I’m trying to sell mineral rights in NM that have been in my family for years. Had multiple offers and have been working with the highest bidder on the documentation. I sent the PSA and Mineral Conveyance to an attorney to review and they object to the special warranty language and asked for a quitclaim deed instead (which was rejected by buyer) and then suggested we ask for a limitation on our liability of up to the purchase amount. The buyer rejected this change and said they will not move forward without the special warranty, and that pretty much all buyers will require this. Is that accurate? Our attorney said a special warranty opens us up to potentially high damages in the event of a title dispute in the future.
1 Like
Your attorney is right! Why should you warrant their title work? They want you to guarantee their work!
This is a real estate sale and real property buyers expect some form of warranty. That is different from an oil and gas lease, in part because there is a lot more money involved than a lease bonus. The issue may be exactly what language is being used in the special warranty clause (such as turning it into a general liability clause) and how NM law affects the seller’s liability under a special warranty clause. In house or commercial property transactions, the seller’s liability is absorbed by the title insurance company and most often the seller pays for that insurance. Mineral sales rarely, if ever, are covered by title insurance. Seller will need to weigh his options regarding the legal advice and the buyer’s requirements, and perhaps consider going with a different buyer, who might agree to the quit claim or limited liability.
This topic was automatically closed after 90 days. New replies are no longer allowed.