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Permalink Reply by Jacque Straap on June 28, 2012 at 11:26pm

Ron... My second paragraph stated:

Possibly what your Associate friend is confused about is the "Super Priority Law" that Ohio passed in 2010 which provides that an oil and gas lease will survive the foreclosure process and continue in force and effect... meaning that the new purchaser of the property will take subject to the old oil and gas lease, and they will receive any royaltyies or bonus payments going forward.

The source of your confusion (yes, you are the one confused) is that the term "minerals" has nothing whatsoever to do with an oil and gas lease other than the fact that the mineral owner is the person that enters into an oil and gas lease with an oil and gas company.  If you own minerals and a mortgage or a tax lien is foreclosed... you will lose your mineral rights assuming that you are the mortgagor, or the surface and mineral owner in the case of a tax sale (regardless of whether or not you have previously entered into an oil and gas lease).  The fact that the "Super Priority Law" in Ohio provides that an existing oil and gas lease will survive and burden the subsequent purchaser has nothing whatsoever to do with the ownership of the mineral rights...absent a severance of the minerals you will be divested by a foreclosure or a tax sale and the new purchaser will succeed to the mineral rights ownership. 

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Permalink Reply by LW on June 28, 2012 at 11:54pm

So, is it possible that if you were in foreclosure without a subordination, the lease would have to renegotiated with the new owners?  The bank? 

What a mess. You'd think they would get the subordination along with the signing of the  lease.

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Permalink Reply by Jacque Straap on June 29, 2012 at 10:52am

No LW ... as I stated previously, Ohio passed a law in 2010 which provides:

If a mortgaged property that is being foreclosed is subject to an oil or gas lease, pipeline agreement, or other instrument related to the production or sale of oil or natural gas and the lease, agreement, or other instrument wasrecorded subsequent to the mortgage, and if the lease, agreement, or other instrument is not in default, the oil or gas lease, pipeline agreement, or other instrument, as applicable, has priority over all other liens, claims, orencumbrances on the property so that the oil or gas lease, pipeline agreement, or other instrument is not terminated or extinguished upon the foreclosure sale of the mortgaged property. If the owner of the mortgaged property wasentitled to oil and gas royalties before the foreclosure sale, the oil or gas royalties shall be paid to the purchaser ofthe foreclosed property

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Permalink Reply by Jacque Straap on June 29, 2012 at 10:54am

Well, that didn't cut and paste too well... but the law is

1509.31of the Ohio Code

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Permalink Reply by Ron Eiselstein on June 28, 2012 at 9:57pm

Drill Baby,  One client had over a hundred parcels leased wherein the property taxes were taken out of the bonus and paid to the county.  Everything you are saying is correct only if there is a case pending.  If  nothing is filed by the lien holders, you have to give the landowner the right to cure any default and not assume that an action is forthcoming.  Again, it is between the landowner and the energy company to negotiate the status of liens and how they may affect the energy company.  My point is that until there is a legal complaint, the landowner can lease or sell his mineral rights without a lien holders consent.  And......the energy concern should not use the lien status as a negotiating tool.

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Permalink Reply by Jacque Straap on June 29, 2012 at 2:28pm

Delinquent taxes, judgments or a mortgage that is in arrears would hardly be leverage for an energy company.  The general course of action would be for an energy company to strike a deal with a landowner, hand him a draft and then sprint to the recorder's office to run the title on the property.  It would be in the process of running the title that the liens, taxes and mortgages would appear.  At that point it would be up to the energy company to choose to either disregard these matters or advise the landowner that they will require them to resolve the matter before a draft will be honored for payment.  Typically a landowner that has liens, delinquent taxes or mortgages has them for a reason... he's got no money to pay them. It is at that point that an energy company could suggest that the agreed to lease bonus will be used in part to pay off the delinquencies with the remainder going to the landowner.  The landowner certainly has the discretion to say that he prefers not to do that and that would likely be the point in time that the energy company would say "good luck Chuck". 

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Permalink Reply by Ron Eiselstein on June 30, 2012 at 8:58am

Now you got.........in Mahoning county tax certs. were sold en masse to a private entity and this has added a new twist in regards to delinquent taxes.  Property taxes in Mahoning county have been made current by a private investor and have become a negotiation between the landowner and the cert holder. 

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Permalink Reply by 2s72s0k9mm8gd on June 28, 2012 at 8:49pm

I would think that if your land is mortgaged and mineral rights are shown on the deed to that property as being part of the deed and not owned by someone else , then they are encumbered by the mortgage holder. If you are foreclosed on you would lose it all. Make sense?

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Permalink Reply by Jacque Straap on June 28, 2012 at 9:25pm

Uhhhh yes, perfect sense!

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Permalink Reply by Debby Melvin on June 30, 2012 at 12:31pm

Does anyone know if the bonus checks have started to arrive in Trumbull county?  I've been trying to find out how they are being sent (I have some really bad mail service out here in the sticks!) and no one from either ALOV or BP will give me the time of day.

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