We just got our first royalty check from Chesapeake. There are so many issues so I will stick with the biggest one. The check is addressed to my husband, me & our  mortgage company. We cannot cash this check. Chesapeake has not been helpful and now won't even reply to our emails. There has to be someone else in our shoes.. please help, what can we do?

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  If your property is under a mortgage it should be a easy fix. Just take the check to you mortgage company and endorse the check, The mortgage company will endorse it and apply it to your mortgage. You might negotiate a portion of the check to be given to you if the mortgage company is nice. But if your payment history is one of late payments the mortgage company will put all of the check towards the balance for the most part.

Thank you for the help. Our mortgage is in good standing and we have never had a late payment. We are getting checks from Anadarko and Mitsui and neither have our mortgage company as a payee. It seems like a hassle to have to jump through hoops to get our payment. I didn't think our lease included any clause allowing strings attached to payment. Pretty frustrating . . . we need to pay our mortgage off before we get to use royalty money.  Maybe we will mail the royalty check as a mortgage payment each month ?? Learning more everyday.. ty!

I have never heard of this happening. The most likely reason for this is that your mortgage predates your lease which means that as long as the Mortgage company has an interest in your property they also have an interest in your lease.

Most companies contact the Landowner prior to drilling, unitization and royalty payments being made and obtain a signatures from the Landowner giving consent to the Driller to contact your Mortgage Company and attempt to obtain a Subordination or Non-Disturbance agreement from the Mortgage Company. What this agreement does is protect the interest the Driller has in your lease should your Mortgage fall into Foreclosure. If your property were foreclosed on the Mortgage Company could choose to eliminate the lease on the property and that would stop all operations within that unit. This is particularly important if a well bore has passed under your property. 

If Chesapeake has in fact not gone through this process with you it is somewhat troubling. It is lazy on their part and could cost them a fortune down the road if a property within that unit were to be foreclosed on. At the same time some Mortgage Companies will not agree to Subordinate. I've seen companies in this case file a Notice of Interest at the County Courthouse. The Notice of Interest insures that the interested parties to the lease will be notified if a foreclosure proceeding begins. At that time the interested parties could choose to pay the mortgage directly to the Mortgage Company to keep the lease in good standing.

I would contact Chesapeake and your Mortgage Company and see if this extra hoop could be eliminated.  

Thanks Jesse. Chesapeake never contacted us on subordination or a consent of lienholder paperwork. I am not sure if our lease or lease extension predates our original mortgage or refinance. I'd have to dig through the paperwork. Our lease was signed with Chief. EXCO extended the lease and now there are several owners, with Chesapeake unfortunately being one of the partners. We will try to contact our mortgage company to see if they can help. Chesapeake is not doing anything. In fact, they actually withheld withholding tax because we would not sign their division order. Their division order had our mortgage co as a payee and we disagree. We did provide w9's (we had to get our own b/c they didn't provide. It is disappointing to learn that we have to deal with Chesapeake. I am shocked that more people aren't in our situation.

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