How can this be legal?

I just met with an attorney in my area to discuss lease addendum language. He informed me that Chesapeake does not sign, or record any lease addendums that they draft. The company says that is not their "policy".  All that gets signed and recorded is the standard boiler plate lease. I am not really comfortable with this scenario. Can anyone shed some light on how can the lease addendum possibly be a legal document if the lessee does not sign it?

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Permalink Reply by Philip Brutz on August 23, 2011 at 8:57am
Maybe this is a good reason to go with a goup like KWGD that writes their own contract.
Permalink Reply by Philip Brutz on August 23, 2011 at 10:37am

This is an interesting land auction. http://www.roaninc.com/?auction=201109101100 

Check out their lease that is not signed by the Gas Co.  http://www.roaninc.com/%60media/images/pictures/flyers/realestate/l...

Check out the appraisal reporthttp://www.roaninc.com/%60media/images/pictures/flyers/realestate/a...

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 12, 2011 at 6:04pm

Philip, a late reply about your post...but my question is?  $1.00 per foot? and that was it?  is there hope to get out of that contract since the lessee or in that case the pipe company didn't sign?

 

thanks for posting this info...I enjoyed reading the info bout the royalty appraisal.

Permalink Reply by Robin Fehrenbach Scala on August 23, 2011 at 12:05pm

Actually, the ONLY thing that ever gets recorded is a MEMORANDUM of LEASE (not even the boilerplate lease itself).

This is not unusual at all and does not affect the lease you signed with the company.

By the way, even leases written by landowner groups are no different. The memorandum only is recorded.

A memorandum just tells the world that a lease exists between the company and the landowner. That is the only thing required. 

If you go to any courthouse recorders office and look up leases, you will find only the memorandum filed. This keeps the lease private but allows everyone to know it exists.

So, don't worry about that part of the deal. The most important thing is to negotiate a good lease and have the company accept it and pay you. 

By the way, it is not just Chesapeake. None of the companies record the entire lease.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 12, 2011 at 6:24pm

Hi Robin,

On the  lease I have inherited they  recorded (all 8 pages) but no 'memorandum of lease' and no paper showing consideration that was given or a signature by the lessee.   So evidentally different companies do these things different ways or each state has its own filing requirements.

Permalink Reply by GBrewer on August 23, 2011 at 12:20pm

The Statutue of Frauds in Pennsylvania requires that any interest in land be in writing to be enforceable, so the addendum, I suggest, should be signed to be enforceable.  Pennsylvania is a "race notice" jurisdiction meaning that the the first filed of record wins (if there are more than two, as against subsequent filings), but the first dated, but second filed would be enforceable against the signers.

 

In short, if I wanted the benefits of the addendum I would not sign unless the lessee signed.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 12, 2011 at 6:26pm

that's a great point GB!   The addendum and the main contract (though an old one) are recorded but no signing by the lessee at all.

Permalink Reply by scott brion on August 25, 2011 at 10:52am

Becca,

Make sure that the boiler plate lease references the amendment and that you sign the amendments.  I have also been concerned about this issue.  I plan to notarize my signature of the amendment (in addition to the lease) and  plan to record the lease and amendments at my expense.   You may want to talk to the registrar in your county to see what if any changes to the lease form might be required to record the lease so that you have that option.

Permalink Reply by Becca on August 25, 2011 at 8:34pm

The attorney also informed me that the Company has a 120 day waiting period while they do their due diligence on my property. So, I guess I wonder if it is possible to record everything prior to end of the waiting period. This is all very confusing and it seems as if even the attorneys I have paid to answer questions cannot give me a straight answer. I just cannot seem to figure how an unsigned agreement would ever hold up in court. Thanks for the input.

Permalink Reply by NY Shale Gas Now on August 26, 2011 at 7:54am
The lack of signature from the lessee has to do with the fact that they're receiving, not giving.

When you sell property, you sign the deed, and when you pledge property, you sign the mortgage. The buyer or the lender don't have to sign. Instead, they accept what you give, and nothing more.

Same with a lease. No oil and gas company is going to get out of anything by their failure to also sign. If you're not comfortable with this, then little more can be said. That's how business is done.
Permalink Reply by Becca on August 27, 2011 at 2:23pm
I follow your line of thinking if the property was being conveyed, but a lease is simply a use/access for a term of time. So, consequently I would have thought that the terms need to be mutally agreed upon. What is to stop a Company from simply denying that the lease addendum ever existed? If they don't sign it, and it is not recorded how is the document binding?
Permalink Reply by Finnbear on August 27, 2011 at 3:11pm
You will have a copy of the addendum, usually drafted by the energy company's attorneys, that is a legally binding contract between you and them.

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