When Does a Lease Become Effective/Binding

Hello All,

 Just curious as to when a lease goes into effect after it is signed. Short story; my family signed three leases in November (SWPA) and were told in February that the titles were still being investigated. I checked on uslandrecords recently and noticed that a memorandum of lease has been recorded in the county for 2 of the 3 leases. One was recorded in Feb. and the other in early March. We have still not received payment. Our attorney is actively looking into the matter, as I think we should have been paid upon the lease's being recorded. Any thoughts on the matter are appreciated. 

JB

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Permalink Reply by Philip Thackray on March 31, 2015 at 8:41am

I have signed four leases and have always been paid well within three months of signing (Phillips, Rex and XTO, Butler County, PA).  Those were better times however.

My understanding is that the lease is effective when signed HOWEVER, the O&G company would never pay you until the title abstraction work is done and good title found.  The abstractor has to go all the way back to mid-1800's so in some locations that may take more time than others.

All O&G companies reserve the right to abandon the lease if the title does not check out or for any other reason.  If abandoned before payment is made the O&G company would not owe the lessor any money.

But, I'm not an Oil and Gas lawyer.

Phil 

Permalink Reply by Philip Brutz on April 1, 2015 at 3:05am

It is common for the O/G company to have 120 business days from lease signing to payment.  Check your lease. 

Permalink Reply by John B. on April 1, 2015 at 3:17am
Hi Phil, we had 45 business days stated, which was up on 1/18.
Permalink Reply by Philip Brutz on April 1, 2015 at 4:49am

Which company is this?

Permalink Reply by Frank Walker on April 1, 2015 at 3:46am

I have to assume this sort of thing, vis a vis timing and so forth, is different for everyone.  FWIW, here is just another data point:

My (bonus) payment, in the form of a check, was handed over to me at time of lease signing.  I was last to sign, which is to say gas company signatures were already on the lease when I signed.  My lease went into effect immediately with my signature and my receipt of payment.

The entire process, for me, was not all that different from when I have bought and sold personal residences.  You go in, everyone sits down and signs whatever must be signed, money changes hands, and you leave with the purchase or sale completed and finalized.

Permalink Reply by Travis Keefer on April 1, 2015 at 1:15pm

our lease with gulfport was filed about a month before we received payment but they had 120 business days which they paid within. you should have definitely received payment by now for the leases that have already been filed. i would be calling and asking wtf for sure

Permalink Reply by Bob Shaw on April 1, 2015 at 2:26pm

In my case, the signing bonus was due 120 days after signing. They missed the payment date and I began the process of having the memorandum removed from the title and the payment came a couple of weeks later. I am sure they would have gone as long as possible, 180+, if I had not moved to enforce the terms of the lease. I think the bottom line is that the lease is valid when payment is delivered.

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