Clearing old leases

  I have been working on obtaining releases for leases which have expired. As I worked on this problem, I have come up with a few problems.

  1st problem:

Landowner signs lease with A, A subsequently  assigns the lease in its entirety to B.  A is no longer in business, and the lease terms have expired.  The lease is not held by production, and there has been no activity for 13 years. The question is, do I need a release from A?

  2nd problem:

  Landowner signs lease with A, A subsequently assigns a working  interest or royalty  interest to B. A is still in business,  B's business status is unknown. The lease's status is the same as the 1st problem. The question is, do I need a release from B, or is  his interest extinguished  upon securing a release from A?

  3rd problem:

  Landowner signs lease with A, A combines a group of leases and uses them as collateral for a line of credit with B. A mortgage of the group of leases was recorded. The lease's status is the same as the 1st problem. The question is,  do I need to get a release of the mortgage from B?

  I ask these questions, because this process can become expensive. I have had one company willing to sign a release for it's working  interest assignment. The recorder fee was $67.00. If I follow the example at a Buckeye minerals meeting, where a lease was assigned 88 times the recording fee would be $5,896.00.

  What are your thoughts?

 

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Replies to This Discussion

Permalink Reply by Finnbear on March 2, 2013 at 5:33pm

5301.332 Forfeiture for failure of lessee, successors or assigns to abide by specifically described covenants.

Whenever leases of natural gas and oil lands recorded under section 5301.09 of the Revised Code concerning lands upon which there are no producing or drilling oil or gas wells become forfeited for failure of the lessee, his successors or assigns, to abide by specifically described covenants provided for in the lease, or because the term of the lease has expired, the lessor, his successors or assigns, may file for record an affidavit for forfeiture with the county recorder after serving notice by certified mail, return receipt requested, to the lessee, his successors or assigns, at his last known address, or if service is not obtained by certified mail, by giving notice by publication at least once in a newspaper of general circulation in the county in which the land is located of the lessor’s intent to declare the lease forfeited.

The notice or publication shall be addressed to the lessee, his successors or assigns, and shall contain the name of the lessee; a general description of the land; the number of acres; the date of the lease; the volume and page of the lease record where the lease is recorded; the cause of the forfeiture; and shall state the intention of the lessor to file for record an affidavit of forfeiture with the county recorder if the lessee does not have the lease released of record within thirty days from the date of receipt of the notice or of publication.

After thirty days and not more than sixty days from the date of proof of mailing or publication of the notice, the lessor, his successors or assigns, may file with the county recorder an affidavit of forfeiture setting forth that he is the lessor of an oil or gas lease; the volume and page of the lease record where the oil or gas lease is recorded; that the lessee, his successors or assigns, has failed and neglected to comply with specifically described covenants provided for in the lease, reciting the facts constituting such failure, or that the term of the lease has expired; that there are no producing or drilling oil or gas wells on the leased premises; that the lease has been forfeited and is void; and that notice was served on the lessee, his successors or assigns, or publication made and the manner and time thereof.

If the lessee, his successors or assigns, claims that the lease is in full force and effect, the lessee, his successors or assigns, shall, within sixty days after the mailing or publication of the notice of the lessor of his intention to declare the lease forfeited, notify the person who filed the affidavit of forfeiture of the claim, and file for record an affidavit with the office of the county recorder of the county in which the land is situated stating that the lease has not been forfeited and that the lessee, his successors or assigns, still claim that the lease is in full force and effect.

If the lessee, his successors or assigns, does not give such notice in writing to the lessor at any time prior to the sixtieth day after the mailing or publication of the notice of the lessor of his intention to declare the lease forfeited, then the lessor shall cause the county recorder to note upon the margin of the record of the lease the following: “This lease cancelled pursuant to affidavit of forfeiture recorded in Lease Vol. . . ., Page. . . .” Thereafter the record of the lease shall not be notice to the public of the existence of the lease or of any interest therein or rights thereunder and the record shall not be received in evidence in any court of the state on behalf of lessee, his successors or assigns, against the lessor, his successors or assigns.

For recording the affidavit of forfeiture, for noting such cancellation upon the margin of the record, and for recording the affidavit giving notice that the lease has not been forfeited, the recorder shall charge the fees provided by section 317.32 of the Revised Code.

In a county in which the county recorder has determined to use the microfilm process as provided by section 9.01 of the Revised Code, the recorder may, where applicable, require that the notation “This lease cancelled pursuant to affidavit of forfeiture recorded in Lease Vol. . . ., Page . . . .” be entered on the affidavit, and that the affidavit be recorded in the record of leases provided for by section 317.08 of the Revised Code. The recorder shall charge the fee for such recording as provided by section 317.32 of the Revised Code for the recording of deeds. The record of the lease is not notice to the public of the existence of the lease or of any interests therein or rights thereunder and the record shall not be received in evidence in any court of the state on behalf of the lessee, his successors or assigns, against the lessor, his successors or assigns.

Effective Date: 10-31-1979

Permalink Reply by james mcmeechan on March 3, 2013 at 12:49am

  Sir, if your intent was to supply general information to the forum, this item will definitely be useful to other members. I was not sure if forum rules would allow the posting of complete items from another site. If it was directed at me, I do not understand.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 3, 2013 at 5:29pm

James, once you reach day 61 your window to file an affidavit is closed and you have to start over again.  The statute says "may" because the law can't compel you (i.e. shall) to file if you choose not to.  

Permalink Reply by Finnbear on March 6, 2013 at 1:49pm

It is Ohio Revised Code. It is public domain, your tax dollars paid for it, and as a taxpayer, you own it (and so do I). The TOS of the site (forum rules) have no prohibitions about posting state laws in their entirety, and I would argue, encourage such posting if it is helpful to others participating in the forum who may not know where/how to obtain such information.

Permalink Reply by Janice L. Hancharick on March 3, 2013 at 9:38am

Hi Finnbear!

Which state does your post represent?

Permalink Reply by Finnbear on March 3, 2013 at 3:22pm

That is Ohio Revised Code 5301.332

Permalink Reply by james mcmeechan on March 4, 2013 at 1:47am

 Finnbear, would you happen to have the ORC number for " affidavit of nondevelopment and nonpayment of rentals?

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 4, 2013 at 5:05am

Not sure there is such a statute.  Pretty sure 5601.332 covers that.

Permalink Reply by james mcmeechan on March 4, 2013 at 9:03am

  Marcus, As I understand it, 5301.332 deals with failure to abide by covenants, and has the force of law, I.E. the recorded lease document may no longer be entered into evidence, or establish the fact that a lease exist. A notice of noncompliance and nonpayment of rentals, is merely a affidavit by the lessor stating the facts. While the affidavit is recorded, it will not be noted in the margin of the original lease and does not have the force of law, I.E. the oil company would not be required to accept it as proof the original lease was released.

  I did attempt to talk with the prosecutor today. He stated any request to further explain must come from the recorder. Since I was at the recorder's office today, I asked if the recorder would be willing to file a request. I was told she is already going to file a request, based on my earlier conversation with her. I just need to make sure she understands my 2 questions, 1st what if I file on the 60th day, and 2 what if I file after 60 days.

  I also talked to an attorney today, he states assignments do not need to be released, as their rights will die with the lease. Any attorneys on this site that would like to confirm?

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 4, 2013 at 9:40am

You don't need to cite a statute in order to file an affidavit of non-compliance.  And assignments don't need to be released.  If the interest in an assignment originated with Lease A and you have now cancelled Lease A then the assignment is no longer valid.

Permalink Reply by james mcmeechan on March 4, 2013 at 10:20am

  I should have been more clear with my previous post. when I stated assignments do not need to be released, I should have said, an assignment of working, or royalty interest would not require a release. an assignment of a lease in its entirety, will require a release from the assignee. Thanks Marcus.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 4, 2013 at 11:13am

I knew what you meant.  You alluded to it earlier so i assumed that was what you were getting at.

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