Replies to This Discussion

Permalink Reply by Finnbear on April 19, 2013 at 5:39pm

If they didn't pay, it is NOT a lease!

Permalink Reply by Mark Dolezal on April 20, 2013 at 1:12am

I think Kevins suggestion that the Ohio AG office should be aware of these complaints. This may prevent other Ohioans from O & G scams in the future.

Permalink Reply by Kevin Senich on April 20, 2013 at 4:18am

Mark:

Has anyone ever contacted the AG's office?  If there is interest in doing so, I would be able to tell the attorneys exactly how this scam worked, and why it is unlawful.

Permalink Reply by Kevin Senich on April 20, 2013 at 4:05am

No, I am not aware of any Ohio case law that would be directly on point.  Ohio's case law on oil and gas law is sparce largely because the industry has been small for the last hundred years. 

We do have case law that would indicate that the form Wishgard uses to lease, the "paid up lease" with the separate "confidential" order of payment, is an option to lease, not a lease.  That case law does not arise in the context of an oil and gas lease, but should be applicable.  Basically, what the law says is that it doesn't matter what you call a transaction, if it has all the elements of an option and operates as an option, it is an option. 

When I wrote before and said the forfeiture "might work", what I meant to say was the forfeiture if recordable may look like it clears title, and that may satisfy any future party interested in the mineral rights, but essentially it is just as wrong as filing a memorandum of lease when you don't have a lease.

The other problem with the forfeiture is that Wishgard may object to it.  Where forfeiture under the statutory procedure is disputed, the dispute ends up in court.  Going to court right now against Wishgard is problematic given Wishgard's involuntary bankruptcy in Pittsburgh.

I do not know what Wishgard is doing right now.  As I said earlier in this thread, the release they provided my client was defective.  ( My client had two properties.  They sent one release with no property descriptions for the two.)  The corrected releases I sent have not been executed and returned. 

If there is a silver lining, it is that Wishgard used a uniform lease/oop/memo of lease for all its transactions.  It is very conceivable that all these bad Wishgard leases could be released en masse with the stroke of one judge's pen.

 

 

 

Permalink Reply by Ed Ganelli on April 20, 2013 at 5:14am

Many months ago when I was posting often on this site, I was strictly against signing with Wishgard (Their insistence of Guaranteed Payment was just one of the reasons that I was so against them).  When our group formed, we had potential Lessees, as part of the leasing process, put 10% of the bonus amount into escrow upon leasing.  That way, if the company decided not to pay the full bonus amount within the time period specified by the lease, at least the landowner would get that 10%.  Not sure about any of the legalities (how to make sure the 10% was actually IN an escrow account, how to get it if leases weren't paid for, etc.) since the attorney working with our group handled that part of it, but it worked for us.  While none of our landowners (with clear title) weren't paid, I do know that when I was paid my bonus money, it came in 2 checks - one for 10% of the lease amount, the other for the remaining 90%...

Permalink Reply by 0i7okn54zwbdo on April 23, 2013 at 7:46am

It's an "unless" lease.  It is automatically void unless they pay a bonus or start drilling w/in whatever given time period (30, 60, 90 days).  That's how most of the leases in Ohio have worked for generations.  I can't recall the actual wording of the Wishgard lease but I assume it was a reasonable approximation to that style.

Permalink Reply by Ed Ganelli on April 23, 2013 at 9:54am

Yes, Marcus...the Wishgard (as are all 'flipper" leases) was an "unless" lease.  That was why we made it a priority to have the 10%  put into escrow upon signing our leases - along with language that if BlackRidge/Beland didn't pay on clear title acreage, the landowner got the escrow amount AND the lease released and recorded immediately upon lapse of the pay-by date...

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