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Permalink Reply by Margaret/Michael Corrigan on December 12, 2012 at 4:12am

We signed a lease 4 years ago and are receiving royalties, and wanted to use the money to purchase a retirement home while prices are so low. We were able to get a mortgage, and did not sell our primary home first.

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Permalink Reply by kathy weir on December 12, 2012 at 7:15pm

We recently had the same problem.  Wells Fargo denied our refinance application because of our lease.  I thought the lease would make our property more valuable, but apparently not.

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Permalink Reply by Rick Cancelliere on December 14, 2012 at 1:24pm

Here is a link to a booklet that was written for the New York Bar Association that brings out some very good points and very bad points on why many lender's will not finance properties that have the new gas leases for deep drilling into the various shale formation.

http://www.scribd.com/doc/70784790/Fracking-the-Homestead

The booklet is called Fracking the Homestead.

In this very well written piece it goes to great length to explain many aspects that people do not realize can happen once you sign a lease. I am in the Real Estate business. I work as a State Certified Residential Real Estate Appraiser. Contrary to some opinions I have read in past posts I have researched many properties in my area that I work in. There is a difference in the values of properties sold with gas leases when the Oil & Gas rights are withheld at a sale,  when a property is sold with an assignment of the lease for the Oil and gas rights to the buyer and when a property has no lease and is sold. I have seen first hand how it can impact a property when there is a well drilled on a property adjacent to a landowner who invested in very large custom built home only to have a 2 acre hazardous wast lagoon be installed next to the property for Frac water retention that made the property rejected for conventional financing because of the proximity to a potentially detrimental factor of no control to the home owner.

By the way, your 5 year lease may just be written in such a way that the holder of that lease may be able to hold you in that lease for many years longer that the face 5 years with out you ever seeing any royalties. Educate yourself! Educate yourself! Educate yourself!

If you sign a lease and have a mortgage on your property you have changed the characteristics of that collateral to the lender.  Many lenders have the ability to call that loan due and payable because you have changed the collateral securing that loan.

I could go on, but I think I have rambled enough.....................

I am not pro or con on drilling. I am a be leaver in education. You have the responsibility to your self to understand that once you sign that lease you give the lease holder the right to put a road in, run utility lines, fencing, pipelines, dispose of hazardous, radioactive tailing from any drilling (very lease specific)  and other things in the fine print of your lease that may impact the marketability of your property in a manner that may just reduce the value of the collateral you used to secure your loan causing it to be rejected on the Secondary Market (purchase by Fannie Mae).

 

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Permalink Reply by ulflyer5 on December 16, 2012 at 11:39am

    I was denied last November. My wife and I are both over 800 on our credit scores. We were all ready to sign and the bank called us and said they have a problem. Because of our lease they were unable to close the loan. Since that time my lease has expired and was presented an offer but as of yet have not taken it. Gave them some counter terms and as of yet no agreement. There is drilling all around me. I told them the money was not where I could not agree it was not bad but their addendum terms sucked to be blunt.

  I am curious how this effects the value of my property since I have no lease and they are drilling close to me but not yet close enough. Probably within 1000' from the edge of a unit. I figure a bad lease is worse than no lease. I have 15+ acres and may sell in the future.

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