Replies to This Discussion

Permalink Reply by Mark Dolezal on April 4, 2013 at 7:11am

Please have him demand a release. Our landowners group can direct him to legal assistance if he chooses.

EGL

Permalink Reply by 0i7okn54zwbdo on April 5, 2013 at 4:36am

What he said.

Permalink Reply by Kevin Senich on April 9, 2013 at 12:04pm

My understanding is that Wishgard will release.  I obtained a release for a client in Orwell/Windsor Twp without having to go to court.   The release Wishgard sent was defective, however, and could not be recorded. I drafted a correct one and sent it to Wishgard for execution (signing). 

I suggest your elderly gentleman friend contact a local lawyer and get a release drafted with a nice cover letter and send it to Wishgard's PA office with a request that it be signed and returned.  It's not a big legal job -- $250.00 or so max.  If that doesn't work, the release can be procured by going to court.  That is a bigger legal job, but a very small expense compared to the value of the mineral rights and what the property would be worth free from this cloud on its title. 

Permalink Reply by Finnbear on April 11, 2013 at 3:07am

Why should a landowner incur ANY expense to get Wishgard to release them? Wishgard violated the terms by not paying up so it should be their sole duty to undo the lease filing. The landowner signed with Wishgard in good faith, but Wishgard did not hold up their end of the deal. This has been SOP for Wishgard since they showed up in SE OH about 3 years ago. They come into an area, seemingly talk a good game (unless you pay very close attention to the details), sign up a slew of landowners to an option to lease that they market to the landowners as a true lease, look around for a producer who wants the acreage, sell what they can, and leave the rest high and dry 6 months to a year later, now with a clouded title.

Permalink Reply by 0i7okn54zwbdo on April 11, 2013 at 3:43am

You should have to incur expenses but the fact is that you likely will.  Unless someone is well versed in the necessary details of dealing with Wishgard it's much harder to get them to do the right thing.  

Permalink Reply by Kevin Senich on April 12, 2013 at 9:04am

Why should a landowner incur ANY expense in acquiring a fair lease?  Certainly Wishgard has done wrong on a massive scale.  So who is going to do anything about it?  I am suggesting a mimimal cost may have real value to a landowner who has a recorded Memorandum of Lease, but who never was paid the bonus money.  You are correct.  Those leases should be released.  But Wishgard is not going to do it out of the goodness of their hearts.  No one forced the landowners to lease with Wishgard.  No one will force them to take some affirmative action to clear their titles of the Wishgard cloud.  But, if at any time before those primary terms expire a real E & P company wants that land, they will either have to pay Wishgard (or their creditors, successors or assigns)for the phony leases, or there will be a monumental court mess at that time and landowners will undoubtedly have to ante up, or let Wishgard keep the landowners' money. 

 

Bear.  What's your best guess as to how many of these bad leases Wishgard has recorded?  By "bad lease", I think we know what we are talking about.  But for others, it is a lease that Wishgard promised to either accept and pay bonus money or reject, but did neither and instead fraudulently recorded a Memorandum of Lease saying they (Wishgard) had accepted when they had not .  How many of these do you think are out there?

Permalink Reply by Depolarized Farmer on April 17, 2013 at 10:21am

There were roughly 400 Wishgard leases when I counted last fall.  Landowners simply need to walk through the Affidavit of Forfeiture process spelled out in Ohio Rev. Code 5301.332 if indeed their Wishgard lease has expired.  It's not complicated, and can be done by either the landowner or his/her attorney.

 

http://codes.ohio.gov/orc/5301.332

Permalink Reply by Kevin Senich on April 17, 2013 at 11:45am

By my rough count, Wishgard acquired more than 620 "leases" in Ashtabula County.  More than 180 releases of the recorded memoranda of lease have been recorded.

RC 5301.332 might and might not work in the Wishgard context.  The use by Wishgard of the "Confidential Exhibit B", the order of payment off the face of the lease complicates matters.   Failure by Wishgard to pay the bonus money within 120 days supposedly effects a rejection of the lease by Wishgard.  Fundamentally, what Wishgard had was an option to lease.  In those cases where the bonus money was not paid, they never exercised their option.  Recording memoranda of leases without accepting those leases is fraud, but no one has ever called them on it.   

The difficulty with the forfeiture statute is either (1) it requires a lease where here there is none, or (2) Wishgard has not breached any covenant of the lease.  Wishgard was never obliged to pay the bonus money, so you can't say they breached a covenant to pay.  The lease and Exhibit B read together clearly contemplate Wishgard not paying the bonus money and, therefore, rejecting the lease.  For purposes of the forfeiture statute, what can you say that Wishgard was obliged to do that they did not do?

There is a diffference between a lease that is forfeited, and a lease that never existed. A forfeiture might work, but a release definitely will work to clear the Wishgard cloud.  Because of this difference, I believe most lawyers would advise their clients to get a release from Wishgard instead of filing under the forfeiture statute.  Wishgard is well aware of the fact that they should never have recorded leases that they had not accepted.  That is why at least 180 landowners have gotten releases. 

Thanks for bringing this up.  It may be lawyer hair-splitting, but when it comes to title issues, safe is much preferable to sorry.

 

 

 

Permalink Reply by Finnbear on April 18, 2013 at 6:07am

The main point here is that Wishgard should be held solely responsible for fixing this problem that they created for these hundreds (+more across OH) of landowners. Like I tell my kids, "YOU make a mess, YOU clean it up". They should have never filed leases they didn't intend to pay, and when the realized they weren't going to pay, they should have immediately began undoing what they filed with the county recorders.

Permalink Reply by Kevin Senich on April 18, 2013 at 12:53pm

That is the absolute truth.  Wishgard could only have done this in a region where O&G industry practices were largely unknown.  I am mildly surprised that the attorneys general of PA and OH have not been all over this issue. 

Permalink Reply by 0i7okn54zwbdo on April 18, 2013 at 3:56pm

This is good, sound advice.  Thank you for being a great part of the conversation, Kevin.  I could not have put it more elegantly, though I was considering giving it a try.

Permalink Reply by Depolarized Farmer on April 19, 2013 at 5:13pm

Kevin, that is a helpful distinction, and I agree whole-heartedly that a release would be the best way to go (if Wishgard will grant it).

 

I do fear that Wishgard would claim that their lease is a lease, however...  not an option to lease.  Are you aware of any case law that would shed some light on this?

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