Forum Post: Mortgage Lenders Are Becoming Increasingly Concerned With Gas and Oil Leases Associated With Hydraulic Fracturing
Posted 12 years ago on Dec. 6, 2011, 12:21 a.m. EST by GirlFriday
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Fee Simple ownership of land in the United States generally consists of both the "surface" rights and the "mineral" rights associated with the property. As hydraulic fracturing becomes more prevalent, landowners are often attracted to the potential financial gain that could be realized by entering into a gas and oil lease that allows an extraction company the right to drill on their land. Gas and oil leases typically allow the extraction company the right to explore and extract "minerals" below the land. These leases also allow the extraction company to engage in other related activities, such as drilling and storage of waste materials on the surface of the landowner's property. In return, the extraction company will agree to pay the landowner royalties based on the amount of natural gas or other minerals extracted from the land. It is estimated that American landowners have signed more than one million of these gas and oil leases.
Recent reports indicate that mortgage lenders are becoming increasingly concerned with the growing number of gas and oil leases on mortgaged land. In most instances, a mortgage is secured by both the "surface" and "subsurface" rights to the land. As a result, the terms of the mortgage generally include the requirement that the landowner: (1) obtain prior permission from the lender before entering into a lease; (2) protect the property from damage, and (3) prohibit the storage of hazardous materials on the land. Some mortgages also include a rider specifically prohibiting the landowner from leasing mineral, oil or gas rights.
Please see full article below for more information. http://www.jdsupra.com/post/documentViewer.aspx?fid=e50e172f-340b-4550-9d5c-b3a374518160
Hey, wanna watch two industries collide?
Good post.
You rock, Nevada.
I thought the banks only owned the loan and the not the land
that actually depends on state/county regulations on mortgages.
Recent reports indicate that mortgage lenders are becoming increasingly concerned with the growing number of gas and oil leases on mortgaged land. In most instances, a mortgage is secured by both the "surface" and "subsurface" rights to the land. As a result, the terms of the mortgage generally include the requirement that the landowner: (1) obtain prior permission from the lender before entering into a lease; (2) protect the property from damage, and (3) prohibit the storage of hazardous materials on the land. Some mortgages also include a rider specifically prohibiting the landowner from leasing mineral, oil or gas rights.
Please see full article below for more information.
The word mortgage is a Law French term meaning "dead pledge," apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure.[2]
http://en.wikipedia.org/wiki/Mortgage_loan
I was looking at some land that said that the the mineral, oil or gas rights had already been sold. So, I could buy the land but did not hold the rights. I find this very, very odd. Except, that I have seen the rights being purchased which would prohibit anyone else later on down the line from claiming those rights. I looked at some land in Oklahoma that as long as I owned the land, paid off or not, there were numerous things that could not be done. Honestly, I never would have done them but it sure ticked me off.
I did come across some articles last night that discussed problems with reselling the land or property after people had moved due to the fracking. This is where I see the collusion.
I think a person can own an apartment in a highrise
Yep, and then of course lose it through eminent domain.
people need public places to assemble in
Yep