4.001 Community Lease
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Community Lease. Record title to the captioned property is in Sam Houston. Yet, Daniel Boone and Jim Bowie joined Sam Houston in granting your oil and gas lease, which is entitled “Community Oil and Gas Lease.” We were unable to locate any Alabama cases dealing with community oil and gas leases, but there are community lease cases in other oil and gas producing states. Where multiple lessors owning differing interests in different tracts join in one lease, that lease becomes a community lease, where all the tracts are presumed to be treated as one unit, with each lessor sharing royalties proportionate to that lessor’s ownership contribution to the lease. See Howell v. Union Producing Co., 392 F.2d 95 (5th Cir. 1968). Since you cannot know the ownership contribution proportions without examining title to all the land included in the lease, you will not be in a position to apportion royalties from production from the captioned property among Sam Houston, Daniel Boone, and Jim Bowie. Therefore, you should either pay royalties by check payable to the order of “Sam Houston, Daniel Boone, and Jim Bowie” or obtain duly executed payment instructions from the lessors naming a different payee.
Requirement: Make all payments to the lessors under the Community Oil and Gas Lease covering the captioned property by check payable to the order of “Sam Houston, Daniel Boone, and Jim Bowie” or obtain duly executed payment instructions from the lessors naming a different payee.
Copyright 2011 by Edward G, Hawkins. All rights reserved.