Clearance of Title Upon Lease Termination

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Clearance of Title Upon Lease Termination

 

 Section 9-17-50 of the Code of Alabama (1975) requires the oil and gas lessee to cancel an oil and gas lease upon written request of the lessor, as follows:

§ 9-17-50. Cancellation on records of lapsed optional leases; liability of lessees for failure or refusal to mark leases cancelled on records, etc., upon request of lessors.

 

(a)    Whenever by reason of the termination of the full period within which an optional gas and oil lease which is of record may be kept alive by the payments of rentals or by reason of the termination of any of the options in such lease by reason of failure on the part of the lessee to comply with the condition therein for the prevention of forfeiture such lease shall lapse, the lessee must, on request in writing by the lessor, mark same cancelled on the records or must furnish the lessor with an instrument, duly acknowledged, directing the cancellation of such lease on the records.

 

(b)   Any lessee failing or refusing to supply the lessor with such an instrument or failing or refusing to cancel any lease on the records within 30 days after receiving written demand as above shall be liable to such lessor for a reasonable attorney's fee incurred by the lessor in bringing suit to have such forfeiture and cancellation adjudged and, in addition thereto, shall be liable to the lessor for all damages suffered by the lessor by reason of his inability to make any lease on account of the first lease not having been cancelled.

 

Some lessors request a lease covenant obligating the lessee to execute and to record the lease cancellation.  An example of this type of covenant is:

 

Clearance of Title upon Termination of Lease.  Upon the termination of this Lease as to any part or all of the Leased Premises, Lessee covenants to execute a quitclaim deed or release in written legal form, properly acknowledged and entitled to be recorded, discharging and releasing all right, title and interest of Lessee from any and all further claim under this Lease and removing any clouds cast by this Lease on the title to such lands. Such deed or release shall be executed and properly recorded by Lessee. Lessee shall deliver to Lessor the original recorded document or a certified copy thereof within thirty (30) days after the termination hereof as to all or part of the Leased Premises. If Lessee fails to execute and deliver such quitclaim deed or release within thirty (30) days after written demand by Lessor therefor, Lessor shall have the right to file suit to cancel this Lease as a cloud on the title to such lands and Lessee covenants and agrees to pay all costs of suit incident to such cancellation and all damages and expenses sustained by Lessor, including attorneys' fees, as a result of such failure. The obligations of Lessee under this Section shall be in addition to, and not in substitution for, any imposed by statute of the state in which the Leased Premises are located.

Copyright 2011 by Edward G, Hawkins. All rights reserved.