An amendment is a document whereby the lessor and lessee agree to change a lease. If the original lease contained an error, or if new terms were later negotiated, then an amendment is needed. Oftentimes, the amendment will be dated effective as of the date of the original lease, in which case, you can treat it as if its terms were in place back when the original lease was signed. 

Unsurprisingly, an extension is just what it sounds like. It is a document by which the parties to a lease agree to extend the primary term for a certain number of years. It allows a lease to continue in effect, without the need for production, for a period of time longer than what was originally agreed to. A new bonus payment to the lessor generally accompanies an extension. 

A release releases the parties from their obligations under a lease. A partial release releases them as it relates only to specific acreage and/or depths. In the case of a partial release, the lease would continue in effect except for whatever portion was released.

There are a few different types of property descriptions you will come across in a conveyance or lease. Depending on the area(s) in which you work, you will definitely be familiar with one or more of them. Let’s talk a bit more about some of the most common ones below.

Section-Township-Range (S-T-R)
This type of description could be written as “the Northwest quarter of the Southwest quarter of Section X, Township Y, Range Z”. After identifying the section, township, range, quadrant, and location within the quadrant of your subject parcel, and comparing it with the description in the deed, you will easily be able to determine whether or not a document conveys interest in your parcel.

Metes and Bounds 
If you see a description along the lines of the following: “Starting at the old oak and then north X degrees west Y feet, then north X degrees west Y feet, then north X degrees east Y feet, and then south x degrees east Y feet, containing Z acres, more or less”, you are dealing with a metes and bounds description. This means that someone has surveyed the tract and that hopefully you will be able to plot it out yourself using a deed plotting program. If so, then you can compare the shape of your tract with the shape of the plot to determine whether or not some or all of your parcel was included in the conveyance. With this type of description, you will need to be aware that the shape of the tracts may change over time, so it may be helpful to compare the tracts to a historical map, if possible. Also, be aware, that depending on the quality of the description, you may not always be able to plot it out. This will be the case if directions or measurements are omitted from the description.
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Boundary Descriptions
Sometimes, a tract of land is described by the names of the owners of the tracts that surround it. In this case, you will definitely need to compare the information listed with a historical map in order to determine whether or not you subject tract is included in the conveyance.

​An executor is a person chosen by the decedent to administer his/her estate upon death. A female executor may also be referred to as an executrix. Often in a will, the decedent will give the executor(s) power to sell his/her property. This allows them to pay off any debts or to more easily distribute the estate to the beneficiaries of the will.

If you find of record an executor’s deed in which he/she conveyed interest to a third party on behalf of the estate, the notes in your runsheet relating to the probate case should primarily focus on the powers given to the executor (specifically the power to sell), rather than just listing out heirs. In such a situation, the heirs never actually received title to the property, just the money from the sale. 

The exception to my recommendation, however, is if you find quitclaim deeds of record in which heirs of the decedent quitclaimed their interest in the property. Although the heirs still didn’t receive title, they quitclaimed their interest to make it clear that they gave up any claim to the property. In that situation, you would want to point out their relationship to the decedent so it is clear from where any perceived or potential interest came.

​Sometimes in a will, the decedent will leave his/her interest in a parcel to a trust. A living person may also transfer his/her interest to a trust. Here is what you need to know when you come across either of these situations in title:

A trust is a relationship in which the grantor/trustor gives a designated trustee or trustees the right to hold title to property for the benefit of one or more beneficiaries.

When a property owner transfers his/her interest to a trust, the trust holds the title to that property. When running title, you will most likely find the transfer of property that is held by a trust under the name of the trustee, but you could also find it under the name of the trustor, or even the trust itself, so make sure to check all options. Also, keep in mind that successor trustees can be named in the event of the death or resignation of one of the original named trustees. In that case, you should include the document naming the successor trustee in your runsheet and search under his/her name as well.

When leasing or transferring property, the trustee(s) should sign the lease or deed in their capacity as trustee (for example, John Smith, trustee of the ABC Trust, dated 1/1/2021). If the trustee also happened to own his own separate interest in the tract, and wanted to lease/sell both, he could sign as John Smith, individually, and as trustee of the ABC Trust, dated 1/1/2021.

The beneficiary receives the financial benefit from the decisions made by the trustee. This may mean that the trustee leases or sells the property and then pays out the money received to the beneficiary or that the trustee transfers the property to the beneficiary at a certain point in time. Although the beneficiary may receive a benefit from the property, the title remains with the trust until it is conveyed.

Determining whether someone has the legal capacity to sign a lease or other agreement is not an issue that comes up often, but whenever it does, it is really important to get right.

As you probably already know, someone who has been declared mentally incompetent should not be asked to sign a lease. In that situation, a guardian should be appointed by the court (if he/she hasn’t already been appointed) and is the one who should sign the agreement in his/her capacity as guardian. 

You probably also know that a minor should not be asked to sign a lease. Some people assume that a parent can just sign on a child’s behalf. However, if you find yourself in a situation in which your company/client is looking to lease a minor’s interest, then you will need to familiarize yourself with the state laws in which the property lies. It is very likely that the minor will need to have a guardian appointed in that situation as well, even if the parent(s) are still alive. 

The reason for these requirements is that both a minor and someone who has been declared mentally incompetent are considered, under the law, as lacking the legal capacity to enter into a binding agreement. In both cases, the lessor would potentially be able to void the lease. A lease that could be made unenforceable at any time is not particularly valuable for your company/client. 

If you go out to meet with a prospective lessor and are unsure about his/her capacity to sign a lease, please bring it to your manager’s attention right away and get clear instructions as to how to proceed. It is not something you will have to deal with often, but it is quite likely that it will come up at some point in your leasing career, if it hasn’t already.

An extension clause, if included in a lease, gives the lessee the right (but not the obligation) to extend the lease for a specified number of years after the expiration of its primary term upon the payment of an extension payment.

This clause comes in handy when the primary term of a lease is about to expire, but a well has not yet been drilled upon the leased premises. If the lease contains an extension clause, and your company/client still plans on developing the acreage, it can choose to extend the lease by paying the agreed upon amount. A record of the extension should be filed in the county where the property lies.
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As I mentioned above, the lessee does not have to extend the lease. If the operator has decided not to develop the acreage, it can simply let the lease expire. If it stills want to develop, but the lease did not contain an extension clause or its terms are now unfavorable, it could attempt to negotiate an amendment that adds or amends the clause and then pay the extension payment. It could also choose to let the lease expire and then renegotiate a new lease with the lessor. As you can see, there are a lot of options, each with its own costs, risks, and benefits, so the best choice depends on the needs of the operator.

The habendum clause is the clause that specifies the lease term. Generally it will consist of a primary term and a secondary term. The primary term is fixed for a certain amount of time (e.g. 1 year, 3 years, 5 years, etc.). It gives the lessee x number of years during which it can drill a well and begin to produce oil & gas. The secondary term is often phrased along the lines of “and as long thereafter as oil & gas are produced…”. If a well is drilled during the primary term, the lease will continue in force for as long as there is production.

It is this clause that will help you determine whether a lease is still in its primary term, held-by-production (HBP), or expired. If the primary term has passed, check for any wells drilled on the leased premises during the relevant time period. If you find that there has been continuous production on the leased tract since the end of the primary term, the lease is held by production and is still in effect. If the primary term has ended, no extension has been filed, and no well was drilled or production on the premises has ceased, the lease is expired.

The Mother Hubbard clause is essentially a “cover-all” clause by which small strips of land may be covered by a lease, even if they were not specifically or adequately described within it. It serves to correct minor deficiencies in the description of the leased premises. You can usually identify it by the words “contiguous”, “adjacent to” and/ or “adjoining”. For example: “This lease also covers and includes, in addition to that above described, all land, if any, contiguous or adjacent to or adjoining the land above described…”

The exact language can vary, so you will need to read it carefully in order to determine what is covered. You will also need to be familiar with where the lands explicitly covered by the lease lie. If applicable, you will need to identify the location(s) of any small strips of land owned by the lessor and determine where they lie in comparison to the leased premises. It is possible that the inclusion of a Mother Hubbard clause in a lease may cause a parcel, or a portion of a parcel, that would otherwise be open of record, to be considered as leased.

A pooling/unitization clause is the clause that allows the lessee to combine multiple leases in order to drill a well that meets the relevant minimum acreage requirements (pooling) or create a drilling unit (unitization). It may also place certain limits on any unit of which it is to be part.

Without this clause, the only way to hold a lease by production (absent the use of forced pooling) was to drill vertically directly on the leased premises. This was the model for many years, but as spacing regulations and minimum acreage requirements began to be imposed, and then later horizontal drilling became more common, new needs emerged.
Horizontal drilling consists of lateral wellbores that usually extend below several parcels. This requires the operator to combine all of the necessary properties in a unit and pay the lessors royalties according to their proportionate share of the unitized lands. In order to include a lease in the unit, it must include a unitization clause that gives the right to do so to the lessee.
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If the operator wants to include a lease that lacks a unitization clause, then it will have to negotiate an amendment or unitization agreement with the lessor. It would, of course, be easier if the clause had already been a part of the lease in the first place. For this reason, you will usually find it included in modern leases.

In the past, an entire lease was usually filed of record, but in more modern times, you will often see a memorandum (memo) filed in place of the lease itself. A memo is basically a summary of a lease. 

A memo provides notice of a lease without disclosing confidential information. It is a concept somewhat similar to that of a deed that references “$1 and other good and valuable consideration”. The grantee in such a deed did not only pay $1 for the property. That phrase is used in the deed to show that consideration was paid (without which the deed would not be valid), but keeps private the actual amount. Likewise, a memo lets others know that a lease was taken but keeps private information relating to payments and/or royalties. 

When negotiating a lease with a landowner, be aware that a lease and memo will generally both be included in the lease packet for the landowner to sign. When you come across one in your chain of title, you can treat it the same as if you had come across an oil and gas lease.