There is currently only one form in the PAR standard forms library dealing with oil, gas and mineral rights – Form OGM – which is a one-page form intended to be a disclosure and an addendum to the Agreement of Sale in one.
For years, we have heard that this one form is entirely inadequate for such a complex area of real estate and leaves members at risk for liability. A task force was formed and they completely revised Form OGM and drafted two new forms for use when oil, gas and mineral rights or interests are an element of the transaction. The following three forms will be released for use on July 1:
- The Oil, Gas and Mineral Rights/Interests Addendum to Agreement of Sale went from half of a page to two pages in length. The addendum now has paragraphs dealing with the separate title to oil, gas and mineral rights; space to detail which oil, gas and mineral rights will be excepted and/or reserved, a conveyance of surface damage and domestic free gas rights, and places to list and include documentation of current leases or conveyances.
- The Oil, Gas and Mineral Rights/Interests Disclosure also expanded from the half-page to two pages. This disclosure form should not be confused with and is not a substitute for the Seller’s Property Disclosure Statement. Form OGMD deals exclusively with oil, gas and mineral rights and is intended to disclose to a potential buyer the extent of the seller’s knowledge regarding those rights. The disclosures are the same as those contained in the current form, but the form itself contains more cautionary and explanatory language for the buyer’s benefit.
- The last form is entirely new; it is an Oil, Gas and Mineral Rights/Interests Addendum to the Exclusive Listing Contract. The purpose of this form is to give the listing broker additional information about which, if any, oil, gas and mineral rights will be excepted or reserved by the seller upon transfer of the property. Knowing this information at the outset will help the broker appropriately market the property. Form OGMX contains separate paragraphs for details on each subsurface right or interest (oil, gas, minerals and “other”) and asks for further information on leases, easements and legal issues.
This is, of course, a short overview of what the new forms contain. You can check them out for yourself on PAR’s standard forms page by filtering “2017 revisions.” I strongly encourage you to familiarize yourself with these forms and review the relevant guidelines for preparation and use. Selling property that has been separated from oil, gas and/or mineral rights is a complicated and legally complex matter, which should not be entered lightly. Any questions about a transaction should be taken to your broker and/or an attorney experienced in these matters. Comments and questions about the forms can be sent to me at email@example.com.