Six Bills Submitted by Lifton to NYS Assembly on 6/15/2011
1. Require filing within 30 days
2. Require lease filing in entirety
3. Plain language phrases
4. Notice when leases are assigned
5. Establish clearinghouse
6. Require signatures of both parties
1. TITLE OF BILL: Requires oil, gas or mineral land lease to be recorded within thirty days of execution.
PURPOSE: To amend the real property law, in relation to requiring oil, gas or mineral land leases to be recorded within thirty days of execution.
SUMMARY OF PROVISIONS: The bill amends section 291 of the real property law, requiring that any conveyance of real property within New York State which is an oil, gas, or mineral land lease shall be recorded within thirty days from execution of the lease.
EXISTING LAW: Section 291 of the real property law.
JUSTIFICATION: Faced with increasing amounts of real estate property in New York that is subject to an oil, gas or mineral land lease, the housing and mortgage markets depend more than ever on timely and accurate information about lease agreements. Proper assessment and valuation of property is integral to the mortgage lending process, and for selling one’s home. However, reports from assessors and real estate agents indicate that gas companies which hold a lease interest have been delaying in recording their lease agreements with the relevant county clerk’s offices. Often the delays in filing have been upwards of six months to a year after execution of an agreement. Lack of information about a parcel’s lease terms, and the possibility of a lease on neighboring properties, have already been gravely impacting the mortgage and real estate markets. Establishing a thirty day requirement for recording of such lease agreements provides ample time for a leaseholder to comply without arbitrarily and capriciously impacting the housing market.
2. TITLE OF BILL: Relates to excluding oil, gas or mineral land leases from leases that may be recorded by memorandum of lease.
PURPOSE: To amend the real property law, in relation to excluding oil, land or mineral land leases from leases that may be recorded by memorandum of lease.
SUMMARY OF PROVISIONS: The bill excludes oil, gas, and mineral leases from the option to record a memorandum of lease at a county clerk’s office, requiring that a lease, in its entirety, be filed and available for public review.
EXISTING LAW: Section 291-c of the real property law.
JUSTIFICATION: Often, after executing an oil, gas, or mineral lease in New York State, the lessee will record a “memorandum of lease” with the relevant county clerk’s office. Such a memorandum provides only the bare minimum of information for public review about each specific lease agreement. Accordingly, the real estate industry in counties that have many oil and gas leases, which have increased exponentially over the past several years due to the possibility of shale gas extraction in the Marcellus play, has been greatly affected. Residential property valuation can be heavily dependent upon the specific terms of an oil, gas, or mineral lease. Notably, the duration of a lease, any easements or surface rights granted to a lessee, among other concerns, can directly impact a property’s value. Also, the existence of a lease on one’s land, or even on neighboring property given the lending institutions’ setback requirements, can impair the viability of a home to be eligible for title insurance or a mortgage. This is critical information for valuation of real property; therefore, the exact terms of a lease must be available to both assessors and lending institutions.
3. TITLE OF BILL: Requires a certain statement to be included in all oil, gas or mineral leases.
PURPOSE: To amend the general obligations law, in relation to requiring a certain statement to be included in all oil, gas or mineral leases.
SUMMARY OF PROVISIONS: The bill adds subdivision 5-a to section 5-333 of the general obligations law, requiring that a plain language phrase explaining the possible risks to property value and to the ability to obtain a mortgage on a home with an oil or gas lease appear in all oil and gas leases executed on or after January 1, 2012.
EXISTING LAW: Section 5-333 of the general obligations law.
JUSTIFICATION: New York State is experiencing exponential growth in the amount of land that is leased for oil, gas or mineral extraction, due to the possibility of hydrofracking in the Marcellus Shale play. An issue that has recently come to light, with the increasing frequency of leases across upstate NY, is the potential impact of a lease upon one’s property value and upon the ability to obtain a mortgage. Most landowners are unaware at the time they sign a lease that long-term impacts to their property interests could result. This legislation seeks to provide consumer protection for landowners, providing notice of possible adverse impacts.
4. TITLE OF BILL: Relates to notice requirements for assigning oil, gas or mineral land leases.
PURPOSE: To amend the general obligations law, in relation to notice requirements for assigning oil, gas or mineral land leases.
SUMMARY OF PROVISIONS: The bill amends general obligations law, requiring that after January 1st 2012, the lessee or assignee must provide written notice to the landowner of any such assignment, and provide the names and addresses of such assignees to the current landowner.
EXISTING LAW: Subdivisions 5 and 6 of section 5-333 of the general obligations law.
5. TITLE OF BILL: Relates to establishing an oil, gas or mineral land leases clearinghouse.
PURPOSE: To amend the executive law and the real property law, in relation to establishing an oil, gas or mineral land leases clearinghouse.
SUMMARY OF PROVISIONS: The bill amends executive and real property law in relation to establishing an oil, gas or mineral land leases clearinghouse within the Department of State, to allow for the collection and maintenance of all such leases in physical and/or electronic form.
EXISTING LAW: Section 291-cc of the real property law; section 100-a of the executive law.
JUSTIFICATION: New York State is experiencing exponential growth in the amount of land that is leased for oil, gas or mineral extraction, due to the possibility of hydrofracking in the Marcellus Shale play. As the number and density of leases increase, the complexity of navigating the implications for real estate assessment, and the effect upon the ability of a landowner to obtain a mortgage, also becomes much more difficult to gauge. Knowing what properties have leases, the specific terms of a lease, and whether New York citizens are able to buy and sell homes in our state is of compelling state and integral to the establishment of a state regulatory program for oil, gas and mineral extraction. Since the state takes the position that it is the sole regulator of natural resource extraction industries they ought to have clear and uniform records with regard to the mortgage lending industy, local assessments, and New Yorkers’ property value.
6. TITLE OF BILL: Requires signatures of both parties to record a modification, extension or renewal of an oil, gas or mineral land lease.
PURPOSE: To amend the real property law, in relation to requiring signatures of both parties to a lease to record a modification, extension or renewal of an oil, gas or mineral land lease.
SUMMARY OF PROVISIONS: The bill adds a new provision to real property law in relation to the recording of a modification, extension or renewal of an oil, gas, or mineral lease, requiring that such modification, extension or renewal be duly acknowledged by both parties to a lease.
EXISTING LAW: Section 291-cc of the real property law.
JUSTIFICATION: County clerks across New York State have increasingly, over the past year or so, been presented with oil, gas and mineral lease extensions which bear only the signature of a representative of the lessee company which has acquired a mineral interest. The unilateral extensions are delivered by couriers who operate on behalf of the lessee company who report that the landowners at issue have been notified of their lease extension. However, without a duly-acknowledged signature of both parties to a lease, there is no way for a county clerk to verify that a landowner has knowledge of the extension. In fact, landowners have reported that they were unaware of lease extension on their property. This legislation will clarify that a valid lease extension or modification must require the signature of both parties.
