Get Out of a Gas Lease
Many people who signed gas leases were not aware of the health, environmental and other problems associated with gas drilling using hydraulic fracturing. Now that they know, they want to terminate their leases. Our colleagues at Fleased have put together this package on lease termination.
The information contained herein is provided “as is,” and is for educational and information purposes only. It does not provide legal advice on any specific legal matter or factual situation. Legal advice is dependent on the specific circumstances of each situation, so some information may not be correct for your situation. This information is not intended to create or provide a lawyer-client relationship. No one should act on this advice without seeking professional counsel. This information is not soliciting clients for legal work. This information is provided at your sole risk. There is no warranty of any kind, express or implied. Therefore, this information is not a substitute for and cannot replace the advice of your own legal counsel. If you choose to hire a lawyer, be sure that lawyer has specific and extensive experience in negotiating gas leases.
Part A – How to Terminate a Gas Lease in New York State under General Obligations Law § 15-304
Be very careful about checks sent to your near the expiration date of your lease. Many leases contain “delay rental” clauses, which allow the company to extend the lease merely by sending such a check; acceptance and cashing this check will extend your lease.
- Determine if your lease has been re-assigned to another gas company. You may have received notice of any assignment, but the only safe way to determine if there has been an assignment is to check with the County Clerk and search under the name of the company who originally leased your lands. Leases are often assigned in whole or in part to other companies by the original lessees, with no notice to the landowners. Many county clerks’ offices have on-line available records. You will need to send a notice to each company that still holds any share of the lease.
- With the understanding that the land owner is the “lessor,” and the gas company is the lessee”, read the sections of your lease that are titled “lease term”, “lease extension”, and “termination”.
- Review the outline (below) of the General Obligations Law 15-304.
- Wait to take your action until 10 days after the expiration date of the lease.
- Using the “Sample Notice Letter for Termination of a Gas Lease” as your template, write your own notice letter to the company currently holding your lease, and follow this template carefully as all of this detailed information must be included in the notice letter/s. If there is more than one lessor who signed the lease, all lessors must be listed in the notice letter. Be sure to use the current address for the gas company.
- Keep at least two copies of your notice letter for your file.
- Send the original of the notice letter to the gas company by certified mail, return receipt requested.
- Prepare and have notarized an “affidavit of service”.
- Make and keep two copies for your file. if the gas company does not respond within 30 days of their receipt of your letter/s, file copies of your notice letter/s and affidavit/s of service at the County Clerk’s office in the county where the leased land exists. “By such filing the lease shall be cancelled and of no further effect” (General Obligations law 15-304).
Part B – Termination of Gas Leases: NY’s General Obligations Law LAW § 15-404
Please Note: Since we always need to be prepared for resistance from the gas companies against termination, with the possibility of legal action, you need to follow these steps very carefully and keep accurate records.
Subdivision (1) requires that once the lease terminates or expires on its own terms, the gas company [the lessee]: “shall provide the current owner of the land which is subject to the lease, without cost to the owner, a document in recordable form cancelling lease . . .”;
Subdivision (2) provides that if the gas company fails to cancel the lease, as provided in subdivision (1), the current owner may serve notice upon the gas company, and all of the assignees, that: “such lease be cancelled as of record, and stating that if such release is not executed within 30 days of the service of the notice, the lease will be terminated and no longer in effect.
Such notice shall also state:
- The names and addresses of the lessor and the lessee
- The name and address of the person giving notice and a statement of his/her interest
- The state, county, and town of the leased property, along with the location and a general description of the property as contained in the lease and If located in a [spacing] unit, the name and description of the unit, if known
- If there is a well on the leased land, the name or number of the well if known
- The date when the lease was signed
- The date of the termination of the lease and the basis of such termination
Service of such notice must be either personal or by certified mail to the last
known address of the gas company or assignee. If this is not possible, then by publication, once a week for 3 weeks in a paper of general circulation in the county where the land is located.
If the gas company claims that the lease has not terminated, but is still in effect, it must (within 30 days of service of the demand) file an affidavit in the county clerk’s office and serve a copy on the landowner within 10 days of the filing. If no such affidavit is filed, the landowner can file a copy of the notice letter and an affidavit of service with the county clerk, and “by such filing the lease shall be cancelled and of no further effect.”
Based on extensive study and scientific evidence, Catskill Mountainkeeper has called for a ban on fracking. We are also working within the existing regulatory process in New York to raise critical issues, widen the discussion of the impacts of drilling, and expand the options available to protect the public.