Barnett Shale meeting toughts

This morning the Arlington Board of Realtors hosted a meeting of over 250 Realtors from all over the metroplex for a meeting on the Barnett Shale. The speaker panel consisted of TAR Chairman Avis Wukash, TAR attorneys Ron Walker, and Bill Jones, a broker from Temple who sits on the Broker-Lawyer Committee.

Here are a few things that I learned:

1. If nothing is stated to the contrary, mineral rights automatically convey when the TREC 1-4 family contract is used.

2. Agents who address the issue of mineral rights in the special provisions paragraph of the contract are treading on thin ice. Ron Walker stated that the only thing that can be written in this paragraph is something that is either a "business detail" OR a "factual statement". Anything else must be written by an attorney.

3. Title companies are now beginning to see documentation at closing from lenders that asks about mineral rights leases. Be sure to watch for this and if you come across it, read it carefully and make sure your buyers understand this.

4. There are provisions in the listing agreement (Paragraph 12, letter D and paragraph 13, letter D) that discuss the sellers representation and disclosure of "leases". According to Ron Walker, this is a generic enough statement that mineral rights leases can be included in this verbiage. BE SURE THAT YOUR SELLERS UNDERSTAND THAT THEY NEED TO TELL YOU IF THEY SIGN A MINERAL RIGHTS LEASE DURING THE TERM OF YOUR LISTING. They also need to know that if they have signed a lease already, that must be disclosed too.

5. In the MLS, if you note that mineral rights do not convey, remember to add it to the contract too!

My final thought on all of this is to keep in perspective the dollars that we are talking about. A friend of mine who is an oil and gas attorney recently sold his home and the buyer wanted the mineral rights. He added up what he thought he might get for his standard lot in Arlington and decided that it would probably be about 2-3 thousand dollars over the life of any gas drilling that occurred in his neighborhood. I think that the impression that people have is that they are going to get rich on their mineral rights and the reality is that in many cases, it is simply not worth the fight!

As a result of today's meeting, I am certain that our TAR leadership has a new understanding of the issue and will be working hard to help create some tools that will make the issue easier for us to deal with. I expect that I will hear more about this next week at th TAR convention in Galveston.