Extends the cancellation period for a gas or oil lease from 3 days to 5 days

Title of bill

An act to amend the general obligations law, in relation to extending from 3 days to 5 days the period to cancel a lease of oil and gas rights

Purpose

To extend the cancellation period for a gas or oil lease from three days to five days.

Summary of provisions

Section 5-333 of General Obligations Law is amended to allow for the extension of the cancellation period for a gas or oil lease from three to five days.

Justification

Discovery of oil and gas accumulations and advances in technology are bringing renewed opportunity for leasing activity in New York's Southern Tier. Landowners have an opportunity to lease or convey their real property rights to oil and gas exploration and production. Landowners should control this relationship through their lease contract where the rights and duties of oil and gas exploration and producing companies should be clearly delineated. Payment of royalties for actual oil and gas produced, use of property for production (i.e. roads, pipeline placement, etc.), crop and property damages should all be defined in the lease contract.

Because of the complex and multi-faceted nature of this business relationship between landowner and oil and gas exploration and production company, research and consultation with an experienced attorney is essential before entering into contract. For many landowners, particularly rural farmers, three business days is an insufficient amount of time to investigate this important business transaction. Five business days, a traditional business week, is a more adequate time frame for landowners to acquire the appropriate legal counsel.

Legislative history

S.7825 (2008) - Passed Senate

Fiscal implications

None.

Effective date

Effective thirty days after enactment into law.