Relates to requiring recordation of certain lease modification agreements

Title of bill

An act to amend the real property law, in relation to recordation of certain lease modifications

Purpose

To provide a mechanism for verification for natural resource lease modifications

Summary of provisions

Section 1 amends § 291-cc of the Real Property Law by adding a new subdivision providing that a modification of a lease agreement involving the rights or interest in oil, gas, minerals, or similar like natural resources shall be recorded with the clerk of the county where such real property is located. Such modification shall contain, in addition the information specified in subdivision two of this section, the signature of both the lessee and lessor. It shall be the obligation of the lessee to record the modification pursuant to this subdivision. Failure to record such modification within 30 days of the execution of such agreement shall result in a civil penalty.

Section 2 provides the effective date.

Existing law

Article 9 of the Real Property Law relates to recording instruments affecting real property. Section 2291-cc of this Article provides the requirements for recording modifications of leases. These requirements include the names of the parties and the addresses, if any, set forth in the agreement; a reference to the agreement with its date of execution; a brief description of the leased premises in form sufficient to identify the same; any changes made by the agreement in the term of the lease and the date of the termination of the lease as modified, and any changes in the provisions of the lease as to the rights of extension or renewal.

Justification

Increasingly, county clerks are presented with energy and mineral lease extensions with only the signature of the representative of the lessee company which has acquired a mineral interest as well as other defects or issues. The unilateral extensions are delivered by couriers who operate on behalf of the lessee who report that landowners at issue have been notified of their lease extension. However, without the signatures of both parties to a lease there is no way for a county clerk to verify that a landowner is aware of the lease extension.

This legislation rectifies the verification problem by requiring: (1) the signature of both parties to protect the interests of all involved; (2) that all leases and assignment of leases be recorded at the county clerk's office within 30 days or be subject to a civil penalty; (3) that all recording text requirements are consistent with the recoding requirements of deeds; and (4) all leases and assignment of leases are kept to a maximum of 10 assignments per document.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately and shall apply to modification agreement entered into on or after such date.