Extends the cancellation period for a gas or oil lease from 3 days to 5 days.
- Jan 4, 2012: REFERRED TO JUDICIARY
- Jan 5, 2011: REFERRED TO JUDICIARY
BILL NUMBER:S750 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: 2009-2010: S.4683/A.2371 Reported to 3rd Calendar Reading 2008: S.7825/A.11259-A Passed Senate FISCAL IMPLICATIONS: None. EFFECTIVE DATE: Effective thirty days after enactment into law and shall apply to oil or gas leases entered into on or after such effective date.
S T A T E O F N E W Y O R K ________________________________________________________________________ 750 2011-2012 Regular Sessions I N SENATE (PREFILED) January 5, 2011 ___________ Introduced by Sen. YOUNG -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary 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 THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS:
Section 1. Subdivision 5 of section 5-333 of the general obligations law, as added by chapter 386 of the laws of 2005, is amended to read as follows:
5. On or after January first, two thousand six, any oil or gas lease shall contain the following statement printed in at least ten point bold type:
THIS IS A LEASE OF OIL AND GAS RIGHTS, NOT A SALE, CONTAINING TERMS THAT MAY BE NEGOTIATED BY YOU. YOU HAVE THE RIGHT TO CANCEL THIS LEASE WITHIN [
THREE] FIVE BUSINESS DAYS AFTER EXECUTION OF THE LEASE BY NOTI- FYING THE LESSEE THAT YOU HAVE CANCELED THIS CONTRACT. IN ORDER TO CANCEL THIS LEASE, YOU MUST EXECUTE A NOTICE OF CANCELLATION IN THE FORM PROVIDED BELOW, MAIL IT TO THE LESSEE AND REFUND ALL AMOUNTS PAID TO YOU BY THE LESSEE WITHIN THE [ THREE-DAY] FIVE-DAY CANCELLATION PERIOD. THE MAILING MUST BE POSTMARKED WITHIN THE [ THREE-DAY] FIVE-DAY CANCELLATION PERIOD TO BE EFFECTIVE. NOTICE OF CANCELLATION I/WE HEREBY CANCEL THIS LEASE. DATED:
THE PERSON PRESENTING THIS LEASE TO YOU IS [
] NOT [ ] A MEMBER OF (name of organization) AND THEREFORE IS [ ] IS NOT [ ] SUBJECT TO A CODE OF CONDUCT. IF THE PERSON PRESENTING THIS LEASE TO YOU IS SUBJECT TO A CODE OF CONDUCT, A COPY OF THE CODE OF CONDUCT MUST BE EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02631-01-1 S. 750 2 PRESENTED TO YOU WITH THIS LEASE. IF APPLICABLE, THE CODE OF CONDUCT PROVIDES A DISPUTE RESOLUTION MECHANISM FOR ANY DISPUTE THAT YOU MAY HAVE REGARDING THE MANNER BY WHICH THIS LEASE WAS PRESENTED TO YOU. IF YOU HAVE ANY SUCH DISPUTE, YOU MAY INVOKE THE DISPUTE RESOLUTION MECH- ANISM OF THE CODE OF CONDUCT BY CONTACTING THE PERSON OR PERSONS DESIG- NATED IN THE CODE OF CONDUCT. THE FAILURE OF THE LESSEE TO PAY ANY ROYALTIES TO YOU AS REQUIRED UNDER THE TERMS OF THE LEASE FOR A PERIOD OF FOUR CONSECUTIVE MONTHS OR MORE SHALL BE A DEFAULT UNLESS OTHERWISE PROVIDED BY LAW, AND WILL RESULT IN CANCELLATION OF THE LEASE APPLICABLE TO THE TARGET FORMATION OF THE WELL WITHIN THE SPACING UNIT, FOLLOWING WRITTEN NOTIFICATION TO THE LESSEE OF YOUR INTENT TO CANCEL AND SIXTY DAYS FOR THE LESSEE TO CURE THE DEFAULT. IF THE LESSEE HAS A BONA FIDE DISPUTE REGARDING THE GROUNDS FOR CANCELLATION, SUCH DISPUTE AND THE REASONS THEREFOR MUST BE PROVIDED TO YOU IN WRITING OR THE DEFAULT MUST BE CURED WITHIN SUCH SIXTY DAY PERIOD, OTHERWISE THE LEASE SHALL BE CANCELLED. S 2. This act shall take effect on the thirtieth day after it shall have become a law and shall apply to oil or gas leases entered into on or after such effective date.