Way, way OT: Royalty Checks

[SoCalSteve]

Hi all,

I recieved a letter in the mail yesterday from an energy company stating that they have royalty moneys due to me. The letter states that they hold a Oil and Gas lease on my property and they want to send me money! Yippeeee!

I have never heard of this. I have owned this house for 4 years now. They state the royalty amount is approx. $5500.00.

I looked them up on the net and spoke to the lady who sent me the letter. It all seems very legit. The address is in downtown Los Angeles in a big office building.

Has anyone heard of this sort of thing? Do any of you homeowners recieve royalty checks from an energy company?

Its like free money!

Thank you all in advance,

Steve

[MartyE]

So if they pay you and then come put an oil or natural gas well in
your backyard you're ok with it?

I'd be really suspiscious having seen some of the stuff
done here in Texas with natural gas and oil.

marty

[Ginger]

Well, it isn't free money, but it is probably legit money *IF* they can produce the contract that was originally signed leasing them the mineral rights to your property.

Make sure there is no clause in anything you sign to get that money/check that gives them future rights to your property unless you're fine with them erecting a drilling site on your land.

Years ago an oil company leased the mineral rights to some of the property on the farm. They didn't want to actually drill on the property, but they had to pay for the mineral rights for a whole underground "area" to do exploratory drilling. They drilled some exploratory wells in the area and abandoned the idea. I suspect in the future they will be back.

Do I think a company would go so far as to tell a current land owner that they owed them money to set an expectation of "free money" to get the land owner to sign a lease that gives the oil company rights to drill on the property? Why not.

[SoCalSteve]

very large.

The lot size is about 8000 sq ft and my home is about 1850 sq ft. I cannot imagine them even being able to put drilling equipment around my home.

Could it be that they have already found natural gas, etc under my home and are tapping it now? And this is a royalty for it?

I put another call in to the company. I want to find out.

Thanks,

Steve

[Bud_E]

I live ( and grew up ) in the L.A. area. I know of property owners ( e.g. in the Pico-Fairfax area ) who were receiving such checks years ago. I don't know the details but it certainly could be legitimate.

[Bill Bove]

I think Ginger may be right. I'd get a laywer before I cash that check.

[SoCalSteve]

On the corner of my street, there is an oil well there. Its really weird that it is there because it is a retail district and a main street. (Pico Blvd, for anyone that cares).

I live within the boundries of this oil well to get royalty checks. In other words, there is oil under my house that this oil rig is drilling for on the corner.

Makes perfect sense now. As for the $5500.00, I believe that is for 4 years worth (as I have lived here that long). Maybe its a grand a year. Still nothing to sneeze at!

Thanks all for your insights and to make me get off my a$$ and do my due diligence.

Steve

[Bill Bove]

Woohoo :banana: sounds like it really is free money :banana: :banana: Take the wife on a cruise for a grand, then she won't be so pissed when she see's the new bike :D

[pale scotsman]

In Alabama it's a 40 acre plot, 1,320' on a side for a single wildcat well. If it's an established field the acreage spreads big time. They'll figure your square feet on the land ownership map which you should be able to see and assign you a percentage. The company I worked for was very diligent about royalties because it can literally be your *** if you a cheating someone.

As an aside don't count on the money in the future because I've got some stories that'll make you either laugh or cry. I've literally seen families torn apart fighting over percentages and when the production declines their fortunes do to. Not pretty.

But, in your case yeeeeee haaaaa! More bike money. :beer:

[lnomalley]

wow. free money.

[Cinci Jim]

I remember hearing I think on NPR a long time ago that in the US most of what we think of as property ownership does not extend underground unless it is clearly stated as such. Also I tthink that anyone who owns the mineral rights as the right to access their "underground" property. Mineral rights can be "severed" from the surface use rights. I remember hearing about people who bought a big chunk of land out west, built the dream house on it with a great view and the mineral rights owner coming in and drilling an oil well right in the middle of it - and it being legal.

here is a link:

http://www.deq.state.mi.us/documents/deq-ogs-land-oilandgas-mineral-rights.PDF

http://www.npr.org/templates/story/story.php?storyId=4651566

[Too Tall]

And I can say I knew you before you load up the kids and moved to Beverley ;)

[Sandy]

1. Very seldom you get something for nothing, especially money.

2. Why would someone give you something for nothing, especially money?

3. Most often those who give you something for nothing (especially money) want a whole lot more from you than the something for nothing that they gave you.

4. Often those that say that they are giving you something for nothing (especially money) aren't even going to give you something for nothing but are going to try to get something from you and give you nothing.

5. Often people will supposedly give you something for nothing, and later you will find that the something for nothing that they gave you, was really something for something, which was a whole lot less than the something that you deserved for the something that you had.

You must investigate very carefully the something for nothing that you are being offered. I wouldn't accept anything for nothing until I totally understood why.

I live in a brick house and have an address, but I'm not giving you something for nothiing.

Get a lawyer before you accept or do anything. Better to be careful now, than to be called a fool later.


Slick Serotta Sandy

[Ginger]

The state of Michigan retains the mineral rights on any property that is claimed by the state due to failure to pay taxes. (So the next owners, or the previous owners no longer have the mineral rights to the land.) Now isn't *that* neat.

I think the mineral rights are mentioned in a little one sentence or two word clause in the property description. If you didn't know what it was, you might not know it was there.

[PaulE]

You may want to discuss this with your tax accountant. You will probably get a 1099 from the company next January. To lessen the tax bite, you may be able to claim some deduction, as you bought this house and this revenue stream as a package deal. If so, some portion of your house cost would offset the income as a deduction. I suspect that this has happened often enough that there are IRS rules covering this.

You should also check that this payment covers all of the time since you've owned the house. It's possible the company only found out recently that there is a new owner of the house, and that they've paid the wrong person for the past three years, in which case they might still owe the rightful owner.

[neverraced]

and the title company that cleared your sale, to find out why no one mentioned anything about these rights when you bought the house.

[SoCalSteve]

I mean, who would let all that $$$ get away, right?

So, turns out that my neighbors have been getting this royalty check for years and years. It is legit as the power company has to pay these royalties as it is mining the ground under us.

As for being 1099ed, I am sure there will be a very nice tax picture accompanying this check. I will look into offsetting it with house bills. Thanks for the advice.

As for someone else getting money that is due to me, I will thouroghly investigate. And, I guess I didnt look at my Title paperwork closely enough when I bought the house. I was told that the lease, etc is all there.

Buying this house was a truly overwhelming experience and after I bought it I spend months renovating it. I didnt even move in for close to half a year. I am sure it fell through the cracks....But yes, I am pretty pissed that the escrow and/or title company didnt tell me about it. My real estate agent as well!

Thank you all for your good and sound advice. I will put about a 1/3 away for taxes and use the rest to pay off some debt. Debt that helped pay for a few bikes...LOL.

Steve

[neverraced]

Wouldn't be surprised if the previous owner was getting the checks at his new address for the past three years.

See you in court.

[SoCalSteve]

It's way too much money owed...My neighbor said that he gets about a thousand a year. So, if I'm owed 5500.00, then that makes sense.

I am sure the power company wants to see the right person get paid, yes? Its on their head to pay royalties to the people who are due those royalties.

I will find out when I get the first royalty check. That will be the beginning of August.

Steve

PS: why would the power company pay the people if they dont live here anymore? The reason there are royalty checks is because of where I live. Not a forwarding address of people who no longer live here.....

[neverraced]

People don't necessarily get their mail at their home address. They might have a PO Box, or it goes to the bank, or to another home address they might have in Hawaii (partly thanks to you?) There's no law that says royalty checks must be sent to the address where the oil is being drilled, is there?

[SoCalSteve]

for all these years then they will have to compensate me and go after the person who they wrongly paid.

I have paperwork showing when I bought the house, became owner, etc.

Anyway, I am not too worried as I know that if they owe me $5,500.00 and my neighbor says he gets a bit over a $1,000.00 a year, then it is the correct amount.

Thank you for your concern,

Steve

[William]

1. Very seldom you get something for nothing, especially money.

2. Why would someone give you something for nothing, especially money?

3. Most often those who give you something for nothing (especially money) want a whole lot more from you than the something for nothing that they gave you.

4. Often those that say that they are giving you something for nothing (especially money) aren't even going to give you something for nothing but are going to try to get something from you and give you nothing.

5. Often people will supposedly give you something for nothing, and later you will find that the something for nothing that they gave you, was really something for something, which was a whole lot less than the something that you deserved for the something that you had.

You must investigate very carefully the something for nothing that you are being offered. I wouldn't accept anything for nothing until I totally understood why.

I live in a brick house and have an address, but I'm not giving you something for nothiing.

Get a lawyer before you accept or do anything. Better to be careful now, than to be called a fool later.


Slick Serotta Sandy

Wasn't this a Seinfeld episode???? :confused:
http://www.accsoft.com.au/~quantum/images/george/pose.jpg


William ;)

[Sandy]

I hope that 3. and 5. don't apply for SoCalSteve.



Seinfeld Sandy

[SoCalSteve]

Wasn't this a Seinfeld episode???? :confused:
http://www.accsoft.com.au/~quantum/images/george/pose.jpg


William ;)

Which episode relates to royalty checks? I'm a huge fan and have seen all the episodes numerous times and the only episode with royalty checks that comes to mind is when Jerry did a commercial in Japan and got 100's of very small royalty checks.

Please enlighten me. As I always say, everything in life comes from a Seinfeld episode (not the other way around).

Steve

[SoCalSteve]

I hope that 3. and 5. don't apply for SoCalSteve.



Seinfeld Sandy

Sandy,

Thank you so much for your concern!

As I posted earlier, there is a active pumping oil rig about 2 blocks away from my house. Weird as its a retail district and on a very busy street. They keep it hidden behind a nice structure. You wouldnt even know what it was.

The oil that it is pumping is coming from the neighborhood. Everyone in the neighborhood gets these royalty checks on a quarterly basis. This has been going on for many, many years. Had I read my Title paperwork when I purchased the house, I probably would have known this.

So, it turns out that because I live within the boundry of this oil pumper, I am entitled to a royalty check from its profits. Lucky me!

The reason it is so much is because I havent collected on these royalties since I've lived here, about 4 years.

Again, thank you for your concern,

Steve

[dave thompson]

I remember traveling to Los Angels in the 40s and 50s and saw a bewildering array of oil towers and pumping stations. Earlier, the greater Los Angeles area had forests of oil derricks. Interesting story here: http://forums.thepaceline.net/ Pic below is of Signal Hill in Long Beach.

[Kevan]

My mother recieves a fraction of a penny for every barrel sucked from the ground from somewhere. The full details haven't been shared with me, but apparently her father maintained mineral rights to a parcel of property he had sold. I think she gets a check for 75 bucks a year. Some oil tycoon she became.

Oh yeah, like you... this just sprung out from no where.