North Carolina DOJ warns homeowners about leasing

We've heard many informal warnings about the risks which homeowners run when they sign drilling leases. Now the North Carolina Department of Justice has delivered a written (draft) report to the state legislature that puts those warnings on the record.

The full document is available here. The following quotes are from coverage by the Associated Press:

  • ...landowners should be extremely careful when considering ceding drilling rights and legislators should require more information and protections for residents .
  • ...the act of leasing without the lender's prior approval could place the mortgage in default.... Storing "hazardous substances" on the site of the mortgaged land also could be grounds for a breach of contract.
  • At least two lenders have said they won't make loans for homes where the borrower doesn't own mineral rights or has leased them.

The draft report was presented on April 26 by Assistant Attorney General Lynne Weaver. (Click here for the official site where the document was posted. Be patient!)

And from PA...

Messages I've received over the last week from people in the Pittsburgh area:

"My son is a realtor, he sent me the West Penn Multi List seller disclosure form that was revised October 2011 - Under section 19 see j, k, l.....that pertains to drilling.....(disclosures are things that will affect property value) and they know property value is affected by drilling!"

"There is a whole section now for gas and mineral rights, and an entire addendum referring to it as well. blows big time"

"Several months ago, I decided to call our local banks and see what their policy was on leased land since the landmen were all over Murrysville. Most of them had no idea what their policy was/is but one bank called me back and told me they would NOT give home equity loans to properties which showed upon inspection that they had been leased."