Utah Admin. Code R850-22-600 - Transfer by Assignment or Operation of Law
1. Any lease may be assigned as to all or
part of the acreage, to any person, firm, association, or corporation qualified
to hold a lease provided, however, that all assignments must be approved by the
director. No assignment is effective until approval is given. Any attempted or
purported assignment made without approval by the director is void.
2. Transfer by Assignment.
(a) An assignment of either a record title,
working or non-working interest in a lease must:
(i) be expressed in a good and sufficient
written legal instrument;
(ii) be
properly executed, acknowledged and clearly set forth:
(A) the serial number of the lease;
(B) the land involved;
(C) the name and address of the
assignee;
(D) the name of the
assignor;
(E) the interest
transferred;
(iii) be
accompanied by a certification that the assignee is a qualified interest owner;
and
(iv) include a certification of
net revenue interest.
(b) Lessees who are assigning a lease shall:
(i) prepare and execute the assignments in
duplicate, complete with acknowledgments;
(ii) provide that each copy of the assignment
have attached thereto an acceptance of assignment duly executed by the
assignee; and
(iii) provide that
all assignments forwarded to or deposited with the agency be accompanied by the
prescribed fee.
(c) The
director shall approve any assignment of interest which has been properly
executed; if the required filing fee is paid for each separate lease in which
an interest is assigned, and the assignment complies with the law and these
rules, so long as the director determines that approval would not be
detrimental to the interests of the trust beneficiaries.
(d) If approval of any assignment is withheld
by the director, the transferee shall be notified of such decision and its
basis. Any decision to withhold approval may be appealed pursuant to Rule
R850-8 or any similar rule in place at the time of such decision.
(e) Any assignment of a portion of a lease,
whether of a record title, working or non-working interest, covering less than
a quarter-quarter section, a surveyed lot, or an assignment of a separate zone
or a separate deposit, shall not be approved.
(f) An assignment shall be effective the
first day of the month following the approval of the assignment by the
director. The assignor or surety, if any, shall continue to be responsible for
performance of any and all obligations as if no assignment had been executed
until the effective date of the assignment. After the effective date of any
assignment, the assignee is bound by the terms of the lease to the same extent
as if the assignee were the original lessee, any conditions in the assignment
to the contrary notwithstanding; provided, however, that the approved record
title interest owner(s) shall retain ultimate responsibility to the agency for
all lease obligations.
(g) A record
title assignment of an undivided 100% record title interest in less than the
total acreage covered by the lease shall cause a segregation of the assigned
and retained portions. After the effective date of the approved assignment, the
assignor shall be released or discharged from any obligation thereafter
accruing to the assigned lands. Segregated leases shall continue in full force
and effect for the primary term of the original lease or as further extended
pursuant to the terms of the lease. The agency may re-issue a lease with a new
lease number covering the assigned lands for the remaining unexpired primary
term. The agency may, in lieu of re-issuing a lease, note the assignment in its
records with all lands covered by the original lease maintained with the
original lease number, and with each separate tract or interest resulting from
an assignment with an additional identifying designation to the original
number.
(h) Any assignment which
would create a cumulative royalty and other non-working interest in excess of
twenty per cent (20%) thereby reducing the net revenue interest in the lease to
less than eighty per cent (80%) NRI shall not be approved by the
agency.
(i) Mass assignments are
allowed, provided:
(i) the requirements set
forth in paragraph R850-22-600(2) are met;
(ii) the serial number, the lands covered
thereby, and the percent of interest assigned therein are expressly described
in an attached exhibit;
(iii) the
prescribed fee is paid for each lease affected; and
(iv) a separate mass assignment is filed for
each type of interest (record title, working or non- working interest) that is
assigned.
(j) The agency
shall not accept for filing, mortgages, deeds of trust, financing statements or
lien filings affecting leases. To the extent a legal foreclosure upon interests
in leases occurs under the terms of such agreements, assignments must be
prepared as set forth in this section and filed with the agency, which will
then be reviewed and approved in due course.
(k) The agency by approving an assignment
does not adjudicate the validity of any assignment as it may affect third
parties, nor estop the agency from challenging any assignment which is later
adjudicated by a court of competent jurisdiction to be invalid or
ineffectual.
3. Transfer
by Operation of Law.
(a) Death: if an
applicant or lessee dies, his/her rights shall be transferred to the heirs,
devisees, executor or administrator of the estate, as appropriate, upon the
filing of:
(i) a certified copy of the death
certificate together with other appropriate documentation to verify change of
ownership as required under the probate laws of the state of Utah (Section
75-1-101
et seq.);
(ii) a list containing
the serial number of each lease interest affected;
(iii) a statement that the transferee(s) is a
qualified interest owner;
(iv) the
required filing fee for each separate lease in which an interest is
transferred; and
(v) a bond rider
or replacement bond for any bond(s) previously furnished by the
decedent.
(b) Corporate
Merger: if a corporate merger affects any interest in a lease because of the
transfer of property of the dissolving corporation to the surviving corporation
by operation of law, no assignment of any affected lease is required. A
notification of the merger, together with a certified copy of the certificate
of merger issued by the Utah Department of Commerce, shall be furnished to the
agency, together with a list by serial number of all lease interests affected.
The required filing fee must be paid for each separate lease in which an
interest is transferred. A bond rider or replacement bond conditioned to cover
the obligations of all affected corporations will be required as a prerequisite
to recognition of the merger.
(c)
Corporate Name Change: if a change of name of a corporate lessee affects any
interest in a lease, the notice of name change shall be submitted in writing
with a certificate from the Utah Department of Commerce evidencing its
recognition of the name change accompanied by a list of lease serial numbers
affected by the name change. The required filing fee must be paid for each
separate lease in which an interest is transferred. A bond rider or replacement
bond, conditioned to cover the obligations of all affected corporations, is
required as a prerequisite to recognition of the name change.
Notes
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