• Failure to Properly Record a Memorandum of Oil & Gas Lease Has Potentially Dire Consequences
  • September 14, 2010 | Authors: Marcia Lucidi Grimes; Matthew I. Moses; Peter H. Schnore
  • Law Firm: Babst Calland - Pittsburgh Office
  • Under Pennsylvania law, failure to record a lease, including an oil and gas lease, or a memorandum of the lease in compliance with statutory formalities, can expose a lessee to a superior claim from a subsequent interest holder such as a purchaser, lessee, mortgagee or easement holder. Because granting an oil and gas lease affects the rights of a subsequent interest holder, the lease (or a memorandum) must be on record to protect the lessee against the claim of a party that obtains its interest in good faith. Lesnick v. Chartiers Natural Gas Co., 889 A.2d 1282 (Pa. Super. 2005). If the lease or a memorandum thereof is recorded in accordance with Pennsylvania’s recording statutes, it puts third parties on constructive notice of the lessee’s interest in the leased property, and those rights will be recognized as superior to those of a subsequent interest holder.