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Assignment of Lease in Violation of Lease Terms Held to Be Void

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

In Harding v. Viking Int’l Resources, Case No. 12 OT 259 (C.P.2013), the Washington County Court of Common Pleas ruled that a violation of a provision prohibiting assignment contained within an oil and gas lease rendered any purported assignments void, absent the requisite consent of the Lessor.  However, the Court went on to hold the underlying leases were not terminated by virtue of the improper assignment, and thus remained binding on the Lessor. 

The consent to assignment provision in the oil and gas lease at issue provided:  “[t]he rights of the Lessor may be assigned in whole or part as shall be binding upon the heirs, executors and assigns.  The rights and responsibilities of the Lessee may not be assigned without the mutual agreement of the parties in writing.”

Slight variations in the facts or contractual language may lead to a different result.  It is anticipated assignability issues will be the subject of additional disputes and analysis by Ohio courts. 

Any parties who have or intend to assign their interests in oil and gas leases should carefully review the terms of the leases at issue to ensure compliance prior to assignment.

If you have any questions concerning this client alert, please contact Attorney Gregory W. Watts gwatts@kwgd.com at 330-497-0700.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

 
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