Under Michigan common law, the surface owner of the land owns oil, gas and minerals in place beneath his or her land, and the minerals are part of the realty until they are severed. These mineral rights are often leased to oil companies for the production of oil and gas. The instrument used to lease mineral rights is an oil and gas lease.

An oil and gas lease is the core legal document of oil and gas development. Oil and gas leases are structured quite differently from ordinary real-property leases. Oil and gas leases are contracts between the property owner, who generally lacks the ability and expertise to explore and develop minerals, and an oil company, which has the resources and expertise required to develop the leased property. Oil and Gas leases contain many terms that may be negotiated for the property owner’s benefit and may not include important terms that are designed to protect the property owner.

As a property owner you should thoroughly read the oil and gas lease. If you are uncomfortable with or don’t understand lease terms it is wise to contact an attorney to help protect your interests. The following is an overview of oil and gas lease terms and negotiation tips regarding these provisions.

Granting Clause
This clause is found in the opening paragraph of the lease and outlines the purpose of the lease and describes the substances that can be explored and produced. To avoid any disputes the extraction method should be specified as borehole only. This eliminates mining techniques that have a potential to damage the surface property.

Surface Operations Use Permitted by the Lease
A standard oil and gas lease allows for an oil company the right to reasonable use of the surface land to locate, develop, and produce oil and gas from the land. This reasonable use generally includes drilling, installing pipelines, and road building. It is wise for the property owner to limit this use in the lease by requiring that wells cannot be established within a certain distance from homes, or certain farming operations on the property.

Most oil and gas leases also contain lease terms providing for compensating the owner for damage causes by operations. It is important to make sure that damage to crops, timber, and water resources are covered under a surface damage compensation term.

Duration of the Lease
Leases are divided into two periods. The primary period is a set amount of time (usually several years) that drilling operations must begin by or delay rentals must be paid. Generally a lease states that if drilling operations have not begin within one year the lease terminates unless a sum called the delay rental is paid to the property owner. If production has been established during the primary term the lease will continue into its secondary term and will continue as long as the substances covered by the lease continue to produce. To force early exploration property owners can sometimes negotiate a short primary term.

Royalty Terms
The standard royalty is 1/8, although some leases will have higher royalties such as 3/16 or 1/5. The lease often states that the landowner can be paid in kind; this means that the property owner may be paid in oil. This can be beneficial to the property owner if the market provisions. For this reason it makes financial sense to have the payment in kind term to be solely at the option of the property owner.

Pooling Provisions
Pooling is defined as bringing together small tracts of mineral interests for the drilling of single well, this is often done to comply with well spacing issues. In Michigan the Department of Natural Resources dictates the spacing of wells. In a pooling situation property owners’ compensation is based on the percentage of land they own in the entire drilling unit.

“Mother Hubbard” Clause
A “mother hubbard” clause or a “cover-all” clause is designed to protect the lessee against inaccuracies in the legal description by including all land owned by the lessor, even if some of the land has been accidentally omitted. These clauses should generally be removed from the lease agreement or limited in scope.

Assignment Clause
Most oil and gas leases contain a provision that permits both the lessor and the lessee to assign their rights and interests under the lease. Property owners should require notification of each assignment, and also specify that assignment will not release any prior lessee.

Force-Majeure Clause
Most oil and gas leases include a force-majeure clause to allow the lessee to preserve the lease when circumstances beyond its control prevent it from operating. It is to the benefit the property owner to limit this clause to truly catastrophic events and not equipment failure or other similar events.

Warranty Clause
Leases generally contain a provision requiring property owners to defend their interests in the leased premises should a dispute arise. To avoid litigation and limit their liability property owners should offer a limited or special warranty.

Conclusion
Negotiating an oil and gas lease requires legal knowledge and common sense. The information contained in this article describes some possible alternative clauses and negotiating techniques. This article is for information only and not a substitute for qualified legal advice from an attorney who understands your particular situation and needs.

Condominium homes are a great, low-maintenance choice for a primary residence, second home, or income property. According to the National Association of Relators condominium sales were up 23 percent in 2013. As the popularity of condominiums rises, it is important for perspective buyers to be aware of the unique aspects of condominium ownership.

In Michigan the Condominium Act (P.A. 59 of 1978, as amended, MCL 559.101 et seq.) regulates nearly all aspects of condominium development, ownership, and administration. The following is a brief overview of condominium ownership.

Condominium Ownership
Condominium co-owners have exclusive ownership of their unit and the right to use the common elements of the condominium development with the other co-owners. A condominium subdivision plan shows which portions of the development are common elements and which are private units. The condominium subdivision plan is part of the master deed; the master deed also provides the percentage ownership of each condominium unit (this is used as a basis for determine the payment of maintenance fees, assessments, and your voting percentage).

Bylaws
Condominium bylaws for the association and condominium development contain important provisions illustrating your rights and obligations as a co-owner. These provisions often include:

• Monthly maintenance fees, assessments, and other monetary obligations;
• Right to modify or make repairs to your unit;
• Pet Policies; and,
• Renting and Subletting Polices.

It is also important to note that bylaws may be amended by the association, and only changes the materially effect the co-owners require a vote of all co-owners. It is important for perspective purchasers to read and fully understand the bylaws

Purchase Agreement
A purchaser may withdraw from a signed purchase agreement without cause or penalty within nine-business day as long as the property has not been conveyed to the purchaser. The nine-business day window starts the day the purchaser receives all the documents that the developer is required to provide. These documents include:

• The recorded master deed;
• Copy of purchase agreement and escrow agreement;
• The condominium buyer’s handbook; and,
• A disclosure statement that includes: the developers previous experience with condominium projects, any warranties taken by the developer, financing arrangements to complete construction (for new developments), and an itemized list of the association’s budget.

The developer must deposit payments under a purchase agreement in an escrow account with an escrow agent. Before signing a purchase agreement it is always prudent to seek professional assistance.

Association of Co-Owners
The association is responsible for governing the development and maintaining the common elements. General common elements usually include hallways, lobbies, lawns, gyms, and utility systems. Many associations hire property management companies to provide services to the development. The elected association members often called the condominium board usually hold regular meetings to administrate the operation of the development. Because a condominium association is a private, not a public entity, the meetings are not subject to the Open Meetings Act. But associations are required to keep books and records detailing the operations and the expenditures of the development.

Remedies Available
Developers who offer or sell a condominium unit in violation of Condominium Act are liable to the purchaser for damages.

In most cases condo developers must also be a licensed residential builder under the Occupational Code (PA 299 of 1980, as amended, MCL 339.101 et seq.), a complaint for violation of the Michigan Occupational Code must be made within 18 months after completion, occupancy, or purchase of a residential structure.

The Michigan Consumer Protection Act (P.A. 331 of 1976, as amended, MCL 445.901 et seq.) prohibits certain methods, acts, practices, and provides for investigations and penalties for developers and sellers of condominiums.

Buying a condominium is a large decision and it is important to seek advice to ensure you understand exactly what you are purchasing.

In every state, there are two distinct court systems: state courts and federal courts. State courts handle a majority of cases. The following is a brief overview of the State of Michigan’s court system.

Article VI, Section 1 of the Michigan Constitution, introduced the Michigan judicial system’s concept of “One Court of Justice,” in 1963. Under this concept the judicial system operates as an integrated unit consisting of one supreme court, once court of appeals, one trial court (circuit court), and several trial courts of limited jurisdiction.

SUPREME COURT
The Supreme Court is the highest court in the state, and hears cases from the Court of Appeals. For a case to be heard an application for “leave to appeal” must be filed with the court. If the Supreme Court grants the application, the case will be heard; if not, the decision made by the lower court remains unchanged.

The Supreme Court consists of seven justices who are elected to serve eight-year terms. Sessions of the Supreme Court are held in Lansing. At these sessions the justices hear oral arguments based on written briefs that have been submitted in advance. After the oral argument has been heard the justices will write a majority opinion for each case, this means that the decision has received the approval from a majority of the justices. If a justice agrees with the outcome of the decision but differs on the reason for the opinion he may write a concurring opinion. If a justice disagrees with the majority decision entirely he may write a dissenting opinion.

http://courts.mi.gov/courts/michigansupremecourt/Pages/default.aspx

COURT OF APPEALS
The Court of Appeals is an intermediate appellate court between the Supreme Court and the Circuit Court. Judges for the Court of Appeals are elected to six-year terms in non-partisan elections from four districts in the State. The Court of Appeals hears cases in Lansing, Detroit, Grand Rapids, and Marquette. The decisions of the Court of Appeals are final unless they are reviewed by the Supreme Court.

http://courts.mi.gov/courts/coa/pages/default.aspx

TRIAL COURT (CIRCUIT COURT)
The Circuit Court has jurisdiction over all actions unless state law provides otherwise. Generally, the Circuit Court has jurisdiction in: all Civil Cases over $25,000; criminal cases that involve a felony or serious misdemeanor; and family law cases such as divorce, parental rights, and adoptions. Michigan is divided into circuits along county lines. In some cases a circuit may encompass more than one county.

Our local circuit courts include:

Kent County – 17^th Circuit Court – Grand Rapids – https://www.accesskent.com/Courts/17thcc/

Ottawa County – 20^th Circuit Court – Grand Haven https://www.miottawa.org/Courts/20thcircuit/

Ionia County – 8^th Circuit Court – Ionia – http://www.ioniacounty.org/circuit-court/

Montcalm County – 8^th Circuit Court – Stanton – http://www.montcalm.org/8thcircuit.asp

Newaygo County – 27^th Circuit Court – White Cloud – http://www.countyofnewaygo.com/CircuitCourt.aspx

Allegan County – 48^th Circuit Court – Allegan – http://www.allegancounty.org/government/cc/

COURTS OF LIMITED JURISDICTION
Court of Claims
The Court of Claimshas limited jurisdiction to hear claims against the state of Michigan. Claims (MCL 600.6419) may be filed in any appellate court in the state.  Senate Bill 652 (Public Act 164) codified in MCL 600.101 et seq. See MCL 600.6401 et seq. http://courts.mi.gov/courts/coc/pages/default.aspx

Probate Court
The Probate Court’s primary function is overseeing the probating of wills and the administration of estates and trusts of deceased persons and conservatorships for persons with mental illness or developmental disability. Most counties in the state have their own probate court.

District Court
District Court’s have exclusive jurisdiction of all civil litigation up to $25,000 and also preside over garnishments, eviction proceedings, land contracts, forfeitures and other proceedings. In criminal cases, the district court conducts preliminary examinations in felony cases and handles all misdemeanors where punishment does not exceed one year. District courts also handle civil infractions and small claims court.

Our local district courts include:

Kent County
– 61^st District Court – Grand Rapids – http://www.grcourt.org
– 62A District Court – Wyoming – http://www.ci.wyoming.mi.us/DistrictCourt/d-court.asp
– 62B District Court – Kentwood – http://www.ci.kentwood.mi.us/court
– 63^rd District Court – Rockford & Grand Rapids https://www.accesskent.com/Courts/63dc/default.htm

Ottawa County – 58^th District Court – Hudsonville – http://www.miottawa.org/Courts/58thdistrict/

Ionia County – 64A District Court – Ionia – http://www.ioniacounty.org/district-court/

Montcalm County – 64B District Court – Stanton – http://www.montcalm.org/64bdistrict.asp

Newaygo County – 78^th District – White Cloud – http://www.countyofnewaygo.com/DistrictCourt.aspx

Allegan County – 57^th District Court – Allegan – http://www.allegancounty.org/government/dc/

Natural Resources – Water – Riparian Rights
Michigan has always recognized a landowner’s right to reasonably use surface waters immediately adjacent to the landowner’s property. This right is known as riparian rights. Landowners bordering a waterway are considered riparians. Michigan defines riparian law as that is bounded by, or includes therein, a natural watercourse. This definition, particularly the phrase “natural watercourse,” excludes artificial watercourses (canals, drainage and irrigation ditches, flumes, and other man-made waterways) from riparian rights.

A riparian (defined above) is a person who is in possession of riparian real estate, or in some instances, a non-riparian may obtain riparian rights through an easement or license. Michigan law recognizes the following riparian property rights:

•The right to exclusive possession and use of the shore;
•Ownership of the bottomlands of the adjacent waterbody to the middle of the lake;
•Access to navigable waters;
•The right to install a dock out to navigable waters;
•The right to anchor a boat to owner’s bottomland; and,
•The right to use the water for domestic purposes.

Riparian law distinguishes between “natural” uses and “artificial” uses. Natural uses include those that meet the domestic needs of the riparian landowner, including: drinking, washing, and watering gardens or a small livestock herd.

Artificial uses are those which increase comfort or economic benefit that are not essential to existence. Use of water for artificial purposes by riparians must meet two requirements: (1) the use must be only for the benefit of the riparian land; and, (2) the use must be reasonable in relation to the rights of other riparian users. This is known as the reasonable use doctrine.

Riparians with land bordering the Great Lakes do not have all of the above rights. The rights of Great Lakes riparians differs in the following ways. Firstly, the bottomland of the Great Lakes is owned by the state, and held in trust for the public. Secondly, Great Lakes Riparians do not have exclusive use of the entire bank and shore. This is a contentious issue, in Glass v Goeckel, 473 Mich 667, the Michigan Supreme Court decided that there is a servitude for the benefit of the public that extends from the water’s edge of the Great Lakes to the ordinary high water mark (“OHWM”). In this thin strip of land the public is allowed to walk without permission from the riparian.

The OHWM is difficult to ascertain, the Michigan Supreme Court Defined it as:
“[T]he point on the bank or shore up to which the presence and action of the water is so continuous as to leave a distinct mark either by erosion, destruction of terrestrial vegetation, or other easily recognized characteristic. And where the bank or shore at any particular place is of such a character that is impossible or difficult to ascertain where the point of ordinary high-water mark is, recourse may be had to other places on the bank or shore of the same stream or lake to determine whether a given stage of water is above or below ordinary high-water mark.” Glass v Goeckel, at 691.

The rights of riparians whose lands border navigable waters are limited to the extent that public rights exist in such waters. The public right to navigate a waterway clearly includes the right to use it for transportation and in most cases recreational use. For example: riparians right to build a dock or wharf out can be limited by the public’s use of the waterway; if a riparian’s dock obstructs navigation, the dock can be removed.

Riparians are also subject to reasonable governmental regulations. These regulations may include: (1) what type of boats are permitted on a lake; (2) the minimum frontage required for lake-access real estate; or (3) how many boats may be launched or stored at a single property.

Lakefront property owners should contact their attorney for any questions they may have.

In Michigan, the no-fault act MCL 500.3101 et. seq., creates a system of receiving insurance benefits without requiring proof of fault in an accident. This system benefits insurance companies and individuals in the aggregate, but is detrimental to the faultless individual. Under fault insurance, an injured party may sue to recover their losses and injuries; or, the injured party may choose to use their own insurance to cover losses and injuries (irrespective of severity).

No Fault, acts as a threshold keeping “minor” suits out of litigation. The No-Fault Act prevents personal injury suits unless the loss or injury exceeds the threshold. And to succeed on a suit, the plaintiff must prove a specific level of loss due to the operation of a motor vehicle (MCL 500.3135). Otherwise, the plaintiff is required to seek recovery from his or her own insurance. For example: Where a scar may not be considered a serious injury (Petaja v. Guck, 178 Mich. App. 577), but that muscle damage or other soft tissue injuries might be serious (DiFranco v. Pickard, 427 Mich. 32). To sue, fault of the defendant must be proven.

Insurance
In Michigan to acquire an automobile registration, $20,000 per-person, $40,000 per accident, and $10,000 for property damage insurance is a prerequisite (MCL 500.3009, 500.3131). And unless there is more information, all claims of accident are filed through ones own insurance. A third-party has a way through the No-Fault Act if there has been a death, permanent and serious disfigurement, or a serious impairment of bodily function (and then there must be an actual cause of action); or, if there is a lawfully parked car.

An individual may recover only once, and generally may not sue for benefits all ready received. Further, social security and worker’s compensation may be calculated by the insurance company to avoid over paying on a claim.

Attorney Fees Recoverable when a no-fault insurance company refuses to pay benefits or delays in paying benefits, attorney fees may be recoverable. This acts as a motivator to encourage only legitimate individual claims against insurance companies and encourages insurance companies not to drag its feet.

Motorcycles Exempt
Motorcycles, under MCL 500.3101 having only two wheels, are not required to purchase no-fault insurance. Personal liability insurance on the other hand, for those motorcycles using highways, is required (off road vehicles exempt). Additionally, out-of-state cars, parked vehicles, and farm tractors are also excluded.

People injured in Michigan car accidents have less than three-years to contact their attorney before their claim will be barred. Those Michigan residents driving out of state must rely on out of state law, unless they are “lucky” enough to hit or get hit, by another Michigan driver.