When is a lease not a lease? When it is a freehold oil or gas lease – Canada’s highest court has ruled that a freehold lease is a profit a prendre – a right to take from the property of another.
One consequence of the profit a prendre designation is that freehold owner-lessors do not have the same legal protection accorded to other owners who lease their property. For example, landlords whose tenants fail to pay the rent prescribed in their lease agreement have the right of distrain – to seize the tenants property to satisfy unpaid debt. Freehold owner-lessors have no such right. Similarly, owners who lease their surface rights to oil companies have recourse to surface rights boards with respect to compensation and, in Alberta, to the Alberta Energy Regulator for surface lease enforcement. There are no subsurface rights boards in Western Canada and oil and gas regulators will not enforce freehold oil or gas leases.
A freehold oil and gas lease is an exceedingly complex legal document. If your mineral rights are currently leased, FHOA can help you to understand the complex terms and conditions in your lease to insure that your oil company-lessee is complying with its obligations. If you are approached to lease, FHOA can help you to understand what changes to the lease your should attempt to negotiate to more adequately protect your interests. While FHOA is not a substitute for professional advice, you will be better educated should you seek additional assistance.