Saturday, October 24, 2009

Gas Leases & Real Estate

My neighbor down the road is a farmer. Like most of the farmers I know she is down-to-earth, can fix just about anything, and practical. During a discussion the other day about landowner's rights to lease, she raised two good points: that a landowner could be held liable for damages that might occur to a neighbor's water should contamination from drilling occur, and the difficulty of selling leased property.

Last spring I interviewed a few realtors in gas-drilling areas, asking them if they'd experienced any trouble selling properties. Dave Knudsen, a Sullivan County realtor with the Catskill Buyer Agency, said that during the summer of 2008 he fielded two calls a week from investors looking for "100 to 200 leaseable acres".

"They were asking for land near the pipeline," Dave said. But his other clients, downstaters looking for a quiet country home, had other priorities. Their first question was: are the neighbors leased? If so, they didn't want to look at the land.

Dave isn't the only one. A Finger Lakes area realtor said she had more than the usual trouble matching prospective home-buyers with their country dream house. One 32-acre parcel near Ithaca was rejected twice because of the lease. The second buyer even had a house package worked up for the land, but the bank denied him a loan because of an existing gas lease on the property. The ultimate buyer figured he could build a house before the gas company moved in to drill a well.

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