Royalty In Suspense
Do You Have Suspended Royalties?
Imagine the responsibility and complexity of properly distributing millions of dollars in oil royalty payments to thousands of people on a routine basis. That’s a regular task of oil and gas companies. It’s no small feat, and its got to be done right. Further, imagine the consequences of paying the wrong people. That’s the last thing an oil and gas company wants to do. Think about it – the time and expense of undoing any mistakes is far costlier than getting it right the first time.
So, let’s introduce the phrase “suspensed funds”, also known as a suspense account, suspended royalty, or money in suspense. The phrase emanates from the simple idea that a particular interest should be “suspended” (i.e. held from payment) for some specific reason. Here are some common examples of those reasons: a W-9 IRS Tax withholding form that has not been signed and returned, a Division Order that has not been signed, a questionable mineral title, or an invalid mailing address.
Determining if You Have Royalties in Suspense
If you have an idea that you may have suspended funds held in your name, contact the Operator (the oil company) and ask for the Land Department. Give them your name and reason for your call. They should have no problem telling you if you have money in suspense and the reason why. Generally speaking, they should be able to tell you what it will take to remedy the situation and get the suspended funds released to you.
Millions of dollars sit in the coffers of America’s oil companies, some of which there is little knowledge of whose it is. However much of these suspended royalties are tagged to an individual, yet there’s some (sometimes minor) detail that hasn’t been attended which keeps the money from being distributed.
Escheatment – Unclaimed Royalties Fall into the State’s Hands
State statutes allow suspended royalty funds to be handed over to the state government after a prolonged period. In effect, the law allows oil companies to off load the responsibility of administration over these funds after a period of 3-10 years, depending on the state. At this point the oil company gives the state whatever records it has, and is relieved of the responsibility of administering these unclaimed royalty funds. The article “Unclaimed Oil and Gas Royalty” discusses how individuals can reclaim unclaimed royalties that are owed them from state governments.
- Oil & Gas 101: Oil and Gas Basics for the Mineral Owner - Article explaining the basics of oil and gas production written for mineral rights owners. Topics include drilling, production, pricing and marketing.
- Unclaimed Oil and Gas Royalty – Explanation of how to recover your unclaimed oil & gas mineral rights and royalties. Includes links to state unclaimed property websites.