“2 Sign or Not 2 Sign:” Which Statute of Frauds Governs Oil & Gas Leases?

by K&L Gates LLP

In a recent decision, the Pennsylvania Superior Court resolved an open question of state law regarding which one of two alternative statutes of frauds apply to oil and gas leases, in the process making clear that for an oil and gas lease, only the grantor of the interest must sign.

In Nolt v. T.S. Calkins & Assocs., et al., ---A.3d---, No. 1214 MDA 2013, 2014 PA Super 141 (Pa. Super. Ct. July 7, 2014), the court concluded that the “general” Pennsylvania statute of frauds—rather than the statute of frauds in the Pennsylvania Landlord and Tenant Act—applies to oil and gas leases, such that their validity cannot be challenged solely on the basis that the lessee’s signature is missing.

The “general” statute of frauds in Pennsylvania applies to conveyances of interests in real property and requires that instrument be “signed by the party” granting the interest (i.e., by the grantor or, in the case of an oil and gas lease, the lessor). 33 P.S. § 1.

On the other hand, the Pennsylvania Landlord and Tenant Act requires that a lease of “real property” for a term of three years or more must be signed by “the parties making or creating the same” (i.e., the lessor and the lessee must sign), or the lease is one at-will only (and, thus, potentially terminable by either party at any time). 68 Pa.C.S. § 250.202.

Although oil and gas leases are universally understood to create an arrangement far different from that of a typical landlord and tenant, the commentary to the Landlord Tenant Act suggests that its version of the statute of frauds (as opposed the “general” statute) applies to leases of any “interests in land,” including “the right to extract oil, coal, stone, iron, ore, etc.”

In Nolt, the lessors invoked the statute of frauds in the Landlord and Tenant Act to challenge the validity of their oil and gas lease. They claimed that, although they signed the oil and gas lease, the statute of frauds in the Landlord Tenant Act requires that both the lessor and lessee sign (the lessees had not signed the lease at issue, as is typical of many oil and gas leases.).

The Superior Court rejected the lessors’ claim and concluded that the “general” statute of frauds applies to oil and gas leases. The court reasoned that “an oil and gas lease, despite the use of the term ‘lease,’ actually involves the conveyance of property rights[.]” The Court noted that the law in Pennsylvania “unequivocally establish[es] that rights to oil and gas are to be treated as transfers of estates in property and not leaseholds.” Because the lessor signed the instrument granting the oil and gas rights to the lessee, the lease satisfied the applicable statute of frauds despite the fact that the lessee had not signed it.

At this point, the Superior Court’s decision forecloses the use of the statute of frauds as a basis for challenging the validity of an oil and gas lease as long as the lessor signed it. If the lessors seek appeal of the decision to the Pennsylvania Supreme Court, however, the industry will want to keep careful watch and consider friend of the court involvement on the proceedings, as a contrary result could call into question many thousands of leases in Pennsylvania that contain only the signature of the lessor.

Written by:

K&L Gates LLP

K&L Gates LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.