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LTE – Lee Boland – 10-15-2014

Frac-sand mining companies and their realtors are busy acquiring mine site leases all over West Central Wisconsin. They typically pay a holding premium of several thousand dollars for entire farms.

 They agree to pay one dollar or more per ton of extracted sand if mining actually occurs. They even offer to pay a small sum for legal advice—and the landowner can pocket that money if he/she decides not to hire an attorney. They suggest that immense wealth will accrue from the extraction and they promise the land will be reclaimed well enough to produce good, usable farmland, replete with sparkling ponds when the mining is finished.

For a few landowners some of these signing promises actually happen. Not always. Not even often. It’s just as likely that sand mining may never occur and no royalties will ever be paid. Either way the landowner has a very real problem; He/she most certainly has what amounts to a long term lien against the property. Such leases must be disclosed to potential buyers of the property and to any lending institution financing it. These defacto liens can last forty years or longer. Not many people buy such encumbered property.

There has recently been a spate of such lease signing. Some landowners reportedly regret having signed but they feel stuck because the leases contain nondisclosure clauses and provisions for “remedial action.” They are not permitted to talk about lease terms and they have almost no right to terminate them without threat of being sued. So, what to do? Get legal advice. The leases are unbalanced in favor of the mining companies. If too much is unrealistically promised, that may be considered material misrepresentation. If coercion tactics were used to influence signing, that’s highly questionable. It’s worth checking out.

Lee Boland
Elk Mound, WI