Lease Maintained by Delay Rental Payments
In Northup Properties, Inc. v. Chesapeake Appalachia, LLC (Case No. 08-5718), the United States Court of Appeals for the Sixth Circuit recently held that delay rental payments maintained an oil and gas lease despite the fact that the lease property went undeveloped for nearly forty years (applying Kentucky law). Notably, the court found that the lease was unusual in that it did not contain the typical habendum clause (e.g., it did not use the "as long as" or "so long as" language commonly found in lease term provisions).
[Note that the court did not address the impact of the producer's failure to timely pay the delay rental at one point, however.]
