35-37 Oil and Gas Owner's Sales Liens - North Dakota Statutes

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CHAPTER 35-37OIL AND GAS OWNER'S SALES LIENS35-37-01. Definitions. As used in this chapter:1."First purchaser" means the first person who purchases oil or gas from an interest
owner at or after the time the oil or gas is severed.2."Interest owner" means a person owning an entire or fractional interest of any kind or
nature in the oil or gas at the time it is severed, or a person who has a right, either
express or implied, to receive a monetary payment determined by the value of the oil
or gas severed.3."Operator" means a person engaged in the severance of oil or gas.4."Purchaser" means a person who purchases oil or gas from a first purchaser.5."Severed" means the taking, extraction, or production from the land of oil or gas in
any manner.35-37-02. Extent of lien - Dispute as to amount due - Notice - Buyer in ordinarycourse of business.1.To secure payment from the sale of oil or gas, an interest owner, subject to section
35-37-04, has a continuing security interest in and a lien on the oil or gas severed, or
the proceeds of sale if the oil or gas has been sold, to the extent of the interest
owner's interest until the purchase price has been paid to the interest owner.2.In the event of a bona fide dispute as to the amount due the interest owner, the
security interest and the lien do not accrue if the person holding the proceeds upon
which a lien is claimed tenders to the interest owner the amount which that person in
good faith believes to be due and payable.3.A security interest or lien claimed pursuant to this chapter is not effective against an
interest owner, operator, first purchaser, or purchaser until a copy of the notice of
lien required to be filed under section 35-37-04 has been delivered to the interest
owner, operator, first purchaser, or purchaser by registered mail.4.Notwithstanding any other provision in this chapter to the contrary, a person who
pays the purchase price for oil or gas severed from a well to the interest owner with
whom that person has a contract regarding purchases from the well or to one who is
authorized to receive payment on behalf of or for the interest owner is deemed a
buyer in the ordinary course of business and takes the oil or gas free of the security
interest and lien granted to the interest owner by this chapter, and the first purchaser
or purchaser who makes the payment and all its property is free from and not
subject to the security interest or lien granted to the interest owner by this chapter.35-37-03. Validity of lien. The validity of the security interest and lien granted to aninterest owner under this chapter is not dependent upon possession of the oil or gas by an
interest owner or operator and a security interest or lien does not become or may not be deemed
to be void or expired by reason of a change or transfer of the actual or constructive possession or
title of the oil or gas from the interest owner or an operator to a first purchaser or purchaser.35-37-04. Perfection of lien - Verified notice - Effect of instruments - Effective dateof lien.1.If the proceeds for oil or gas which are required to be paid are not paid to the interest
owner when due, the interest owner may perfect the security interest and lien byPage No. 1filing a form UCC-1A in the central indexing system and recording the lien in the real
estate records in the office of the county recorder of the county in which the well is
located. If the oil and gas owner's lien is not filed within ninety days from the date of
production, the security interest is not perfected and does not give the interest owner
priority over a perfected security interest in the same oil, gas, or proceeds of the oil
or gas.2.All instruments that are presented to a county recorder for filing in accordance with
subsection 1 are effective as financing statements even though the signature of the
debtor may not appear on the lien.Liens must be filed in the central indexingsystem and recorded in the real estate records of the county.Liens may beterminated in the same manner as financing statements.3.Upon perfection by filing, the security interest and lien of the interest owner takes
priority over the rights of all persons whose rights or claims arise or attach thereafter
to the oil or gas unpaid for, or the proceeds of oil or gas if the oil or gas has been
sold, including those that arise or attach between the time the security interest and
lien attaches and the time of filing. The security interest and lien created pursuant to
this chapter do not have priority over the security interest and lien rights previously
created and perfected or an operating agreement or other voluntary agreement for
the development and operation of the property.35-37-05.Rights of first purchasers.Neither this chapter nor the filing of a lienpermitted under this chapter affects the time at which legal title to the oil and gas may pass from
an interest owner or operator to a first purchaser or the ownership of the oil and gas before
severed as reflected by the records affecting real property or the right of a first purchaser to take
or receive oil and gas under the terms of a division order or similar agreement for the sale and
purchase of oil or gas. Notwithstanding this chapter, a first purchaser or purchaser is free to
transport products out of the state and to sell the products without permission or release of lien.35-37-06. Expiration of lien - Enforcement - Joinder and consolidation - Costs -Personal actions - Other rights and remedies.1.The security interest and lien granted to an interest owner follow the oil and gas
unpaid for or the proceeds of the oil or gas if the oil or gas has been sold. The
security interest and lien expire one year after the date of the filing of the notice of
lien unless proper action to enforce the lien is commenced within such time in the
district court of the county in which the well is located, or wherever the oil or gas
unpaid for or the proceeds of oil or gas sold may be found.Persons claimingsecurity interests and liens with respect to the oil or gas from the same well may join
in the same action, and where separate actions are commenced the court may
consolidate them. The court may allow as part of the costs of the action moneys
paid for filing and recording instruments and reasonable attorney's fees for the
prevailing party.If an action is commenced after the filing of a lien, the lien isconsidered a lien upon the oil or gas severed, or the proceeds of sale if the oil or gas
has been sold, to the extent of the interest of the claimant, for payment of the
amount due the claimant and the security interest and lien of the claimant may be
enforced in the manner provided by law.2.This chapter does not impair or affect the right of a person to whom a debt may be
due to maintain a personal action to recover the debt against the person liable for
payment of the debt.3.This chapter does not impair or affect the rights, priorities, or remedies of a person
under the Uniform Commercial Code and this chapter is cumulative to and not a
limitation on or a substitution for any rights or remedies otherwise provided by law to
a creditor against the creditor's debtor.Page No. 2Document Outlinechapter 35-37 oil and gas owner's sales liens