By Charlene D. Moody,
Assistant Director, Regulatory Affairs
Effective January 1, 2015, sellers must provide a new Mineral and Oil and Gas Mandatory Disclosure Statement (MOGMDS) to buyers prior to making an offer.
The form for the Statement is being developed by the Real Estate Commission and will be available on the Commission Web site, www.ncrec.gov., in December to allow sellers time to complete the disclosure for any properties on the market as of January 1. It will be separate from and in addition to the Residential Property and Owners’ Association Statement (RPOADS).
The new requirement results from the legislature’s amendment of the Residential Property Disclosure Act (North Carolina General Statutes Chapter 47E), which previoiusly required that oil and gas disclosures be included in, not separate from, contracts for the sale of any real property subject to the Act. In the amended Act, there is no exemption from the MOGMDS for new construction, properties under a lease/purchase agreement, and properties for which the parties have agreed that RPOADS is not required. (These exemptions still apply to the RPOADS.
The amendment adds the requirement of the disclosure of the severance of mineral rights to the severance of oil and gas rights. Minerals are not specifically defined, but other North Carolina statutes provide some guidance: under the NC Mining Act of 1974 (NCGS §74-49(6)), “mineral” is defined as soil, clay, coal, stone, gravel, sand, phosphate, rock, metallic ore, and any other solid material or substance of commercial value found in natural deposits on or in the earth.
Sellers are allowed the option to mark No Representation in the Disclosure Statement as to whether mineral and oil and gas rights were severed from the property by a previous owner. Sellers must mark “yes” or “no” as to their own previous severance of rights or their intended severance prior to transfer of title to the buyer.
The Commission is proceeding with temporary rulemaking to have appropriate rules and the Statement form in place by January 1. Information about the rulemaking process is available on the Commission Web site.
This article came from the October 2014-Vol45-2 edition of the bulletin.