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Simple English definitions for legal terms
top lease
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A quick definition of top lease:
A lease is a contract where someone who owns property lets someone else use it in exchange for money. The lease can be for a short or long time, and the person using the property usually has to follow certain rules. There are different types of leases, like ones for businesses or for mining. A top lease is when someone leases property that already has a lease on it, but the new lease only starts when the old one ends.A more thorough explanation:
Definition: A top lease is a lease granted on property that is already subject to an oil-and-gas lease. The rights granted by a top lease are valid only if the existing lease ends.
Example: Company A has an oil-and-gas lease on a piece of land. Company B wants to lease the same land for oil and gas exploration, so they enter into a top lease with the landowner. However, the top lease will only become effective if Company A's lease ends.
Explanation: A top lease is a type of lease that is granted on property that is already subject to an existing lease. In the example, Company B wants to lease the land for oil and gas exploration, but Company A already has a lease on the same land. The landowner can grant a top lease to Company B, but the top lease will only become effective if Company A's lease ends. This ensures that the rights granted by the top lease are valid and do not interfere with the existing lease.