Title Defect Adjustments Clause Samples
The Title Defect Adjustments clause outlines the procedures for addressing and resolving issues related to defects in the title of a property or asset being transferred. Typically, this clause specifies how parties should notify each other of discovered title defects, the timeframe for making such notifications, and the methods for curing or compensating for these defects, such as price adjustments or corrective actions. Its core practical function is to ensure that both parties have a clear process for handling title issues, thereby reducing uncertainty and allocating risk associated with potential defects in ownership or encumbrances.
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) below in respect of any individual Title Defect unless the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller Parties.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five (45) days after the Execution Date. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that do not meet the requirements set forth in Section 5.02(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property b...
Title Defect Adjustments. (a) No adjustment to the Purchase Price for Title Defects shall be made unless and until, and only to the extent that the individual value of each Title Defect exceeds $25,000.00 or the aggregate value of all Title Defects exceeds one percent (1%) of the Purchase Price.
(b) Buyer shall give Seller written notice of Title Defects ten (10) days prior to the Closing Date. Such notice shall be in writing and shall include (i) a description of the Title Defect, (ii) the Allocated Value of the Well affected by the Title Defect and (iii) the amount by which Buyer believes the Allocated Value of such Well has been reduced because of such Title Defect. Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice by Buyer and all Title Defects that do not meet the thresholds for an adjustment to the Purchase Price set forth in Section 5.2(a).
(c) Subject to the limitation contained in Section 5.2(a), a Well affected by a Title Defect and the Leases comprising the production unit or proration unit for the Well shall be excluded from the Interests to be purchased by Buyer hereunder and the Purchase Price shall be reduced in accordance with Section 2.2 by an amount equal to the Allocated Value of such Well unless prior to closing, (i) the Title Defect has been removed, (ii) Buyer
Title Defect Adjustments. Title Defect Adjustments shall be determined as follows: iIf, because of a Title Defect, title to one or more Title Defect Properties fails completely with the effect that Seller has no ownership interest in the relevant Asset, the adjustment to the Purchase Price attributable to such Title Defect shall be the Allocated Value of the affected Assets. iiIf the Title Defect consists of a lien, encumbrance, or other charge upon the Title Defect Property which is undisputed and liquidated in amount, the adjustment to the Purchase Price attributable to such Title Defect shall be the amount necessary to pay the obligee to remove such Title Defect, not to exceed the Allocated Value of such Asset. iiiIf Seller’s actual net revenue interest in all or a portion of the Assets is less than eighty percent (80%) after giving effect to the Conveyance of ORRI, the adjustment to the Purchase Price attributable to such Title Defect shall be an amount equal to (A) the ratio of (x) the difference obtained by subtracting the actual net revenue interest for such Assets from eighty percent (80%), to (y) eighty percent (80%), (B) multiplied by the Allocated Value of such Asset.
Title Defect Adjustments. (a) A Title Defect shall not be considered for adjustment unless such Title Defect results, in Buyer's good faith and reasonable calculation, in a reduction in the Allocated Value of a Leasehold Interest in excess of $25,000.00. "Allocated Value" of a Leasehold Interest, as used in this Agreement, means the value allocated to each Leasehold Interest as set forth in EXHIBIT A-II hereto.
Title Defect Adjustments. Upon timely delivery of a notice of a Title Defect under Section 5.9(a), Purchaser and the Company will in good faith negotiate the validity of the Claim and the amount of any adjustment to the Base Consideration using the following criteria:
(i) If the requested adjustment is based on the Company or the Subsidiary owning an NRI for a well, Unit or Lease less than that shown in Schedule 1.1, and the Aggregate Defect Threshold has been met (after including the requested adjustment), then a downward adjustment shall be calculated by multiplying the Allocated Value set forth for such well, Unit, or Lease on Schedule 1.1 by a fraction (1) the numerator of which is an amount equal to the NRI shown on Schedule 1.1 for such well, Unit, or Lease less the decimal share to which the Company or the Subsidiary would be entitled as a result of its ownership interest in such well, Unit, or Lease which is unaffected by such Title Defect, and (2) the denominator of which is the NRI shown for such well, Unit, or Lease on Schedule 1.1. Any downward adjustments requested by Purchaser may be offset by upward adjustments if it is determined that the Company's or the Subsidiary's NRI for any other well, Unit, or Lease shown on Schedule 1.1 is greater than that shown on Schedule 1.1. The value of an upward adjustment will be determined based on the Allocated Value for such well, Unit, or Lease;
(ii) If the requested adjustment is based on the Company or the Subsidiary owning a WI that is larger than the WI shown on Schedule 1.1, but without a proportionate increase in the Company's or the Subsidiary's NRI, and the Aggregate Defect Threshold has been met (after including the requested adjustment), then the adjustment is calculated as the positive difference (if any) obtained by subtracting (A) a recalculated Allocated Value for such well, Unit, or Lease using the same production rates, pricing, costs, tax forecasts, and discount factors, as shown on Schedule 1.1, used to calculate the original Allocated Value for such well, Unit, or Lease adjusted to account for the diminution in the net present value of the future cash flows that results from the higher expense-bearing interest, from (B) the Allocated Value for such well, Unit, or Lease set forth on Schedule 1.1;
(iii) If the requested adjustment is based on a Lien or other monetary charge upon a well, Unit, or Lease or a liability to otherwise cure a Title Defect related to a well, Unit, or Lease that the Parties agree is liqui...
Title Defect Adjustments. The aggregate of all reductions to the Purchase Price for Title Defects asserted by Buyer in good faith, and agreed to by Seller, pursuant to Article V shall not exceed ten percent (10%) of the Purchase Price.
Title Defect Adjustments. 9 5.3. CASUALTY LOSS................................................. 9 5.4. CONSENTS..................................................... 10
Title Defect Adjustments. Upon receipt of the Title Defect Notice:
Title Defect Adjustments. 31 Section 6.02 Environmental Defect Adjustments........................................................35 Section 6.03