What is the Habendum Clause?

A Habendum clause includes property rights, interests, and ownership elements for one party in a contract. Property papers frequently incorporate basic legal terminology. Used in real estate transfers, leases, and deeds, particularly in the oil and gas business, it is familiar to buyers and sellers.

Understanding Habendum Clause

What a haberdum clause says depends on the contract. Habendum clauses in real estate contracts refer to property ownership transfers and limitations. Sometimes termed the “to have and to hold clause,” the habendum clause begins with “to have and to hold.”

The habendum clause determines oil and gas leases’ primary and secondary terms. The habendum clause in oil and gas leases focuses on the “and so long after that” component that extends the lease if criteria are satisfied. Oil and gas companies call the habendum clause the “term clause.”

Habendum Clauses in Property

Habendum provisions in real estate leases outline the rights and interests of the lessee.

A habendum clause transfers property ownership and any limitations for outright real estate transactions. Habendum clauses usually allow property transfers without limits. The new owner has absolute possession of the property after meeting their terms (typically full payment) and can sell or gift it to an heir.

Habendum clauses transmit “fee simple absolute” property titles—a simple also absolute feeders full property ownership, subject to government rules.

They call the habendum clause the “to have and to hold clause” since it starts with “to have and to hold.”

Some real estate transfers include habendum clause limitations. For instance, a timeshare contract specifies the ownership portion and other conditions.

Sometimes, a countdown transfers ownership of property or land to another body. Some treaty areas enable development but limit ownership transfers to 100 years. This makes any property on those lands appealing in the first half of the lease, but it decreases in value as ownership approaches the deadline. After the buyer dies, some leases return the property to the original owner.

Habendum and Oil/Gas Leases

The oil and gas industry clause defines the period where a corporation retains mineral rights to the property but is not required to explore. Depending on its validity, a field’s primary term might range from one to 10 years. The lease terminates without production after the primary term. The second term begins and continues as long as the leased land produces oil or gas.

The habendum provision permits the lessor to resell the lease if the lessee doesn’t start production within the main period but protects the lessee if they invest in the land and produce.

Conclusion

• A habendum provision in a land contract governs rights, interests, and other ownership issues.
• Habendum clauses protect lessees’ rights and interests in real estate leases.
• Habendum provisions in real estate purchase contracts allow ownership transfers without restrictions.
• A business possesses mineral rights to land but is not required to explore under the habendum clause in oil and gas contracts.