When does a seller have to provide the Mineral and Oil and Gas Rights Mandatory Disclosure Statement?

QUESTION: I have a couple of questions about when a seller client is required to provide a Mineral and Oil and Gas Rights Mandatory Disclosure Statement. First, does an MOG Disclosure Statement have to be provided on a sale of vacant land? Second, I know that there are exemptions for certain transfers, but I’m confused about whether the exemptions from providing a MOG Disclosure Statement are the same as the exemptions from providing a Residential Property and Owners Association Disclosure Statement and would like clarification on that.

ANSWER: To answer your first question, the Mineral and Oil and Gas Rights Mandatory Disclosure Statement does not have to be provided by owners of unimproved property, just as the owner of unimproved property does not have to provide a Residential Property and Owners Association Disclosure Statement. The obligation to provide a MOG Disclosure Statement is contained in the Residential Property Disclosure Act. The Act only applies to certain “transfers of residential real property consisting of not less than one nor more than four dwelling units” (see G.S. 47E-1).  Since vacant land does not contain a dwelling unit, the Act doesn’t apply to transfers of vacant land, and thus, neither of the Disclosure Statements has to be provided in connection with the transfer of vacant land. Of course, a buyer can request that the seller of vacant land provide either or both of the Disclosure Statements, but it’s not mandatory.

In response to your second question, the exemptions from providing the MOG Disclosure Statement are somewhat different than the exemptions from providing the Residential Property and Owners Association Disclosure Statement. All of the exemptions are listed in G.S. 47E-2. There are a total of eleven exemptions, eight of which are listed under subsection (a) and three of which are listed under subsection (b). All eleven exemptions apply to the Residential Property and Owners Association Disclosure Statement, but only the first eight exemptions listed in subsection (a) apply to the MOG Disclosure Statement. The three exemptions listed in subsection (b) do not apply to the MOG Disclosure Statement. Thus, the MOG Disclosure Statement must be provided for the first sale of a dwelling never inhabited (i.e., new construction) and for a lease with an option to purchase contract where the lessee occupies or intends to occupy the dwelling. In addition, the parties do not have the option of agreeing that an MOG Disclosure Statement will not be provided.