When a broker completes the TREC Farm and Ranch Contract form, what is the best way to draft a reservation clause in Paragraph 2F?

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There is no standard language that is suggested. The broker must exercise caution when completing Paragraph 2F because the reservation clause may become complex. The broker will need to determine the extent of the mineral interests and rights that the owner wishes to reserve. This may or may not become an issue of significant negotiations between the buyer and seller. The buyers and sellers may negotiate a number of provisions in a reservation clause. For example, will the seller retain all or just a specific portion of the mineral estate? Will the seller reserve all minerals or just certain minerals? Will the seller retain all executive rights? Will there be any limitations on drilling? If the reservation clause involves anything more than a very basic, simple reservation clause, the broker will likely need to suggest that the parties seek the assistance of counsel who can draft an appropriate addendum to the contract. A broker will not want to move into the unauthorized practice of law by drafting a complex legal clause or addendum.

Source: TAR

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