Habendum Clause

Defining Habendum Clause

A habendum clause is one such section in a contract that talks about property rights as well as interests amidst other ownership factors that are given to one of the parties in a deal. This clause has basic legal language and generally comes in documents related to property.

Most of the people might be experienced with this clause through the transfers of Real Estate. However, it can also be used in every manner of deeds and leases, specifically in the gas and oil Industry.

Explaining a Habendum Clause

Somewhat, the content of a habendum clause differs based on the nature of the contract. As far as real estate contracts are concerned, the habendum clause may talk about the transferring of the property ownership and any supplementary limitations.

Since this clause starts with “To have and to hold”, sometimes, this clause is also known as “to have and to hold clause.” In the leases of real estate, the habendum clauses are such sections of the contract that talk about the interests and rights provided to the lessee.

Generally, this clause describes that the property is being transferred without any limitations. This simply means that the new owner has the complete right on this property upon meeting the conditions.

Thus, they can now sell, gift, demolish or do anything as they please with the property. Usually, the property title transferred with the habendum clause is known as the fee simple absolute.

In gas and oil leases, on the other hand, the habendum clause talks about the primary and the secondary term of the Lease, defining how long this lease will remain in the force. When used in the gas and oil leases, the concentration of the habendum clause remains “and so long thereafter” portion that may also result in the extension of the lease, given all the conditions are fulfilled.

Also, in this industry, this clause is also known as the term clause. In this sector, the habendum clause defines the primary term wherein a company gets the mineral rights to the Land but is not responsible for beginning exploration.

This primary term can differ anywhere from one year to ten years, based on how proven the field is. In case the primary term passes without production, then the lease will expire. But, in case the leased area gets drilled, and the gas or oil is flowing, this means that the lease is in production. Thus, secondary term will begin and continue as long as the leased area is producing gas or oil.