Montana Code 71-3-1603. Extent of lien — dispute resolution — notice — buyer in ordinary course of business
71-3-1603. Extent of lien — dispute resolution — notice — buyer in ordinary course of business. (1) To secure payment from the sale of oil or gas, an interest owner, subject to 71-3-1606(2) and subsection (4) of this section, has a continuing security interest in and the right to a lien upon the severed oil or gas or the proceeds from the sale of severed oil or gas to the extent of the interest owner’s interest until the purchase price has been paid to the interest owner.
Terms Used In Montana Code 71-3-1603
- First purchaser: means the first person who under contract purchases oil or gas from an interest owner at or after the time the oil or gas is severed. See Montana Code 71-3-1602
- Interest owner: means a person:
(a)who owns an entire or a fractional interest of any kind or nature in the oil or gas at the time it is severed; or
(b)who has a right, either express or implied, to receive a monetary payment determined by the value of the severed oil or gas. See Montana Code 71-3-1602
- Lien: A claim against real or personal property in satisfaction of a debt.
- Operator: means any person engaged in the severance of oil or gas on the operator's own behalf, on behalf of the operator and other persons, or on behalf of other persons. See Montana Code 71-3-1602
- Person: means any individual, executor, administrator, agent, trustee, or receiver or an estate, institution, business trust, trust of any other kind, firm, corporation, partnership, cooperative, limited liability company, limited liability partnership, sole proprietorship, government agency, association, or any other group acting as a unit. See Montana Code 71-3-1602
- Property: means real and personal property. See Montana Code 1-1-205
- Purchaser: means a person who under contract purchases oil or gas from a first purchaser. See Montana Code 71-3-1602
(2)If there is a bona fide dispute about the amount due to the interest owner, the security interest and lien do not accrue if the person holding the proceeds upon which the interest owner’s security interest and lien are based makes a good faith determination of the amount of payment due to the interest owner and pays the interest owner that amount.
(3)(a) To have effect, a security interest or lien claimed under this part must be perfected as provided in 71-3-1605, and a copy of the notice of the lien, as provided in 71-3-1605, must be provided by an interest owner claiming the security interest or lien to other interest owners, if any, and to the operator, first purchaser, or purchaser by registered or certified mail.
(b)A security interest or lien is not valid under this part unless the provisions in subsection (3)(a) have been met.
(4)(a) A buyer in the ordinary course of business, as described in Title 30, chapter 9A, and subsection (4)(b), is entitled to the severed oil or gas free of the security interest and a lien filed by the interest owner under this part.
(b)A buyer in the ordinary course of business is:
(i)a first purchaser or purchaser who has paid the purchase price for severed oil or gas to the interest owner; or
(ii)a person who pays the purchase price for severed oil or gas to a person authorized to receive payment on behalf of an interest owner.
(c)The property of the first purchaser or purchaser described under subsection (4)(b)(ii) also is free from and not subject to a security interest or lien granted to an interest owner under this part.