Special Limitation (US) | Practical Law

Special Limitation (US) | Practical Law

Special Limitation (US)

Special Limitation (US)

Practical Law Glossary Item w-029-0755 (Approx. 2 pages)

Glossary

Special Limitation (US)

In oil & gas leases, a special limitation is a clause that limits the duration of the interest conveyed by stating a period or event, the occurrence of which results in the automatic termination of the mineral leasehold estate and an automatic reversion to the mineral owner/lessor. It is distinguished from a condition subsequent and a covenant. Events triggering lease termination in some jurisdictions include the:
  • Failure to produce oil and gas in paying quantities.
  • Lessee not drilling or beginning reworking operations within a specified time.
  • Lessee failing to pay shut-in royalty as required by the lease.