Common use of Title Procedure Clause in Contracts

Title Procedure. If any of the information or materials supplied ---------------- by Seller pursuant to this Agreement, or any other information or data, including the Buyer's due diligence examination of title, reflects the existence of any encumbrance, encroachment, defect in or objection to title that renders title to the gas properties defective or encumbered, and not capable of being conveyed due to a title defect that would make the Gas Properties unmarketable ("Title Defects"), then: (a) Buyer shall notify Seller in writing of the Title Defects as they are identified, providing Seller with adequate information to enable Seller to go forward with curing the Title Defects. Within five (5) days prior to closing, Seller shall furnish Buyer all documentation reasonably satisfying the Title Defects. (b) If Seller is unable to cure the Title Defects, Buyer shall have the option to: accept the Gas Properties with the Title Defects and adjust the Purchase Price in an amount to be agreed upon between Buyer and Seller or terminate this Purchase and Sale Agreement and receive a refund from the Seller of the down payment described in Section 2.1, above. The value of the Title Defects must exceed $100,000 in value before any adjustment in the Purchase Price will be made. The value of Title Defects as to all producing Gas Properties shall be based on Buyer's bid amount as it relates to each producing well. The value of Title Defects as to all non-producing Gas Properties shall be based on Buyer's bid amount as it relates to the mineral leases covering the non-producing Gas Properties. In the event Buyer identifies Title Defects having a value of $100,000, or more, and the same are not cured within five (5) days prior to closing and the Buyer and Seller have not negotiated a reduction of the Purchase Price in exchange for a waiver of the Title Defects within two (2) days prior to closing, either party may terminate this Agreement as allowed in Section 10. 1. Notwithstanding this limitation, Seller shall always have the option to remove any of the Gas Properties upon which there are Title Defects from this transaction, reducing the Purchase Price by the value assigned to the Title Defects and the affected interests. As to all producing Gas Properties, Buyers shall not identify a title defect as to any Gas Property that has been producing for more than two (2) years and as to which Seller's title has not been challenged.