Issue link: https://read.dmtmag.com/i/585738
28 Oil Prophets LEGAL CORNER In recent weeks and months, I've had a myriad of situations where marketers with dealers under written supply contracts have had those dealers stop buying fuel from them and go to another supplier. This is nothing new, but there appears to be a current rash of it. While I've previously written about the dos and don'ts for both the existing marketer with the dealer under contract but in particular, for any marketer looking to approach a dealer under a contract with another supplier, that is not the point of this article. I want to address what steps a marketer can take with its supply contracts to help make them binding on any new dealer/operators at a location and/or new owners of the underlying property. I am compelled to say at the outset that there is simply very little case law specifically dealing with these situations, so we will likely see some law made in this arena in the near future. I am in a handful of disputes and/or lawsuits fighting this very issue as I write this article. First, you need to look at your supply contract itself. It needs to contain language that says clearly and maybe even repeatedly that "the parties hereto expressly understand and agree that this contract shall 'run with the land' and be binding on all successors and assigns to this agreement and any successors and assigns as tenants or operators of the subject property as well as any successor purchaser/owner of the subject property." There is no magic to this particular language, but this gives you some idea of the points you want to make clearly within the contract itself. It would also be beneficial to have within your "default" language or somewhere in your contract that states clearly that if the dealer defaults under this agreement or otherwise terminates the agreement early, what will happen. If a branded location and there are unamortized image/ incentive monies outstanding, then your contract needs to say that your dealer will be responsible in such event for those unamortized monies. Additionally, the contract should say if the tenant defaults or terminates for whatever reason that they will owe all future lost profits to the supplier under the contract consisting under the contracted for wholesale markup over the remaining life of the contract including option periods, assuming option periods of the supplier to renew, not the dealer's. The next thing you want to do is record your supply contract or some abbreviated memorandum of same in the Real Property records in the county where the location is situated. I am surprised even today how few marketers actually do this, but it can really save a supply contract at the end of the day. The purpose, of course, is if someone is looking at buying the subject property, and a title examination will be done by an abstract company and/or attorney, and you want to make sure that your supply contract or whatever document you've recorded as proof of same, is picked up in any such title examination. If such is picked up, then you've cleared hurdle one. That is not to say the lawyer for the buyer won't fight the issue of whether it is an ongoing encumbrance on the subject property and binding on any subsequent owner, but it is going to be a serious "red flag" to any lawyer finding a recorded supply contract on property to which he is checking title. In recording your supply contact or memorandum of same, there are some "be carefuls." If your supply contract is with a dealer who is also the owner of the real estate, then you really don't have to do anything else when you record that contract. Someone checking title to a piece of property will be name-searching using the current recorded property owner's name, and Suppy Contracts That "Run with the Land" H. Dean Mooty, Jr. Mooty & Associates, P.C.