Question

Differences between royalty reserves and short working

Answer 1

Royaltiy reserve- Royalty Reserve means, on any date, an amount equal to the sum of: (i) all Royalties that are more than 60 days past due and payable by the Borrower on such date, and (ii) all Royalties that would be payable upon the sale or other disposition of Eligible Inventory, assuming that such Eligible Inventory would be sold at its Value.

Short working -Short working defined as that amount by which the minimum rent exceeds actual royalty.

In other words we can say that , whenever the minimum rent is more than the actual royalty, the difference is called short working or redeemable dead rent.

We can also say that Short working is also called 'royalty suspense' by lessor.

Answer 2

Shortworking is the amount by which the actual royalty is exceeded by minimum rent.

Therefore, whenever the minimum rent rises over the actual royalty it is known as redeemable dead rent or shortworking.

It is also known as royalty suspensor. Royalty reserves refer to the payment that is due as per the contract.

There are many kinds of royalty reserve accounts.