It happens alllll the time. Quite common because royalty checks extend over time, so you're not getting "that much" each time. If someone is willing to pay you 500k right now for the rights to your record, and you're broke? It's not an easy decision
Like a prime example off the top of my head,
4tay could of been eating for life off of Who Do U Love from YG / Drake, (Drake!) and instead he settled and got like 300K from it.
It doesn't happen as often but it still happens all the time. Most of the older rap records you hear today the those artist don't see any residuals from it. That's why I applaud what guys like Nip and DOM K (Dom k especially. His manager is my neighbor and what he's done as an indie act is borderline legendary to me) do on the independent circuit.