Replies to This Discussion

Permalink Reply by M. Mcwilliams on July 24, 2008 at 0:51

There may be some confusion here, also, between the idea of a title opinion and an abstract of title. An abstract of title is a listing, or copy, of all records affecting the title to a particular piece of property, and a full abstract of title, i.e., a list of or copies of all documents on public record, will reveal any mineral deeds or reservations. A title opinion, particularly one done for the sale of a home, will generally just tell you whether or not the title to the property is free and clear of any liens, easements, encumbrances, prior sales, mortgages, judgments, etc. and whether the title to the surface is clear for sale. A title opinion is just that: an opinion of a title examiner, but if done by an attorney, it is backed up by his or her malpractice insurance and your title insurance. For ordinary home sales, it's the mortgage companies that order the title searches and opinions, and they don't care if minerals are present or not.

Now, what all of this will do to the appraisal value of homes in the future is an interesting question. When people start demanding mineral rights to go along with their quarter-acre subdivision lots, what's going to happen?

Permalink Reply by Carver on July 24, 2008 at 6:45

Hi, Parker. Yes, I know that documents are complicated, but they always have titles or names. Cash Sale Deed. Mineral Lease. Grant of Easement. Whatever.

I was thinking that those titles were listed in a title opinion, along with date of recordation and such.

But I may be confusing a title opinion with a title policy. I think it's the title insurance policy where I've seen that list of recorded docs.

Or as M. Mcwilliams said, maybe I'm thinking of an abstract of title.

Permalink Reply by SoBoRes on July 23, 2008 at 16:44

A title search was required when I purchased homes in Texas and Louisiana by the lender, this was not optional. The question I believe that needs to be answered is whether or not the state of Louisiana requires a seller to disclose the retention of minerals in the disclosure statement signed by both the seller and purchaser. Even if the purchase was somehow done without the title search, the information regarding minerals should have been disclosed in writting to the buyer. IMHO

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Permalink Reply by Randy on July 23, 2008 at 16:49

If they didn't want to pay for a mineral verification that is their fault. State law does not require a mineral verification, and it costs extra money. That can be time-consuming work and closing costs aren't cheap as it is.

If person 'A' reserves the minerals, then sells it to 'B', who then sells it to 'C', who then sells it to 'D', then 'D' doesn't know the minerals were reserved by 'A'. That's why you pay people like me to check that stuff for you, my issue with all this is that....

2 years ago these same people were telling people like me that our services were useless and they didn't need to pay for it because it doesn't matter. NOW they are mad. So sorry.

Randy

Randy

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Permalink Reply by M. Mcwilliams on July 24, 2008 at 0:56

And I also would point out that the homeowners pursuing this class action will have to answer one question, and that is, what value do they place on the minerals at the time they bought the property in 2006? You can't say that because someone will pay $20,000 an acre for a lease in July 2008 that this is the value. In February 2008, an acre might only have brought $200 for a lease. Is that worth fighting over? Fact is, until just very recently, no one dreamed that there would be any value to minerals on individual lots in a subdivision, because there was not much of a way to get to the minerals until companies began horizontal drilling.

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Permalink Reply by Bobi Carr ("parker") on July 23, 2008 at 22:05

A title search is done, in the Title Policy, minerals are excluded. An owner could have paid to have a search done. I'm sure that 99.9% would not have done so. Most buyers do not even spring for the owners title policy. They EXPECT someone else to do everything for them.

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Permalink Reply by Liz Cb2 on July 24, 2008 at 1:34

I worked for a major mortgage company for many years performing loan closings and I can tell you that when we required a title search on any property we mortgaged (as all mortgage companys do). The mortgage company is concerned as to whether or not there is a "cloud" on the title. That would be in the form of judgments, liens, encumbrances and things of that nature. It normally goes back ten years. The reason being that the mortgage company wanted to be sure that they were the first lienholder was if they had to foreclose on the property they would have full title and right to do so. The issue of mineral rights has NOTHING to do with title. They are mortgage the house and lot, not the minerals. It is not a requirement to disclose mineral rights on property as to whether or not they are being retained. It is; however, up to the purchasers of the property to ask questions and be knowledgeable enough to understand what they are signing and ask questions prior to the sell of the property. The disclosure of the home only has to do with the home itself, not the minerals below. This is a very, very rare situation with todays natural gas find. The vast majority of the time the lots are so small that this would have never been an issue. Only in larger tracts of land was this in question.

I would think the Brown's only have something to worry about if someone asked them directly or if there was some documentation prior to the sale that they would tender the mineral rights with the land and they failed to do so. They're only doing what most developers are doing and it is perfectly legal.

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Permalink Reply by SoBoRes on July 24, 2008 at 2:17

Maybe we did pay more for our title search, as ours specifically stated that minerals were being transferred to our family. On top of that, our disclosure statement from the purchase, signed by both parties specifically points out that minerals were not under lease, would not be retained and would be transferred. Is this mineral question not on every disclosure statement? I have been told that it definitely is for rural area (where we reside) but may not have been for smaller tracks of land inside city limits.

Also, in every disclosure statement I have seen, there is a section for additional comments, would this not be something that should have been included if you the "seller" were retaining minerals? In my mind, it is a simple question of ethics. I can not find fault with people taking this type of action as the very least it may shed light on an issue that can easily be resolved by future state regulations or other avenues.

Permalink Reply by Liz Cb2 on July 24, 2008 at 3:09

SoBoRes,
Title searches do not show what a seller's intentions are as to mineral rights or anything else. Title searches are done at the request of the mortgage company to ensure there is clear title to their mortgage. You pay your title attorney for this service. The title search only provides information as to whether or not there are liens, encumbrances, judgments or other outstanding mortgages that effect the title of the property hence effecting your ability to get a loan.

Even if you had requested a title search of your own this is what you would have gotten.

You may be speaking of contract of intent to purchase that you sign when with a real estate agent. There is a section on there that you can make certain demands from the seller while you're in the negotiation process of buying the lot/home.

The disclosure statement you mentioned is something that the buyer fills out as to the house and lot such as if the house has been damages by fire, flood, lead paint disclosure, asbestos, etc. Just things that the seller has knowledge of in relation to the house and/or lot.

Any real estate agent or person in the mortgage industry will tell you that retention of mineral rights with city lots was never really an issue because of the size of the lots and the fact that they were in the city. I know because I asked that very same question when I purchased my first home.

As to rural property with any acreage one of the first things I would ask about is retention or the sale of mineral rights. I wouldn't have purchased the property I have now if the mineral rights weren't tendered at sale.

I don't find fault with anyone wanting to file suit. Certainly, it's their right to do so; however, it is up the buyer (no matter what they're purchasing) to be informed, ask questions and educate themselves before making a purchase of a lifetime. There is no question that people are learning more every day thanks to this site.

The bottom line is that no one cared about mineral rights until they learned about the HAShale. And this is probably something you'll never see again in our lifetime.

While I'm not a supporter of the Brown's, I don't see what they did as wrong or unethical. It's just good business on their part. Sorry.

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Permalink Reply by SoBoRes on July 24, 2008 at 3:47

Liz,

No need to apologize, I am not an expert at any of this. I've gone back through our mountain of paperwork that we received at closing and our documentation (whether from title search or mortgage/deed information) shows the transfer of both surface and mineral. I guess from an outsiders perspective I just try to see things from their (those that do not have minerals) standpoint. My wife will tell you that I normally play devils advocate and have very little sympathy for anyone, but I'm working on it through a lot of prayer and help.

I guess retention of mineral rights within city limits will be added to documentation now, especially in the Haynesville area (not that we know for sure what those boundaries are). I just wonder if property value will go up if minerals are included in the sale.

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Permalink Reply by Liz Cb2 on July 24, 2008 at 4:20

SoBoRes,
If you have absolute documentation showing that the minerals were supposed to be transferred to you in the deed and this was not done you should contact the title attorney who closed your loan about an act of correction to the deed. If your deed shows that the mineral and surface rights were transferred to you at the time of the sale you have nothing to worry about. If you recently purchased this property you may want to go back to the title company and ask them to review your file. They will have a record of the closing.

There is no doubt that as a result of the HAShale that future sells of property will certainly have specific information as to the mineral rights. And yes, I'm sure the value of the property will go up due to the possible royalties to be made. There are so many variables to all of this. Personally, I would not buy property without mineral rights but on the other hand who would want to transfer them now? The other issue would be if you sell your land and it's under production at the time of sale the royalties would go to you and not the future owner. I wouldn't be interested in land under that scenario. So you see, there are many facets to this ever changing situation we're all in.

I think it is of utmost importance for people to ask questions, read and learn as much as they can before making possible life changing situations. Everyone has a different situations to deal with. Hopefully, we can all benefit in the long run. Good luck to you!

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Permalink Reply by sesport on July 24, 2008 at 7:25

Just a thought, is it possible to take this from another angle by checking into whether it was appropriate (or legal) for JMB the corporation to divest or sell its assets to its directors/officers & family members as it is alleged? I'm not a lawyer but thought I read something along these lines in LA revised statutes. Closest I could come up with so far is RS 12:92, G(2) & (3).
Also, if JMB Corp. did sell these assets for $100 as alleged, would this have been the fair market value in Dec. 2006?
Hope this helps.

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