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Permalink Reply by Chris on October 21, 2010 at 9:51

Usually this is called a Stipulation of Interest and is actually a fairly common document in these situations. It basically means that the title is not 100% clear in some area and they have determined ownership to the best of their ability so they are asking the heirs to agree to their ownership so they don't come back later and decide they want more and sue the company.

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Permalink Reply by LesterG on October 21, 2010 at 16:08

Well Thanks to all for your insight and enlightenment on this subject. I was unclear on how common this document was and the nature of the curative process for title to property, especially in this atmosphere of big bucks exploration. I was unsure of the title to this property, and looking back at all of the conveyances and deeds and sales and buybacks and buyouts of family members has been a trip through history for me. Thanks everyone, Baron, Dion, and Chris.... I appreciate the information from everyone!

Lester

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Permalink Reply by Tom Hough on October 21, 2010 at 17:31

Where the confusion comes in is when there are several generations involved. I own 1/5 interest with a brother deceased and a sister soon to be deceased. They each have two heirs which means that each has 1/10 interest. Right now my mother has the usefruct and is in great shape for 88. She may out live us all and if so there will be all kinds of different divisions at that point. It isn't a bad idea to have a paper that properly lays out the undivided interest of all the heirs.

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Permalink Reply by Dion Warr, CPL on October 25, 2010 at 8:16

Tom H:

You're right - and this comes up more than many people realize. Real estate transactions, timber sales, rights-of-way - any number of transactions which involve the conveyance of rights in the immovable property with a third party can be scuttled as a result of this type of situation, and while it is a common practice for children to put off opening successions involving their parents until both parents are deceased (particularly for relatively uncomplicated and/or small estates), the effects are very real and made particularly poignant at times such as the above, when it becomes time to 'do the deal' or receive one's just proceeds from said deal.

The concept of the usufruct is one where the functionality of the situation is many times at odds with the legal situation. In harmonious family situations, for example, where all the co-owners are cognizant and generally respectful and deferrent to the wishes of the legal or conventional usufruct, [e.g., "Daddy's dead, and it's Momma's property to do with what she wants for as long as she lives and have whatever proceeds from the land is hers"] who usually consults with her children on such things prior to making a decision, it may seem odd to contemplate such matters. In many cases, the family is asked to reduce their collective wishes to writing to which they will all sign (the result of which being a directed monies provision or a rental (and/or royalty division order) within the scope of the contract. If everyone agrees, great. But what if one or more of the co-owners does not wish to sign? What if one of them is on bad terms with one or more members of the family? Again, hopefully this is not the case for you, but it has arisen in other families.

Frankly, with the scope of possible royalties and revenues to be weighed here (particular with the myriad of leases which contain 'no warranty' provisions), companies may become increasingly averse to simply obtaining and relying upon either one or a series of Affidavit(s) of Death and Heirship as a matter of title curative. The inherent risks of not having a clear(ed) chain of title and ownership may be too great to not leave addressed on acts which may be deemed inconclusive or insufficient to provide notice to all third parties.

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Permalink Reply by Jethro on October 22, 2010 at 8:49

LA Mineral Code, Art138.1 D. If the lessee fails to pay royalties soley because his lessor has not executed a division order as defined in this article, the court shall award as damages double the amount of royalties due, legal interest on that sum from the date due, and reasonable attorneys fees. ...

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Permalink Reply by Dion Warr, CPL on October 25, 2010 at 7:42

Jethro:

Be careful with the interpretation here. La. R. S. 31:138.1 is placed where it is for a reason (Chapter 7, the "Lease" Section), and is written for the express purpose of defining the precedence of the terms of the lease over the terms of the division order (anecdotally, some bad actors were using the division order to surreptitiously amend the terms of the lease or change the division of ownership in an unseemly manner). While it does codify that not signing a division order is not a valid reason for withholding payment of royalties (See preceding Article 138), it does allows for lessee to reasonably ask for name, address, and tax identification number and reasonably withhold payment until receiving same (without subsequent penalty), which you did not cite here.

Under the current situation, lessee would seek to determine the clear and actual ownership of the mineral rights in and to the property prior to payment of royalties. Title defects and clouds on the title in this regard, IMHO (IANAL) would constitute the valid reason for withholding royalties, as it would appear that the lessee has performed a reasonable level of due diligence to determine the title issues on point and clouded title. R. S. 31:138.1 comes into play if the lessee fails to pay royalty "... SOLELY because his lessor has not executed a division order as defined in this article..." (my emphasis). If the title was clear and there was no other basis for withholding payment, your citation would be applicable.

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