Do you "Really" know the LEGAL STATUS of your minerals? Now is the time to "Do Your Mineral Homework"...
For those of us who have not leased anything yet, now is the time to be doing your land/mineral research in preparation for the next round of leasing (2009). When you get an offer, you should already know all you can about your interests. You should know the history of the land/minerals and how you came to own your interests. You should know who else may own a % of the minerals you think you own, whether you acquired that interest through inheritance or purchase. Don't wait for the land company to run title on your minerals, only to find out that you don't have clear title or that you don't own the number of (mineral) acres you thought you did. Or that your minerals are HBP (held by production) from a lease that may be 40 or 50 years old. Those are bitter pills to swallow, if it's true, but be forewarned...there are a number of green landmen(women) running title right now. They can and do make mistakes. If you have the work done ahead of them you won't get any surprises. And you will have had the time to maybe fix a potential problem (or at least be aware of it) by the time they get to you.
I am speaking from personal experience. We have a tract that has been in my family for 99 years. We are selling the surface acreage and have been working with an abstract company to cure the title so that we can get a title policy. Due to a great grandfather who died without a will (intestate) the land passed to his wife and four daughters. Ok, no will, no probate, no affidavit of heirship, nothing legal filed at the courthouse (we're in Texas) that says how the girls or his wife claim title to the land. I know that they were his legal heirs but, in order to prove that, I just had to locate a living person willing to swear that they knew my great grandfather before he died and that they also know his relationship to these girls and their mother (all deceased, of course). He died in 1933! If you don't think that was some kind of tricky...go try it. But I got it done, none the less.
It was actually a bit more complicated than that, as there are about a dozen deeds for the pieces of this tract, because they (the ancestors) swapped around among the wife, the daughters, the husband of one girl (my grandfather) and my dad. And then my dad left it to us after which my siblings and I did some swapping of our own.
And I, innocently, had thought proving title on that tract should be a cakewalk because I knew the history and knew that not one acre had ever left the family. HA! I'm not even going to get into the survey saga...that's another story. Just suffice it to say that we don't own as many acres as we thought.
My point is that, now, after going through all that, when the landman says it will take 30 business days to run title, hence a sightdraft instead of a check, all I have to do is hand over my proof. I now have everything needed to prove title for both the surface and the minerals. Now, even though we don't own all of the minerals today, I know exactly who does, where to find them and exactly what percentage they own in that tract. And I know that running my title won't take 30 days so I can ask for a 10 or 15 day draft now (or better yet, a check!). My money is in the bank in half the usual time.
Note: Mineral title should be proved back to patent if possible (in Texas) and at least back to before any significant O & G activity in the area (going back to about 1900 may be sufficient in some areas but may require going further back in other areas/states). Although my experiences have to do with Texas land, some of what I say about mineral title also applies to Louisiana land. But, there are some very distinct (and critical) rules which apply in Louisiana that do not apply in Texas. A large portion of the posts (on this site) pertaining to mineral rules are pertinent to Louisiana and do not apply in Texas. Keep that in mind as you read.
Folks, if you live close/on your acreage and think you can run your own title, by all means, do so. If you live a great distance from your land or don't feel qualified to do your own title research, please find a professional person (of some sort) to help you. It could save you so many headaches and so much time, down the road. It will be well worth any amount you may have to spend. And, if the cost of hiring professional help, whether it's an attorney (most expensive), an abstract company (moderately expensive) or an individual (pricey, but bearable), seems huge, you need to weigh this cost against the potential income in bonus/royalties and then decide how to proceed. Good luck in your leasing endeavors! May we all get a great lease and eight wells (Oh, well... OK...I'd be tickled pink with just one).
JF
I am speaking from personal experience. We have a tract that has been in my family for 99 years. We are selling the surface acreage and have been working with an abstract company to cure the title so that we can get a title policy. Due to a great grandfather who died without a will (intestate) the land passed to his wife and four daughters. Ok, no will, no probate, no affidavit of heirship, nothing legal filed at the courthouse (we're in Texas) that says how the girls or his wife claim title to the land. I know that they were his legal heirs but, in order to prove that, I just had to locate a living person willing to swear that they knew my great grandfather before he died and that they also know his relationship to these girls and their mother (all deceased, of course). He died in 1933! If you don't think that was some kind of tricky...go try it. But I got it done, none the less.
It was actually a bit more complicated than that, as there are about a dozen deeds for the pieces of this tract, because they (the ancestors) swapped around among the wife, the daughters, the husband of one girl (my grandfather) and my dad. And then my dad left it to us after which my siblings and I did some swapping of our own.
And I, innocently, had thought proving title on that tract should be a cakewalk because I knew the history and knew that not one acre had ever left the family. HA! I'm not even going to get into the survey saga...that's another story. Just suffice it to say that we don't own as many acres as we thought.
My point is that, now, after going through all that, when the landman says it will take 30 business days to run title, hence a sightdraft instead of a check, all I have to do is hand over my proof. I now have everything needed to prove title for both the surface and the minerals. Now, even though we don't own all of the minerals today, I know exactly who does, where to find them and exactly what percentage they own in that tract. And I know that running my title won't take 30 days so I can ask for a 10 or 15 day draft now (or better yet, a check!). My money is in the bank in half the usual time.
Note: Mineral title should be proved back to patent if possible (in Texas) and at least back to before any significant O & G activity in the area (going back to about 1900 may be sufficient in some areas but may require going further back in other areas/states). Although my experiences have to do with Texas land, some of what I say about mineral title also applies to Louisiana land. But, there are some very distinct (and critical) rules which apply in Louisiana that do not apply in Texas. A large portion of the posts (on this site) pertaining to mineral rules are pertinent to Louisiana and do not apply in Texas. Keep that in mind as you read.
Folks, if you live close/on your acreage and think you can run your own title, by all means, do so. If you live a great distance from your land or don't feel qualified to do your own title research, please find a professional person (of some sort) to help you. It could save you so many headaches and so much time, down the road. It will be well worth any amount you may have to spend. And, if the cost of hiring professional help, whether it's an attorney (most expensive), an abstract company (moderately expensive) or an individual (pricey, but bearable), seems huge, you need to weigh this cost against the potential income in bonus/royalties and then decide how to proceed. Good luck in your leasing endeavors! May we all get a great lease and eight wells (Oh, well... OK...I'd be tickled pink with just one).
JF
Views: 250
Add a Comment
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Comment by ronda and bruce on September 3, 2010 at 20:53 -
thanks for the valuable post jffree1! We,too, have a hodge-podge of land-swappers in our lands' history! We tried to research it ourselves....WOW!!! The only thing we ever saw regarding 'leasing' was concerning a term of 15 years plus 5 for harvesting of trees. It was VERY overwhelming trying to read and interpret some of the language! I guess we just need to give in and hire a professional! there were just too many forks in the road, so to speak!! Thanks again! =)
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Comment by michael jordan on June 16, 2010 at 19:43
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any more advice my story reads word for word .my abstract is in san augustine . headright in the year 1835. mj
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Comment by jffree1 on February 2, 2009 at 13:09
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Thank you, Intrepid. I agree. If leasing picks up again anywhere near like it was last summer, there won't be time to get informed before signing on the dotted line. Once the ink dries... ? Well, that may just be too late.
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Comment by intrepid on February 1, 2009 at 15:10
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There are a lot of people who could benefit from reading or re-reading this blog post now- before leasing activity gets heated up again.
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Dion,
Thank you for your very well thought out comments. We have all been presented very unusual and extraordinary circumstances in this play.
jffree1
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Comment by Dion Warr, CPL on December 2, 2008 at 5:49 -
Jffree:
I agree that whenever possible, one should have at least a good idea as to what the chain of title is as to their particular tract(s) of land looks like, if for any other reason than to at least be able to point out any possible deficiencies or title defects so that they may be remedied in a faster manner. As a landman (and I am aware that there are several that follow this site, both on the side of "landowners" and "companies"), I feel that it should be pointed out that is in rare instances that an O&G company will just accept Lessor's word or opinion when acquiring an oil and gas lease, without vetting the title independently. Under the conditions and leasing situation that was present in the HS area prior to a couple of months ago, where comparatively vast sums of money were changing hands, I would consider it acceptable that O&G companies would want to run more or less full title prior to releasing any monies, especially considering the fact that many landowners (or mineral owners) wanted to lease minerals "AS IS, WHERE IS" by striking out or deleting any provision in a lease that provided for Lessor's warranty of title.
Before anyone starts, let me say that it is perfectly fine in most any situation for a landowner to assert that O&G companies (or their landmen) should assure themselves of the mineral title to a piece of land prior to contacting a landowner. The HS boom did not fit most situations in that companies were climbing over each other in a race to lease approximately 3MM acres in a period of a couple of years (a lot of which was put together in a few months). Combine with that in many productive areas, mineral title in LA cannot be fully ascertained by just running the records in the courthouse, and you have a situation where a company call was made to run limited title to get through the lease negotiation, then verify title after a lease commitment was made (or a lease was signed). Thus, the only time 'real title' would be run was at the point that the lease was executed, and 'best as we can tell' or some version of scattergun title check was done just to be able to get field agents enough information to start making phone calls, or knocking on doors.
That being said, on a lease that I negotiated for another owner in that area, I pointed out certain issues as to boundary discrepancies and title snafus so that the abstractor could better know the issues and what they were looking for. It didn't stop them from checking independently, but it sure made the company breathe easier knowing that they were dealing with a knowledgeable and diligent lessor, and therefore facilitated the title clearance process. Then again, we felt confident enough in the title to not strike the warranty clause.
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Comment by Zydeco on December 1, 2008 at 13:19
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hello that is great information.... and YES I am in the pickle of living in TX.. not able to travel back to LA.... and from my grandfather comes a heap of a mess.... that was very well written ! I too started to research "what I had" as I wished to make a will, long before the Haynesville shale entered the picture and have received the same run around about too busy etc... I DO NEED HELP !!!
thank you again for posting such an informative article...
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Skip Peel, Oh, so very true!
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Then we are in agreement.
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Comment by Two Dogs, Pirate on November 30, 2008 at 13:47
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My drafts are for 15 buisness days. I am not downing you for running your own title, I would suggest everyone do that but they need to understand that it is not something that everyone can do.
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