Replies to This Discussion

Permalink Reply by Aubrey C. Sanders, Jr. on January 1, 2014 at 11:06

Ken,

I do not know about states except for LA and AR. So long as all parties are in agreement you can own an undivided interest, or you may divide into individual tracts in individual names.

I prefer to keep mineral interests undivided. I can see no need to divide minerals. If you are talking small acreage it may or may not matter. I personally want my share of minerals from the entire tract. If you have large acreage part of land could fall into 2 or more drilling units. In that case part of heirs may have production whereas others might have none. Or, if no drilling units are established and production is not unitized only that tract will receive payment at 100%.

My understanding as to forced sale is that if a forced sale is ordered by a Court then EVERY party gets paid their proportionate share. SEE LAWYER

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Permalink Reply by Nixon Dow on January 1, 2014 at 12:14

Your question is a little general. So first I will provide some general rules.

Co-Ownership Rules

• general rule ownership of the same thing by 2+ persons is co-ownership in indivision; co-owners are presumed to own equal shares in the thing in the absence of a juridical act or provision of law.
• rights to fruits and products(mineral and royalty) share in proportion to their ownership interest; a co-owner who produces the fruit/product is entitled to reimbursement for his out of pocket expenses.
• use and management of the thing can use and manage according to an agreement between the co-owners, by the destination of the thing, or by court order if partition is not available or the co-owners cannot agree.
• alienation(lease, sell interest) can alienate your share without any consent of the co-owners; have to have consent of all co-owners to alienate the entire co-owned thing.
• reimbursement for substantial alterations and improvements - have to have consent of co-owners to get reimbursement; if made without consent, then if the consistent with the use of the property, then the other co-owners must keep and pay the improver either the cost of the work, the current value or the enhanced value; if inconsistent with the use of the property, then other co-owners may either demand demolition at the expense of the improver and seek damages or keep ad pay either the current value of the work or the enhanced value of the immovable.
• right of partition - always have the right to partition unless excluded by agreement for not more than 15 years(succession or will provided clause).
• modes of partition 
  • extrajudicial may be attacked on contractual grounds or for lesion if receive less than ¼ of the FMV of your share.
  • in kind  if a thing is susceptible of division into lots of nearly equal value and the total value of lots is not significantly lower than the value of the property as a whole.
  • licitation - only if in kind is not available; partition by public action or private sale and then distribute proceeds to other co-owners in proportion to their shares. 

So now that you know the general rules I will go into your specific two question.

I want to know after a succession has been completed is it necessary to get a partition done? No.

Can heirs still legally receive payment is a partition is not done? Yes but it is a slippery slope. You can always receive payment however, if you only have (1/3) interest and you received payment for the entire amount know that the other parties will be entitled to their interest (either by payment directly to from you or later by the production company withholding payment until your account is balanced). If one did not decide to partition they interest I would recommend they do 1 of 2 things. 1) Set up an LLC/Trust having the same ownership interest and then  transfer the property into the LLC/Trust. Then send a legal notice with the copy of the filed conveyances, to the operating company. 2) The second option would be just to send a notice to the operating company of the JOP (from the succession). To prevent any delay or questions i would also provide a Stipulation of Interest(detailing the current ownership interest) signed by all the parties.

If all of the heirs are not in agreement, can the heirs who chose to participate loose their land at the auction also?  As to each parties mineral interest it is essentially "partitioned" in theory. Each parties mineral interest in the property is a separately owned interest (at least for unit well production and drilling).

Now if your meaning for "participation" is the use and management of the property then you get into a strange situation. There is no such thing as partial property tax payment. If the property is not partitioned then anything less than full payment will be insufficient. If one party decides to pay the entire property tax it will be treated as payment for all the parties. If one owner decides to pay or redeem the property they can't claim ownership over the other's interest. They may sue to get reimbursement but that is it. 

Understand my ramblings are just an attempt (which are rather poor at best) to give a simple explanation to a very confusing and perplexing area of law. So if your question is more than just curiosity please seek professional advice before taking any action in this matter.

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Permalink Reply by W. Marshall Shaw on January 6, 2014 at 5:09

Mr. Sanders and Mr. Dow have given you good answers and good advice.  I would merely add that land can be sold in a partition with all of the mineral rights reserved, which most owners usually prefer.  It is important that bids not be "chilled" by third parties in collusion.  You want publicity for a public sale of land and a healthy competition in the bidding so that you get a decent price. 

If you think that the land is a good investment or if you have a sentimental attachment to it, you might want to buy it in yourself; you will have a head start since you only have to buy out your co-owners.  But sales are in cash, and the sheriff will expect for you to pay by cashier's check.

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Permalink Reply by Ken Boone on January 6, 2014 at 5:59

So am I to understand that the only time heirs should do a partition is if they are all in agreement? And if they are NOT, then a party (one of the heirs) can force a partition, in which all heirs could loose the land, unless someone has enough money to purchase the whole piece of land? (say 100 acres)?

Do the heirs get first dibs on the land, or do they compete with all the other bidders in the public?

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Permalink Reply by W. Marshall Shaw on January 6, 2014 at 6:21

No one can be forced to own property with another person.  Yes, any single co-owner can force a partition.  It does not have to be an heir.  It can be an outsider who buys an interest from an heir.  When a court orders a partition, everyone competes with all other bidders.  It is a public sale. 

It is good to stay in touch with siblings and cousins, and it is important that a family stays together, especially when they own valuable property. 

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Permalink Reply by Henry on January 7, 2014 at 1:57

Isn't it true that to force a partition or sale, you must own above a certain percentage of the land?  I think the number is something like 20%, but I could be all wrong here.  In other words, an heir who owns some tiny fraction of the land cannot force it up for sale, right?

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Permalink Reply by W. Marshall Shaw on January 7, 2014 at 2:14

Wrong, unless the law has recently changed.  Any co-owner can force a partition sale of the land, even if he or she only owns 1%.  The 20% figure is, if I am still current with the law, what it takes to block economic use of the land, for instance a timber sale. 

If this is a serious and immediate problem for you, Henry, you need to see a lawyer who practices regularly in the successions and real estate field.  Like most of us on this website, we can offer suggestions, but for genuine legal advice as to your individual situation, you must see -- and pay -- a lawyer.

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Permalink Reply by Andrew on January 16, 2014 at 0:10

Henry,

As Marshall correctly stated, there is no minimum ownership requirement to compel a partition. Any single co-owner can compel a partition, even if his share of ownership is microscopic. A partition in kind (by dividing into lots) is the preferred method for any partition, but if the property isn't susceptible of being fairly divided into lots, a co-owner can compel a partition by licitation (sheriff's sale). The proceeds from such a sale would be distributed among the co-owners according to their share of ownership.

I think you're getting the 20% number from the Mineral Code's rules on co-owners' rights to operate when less than all the co-owners granted a mineral right. Articles 164, 166, and 175 basically say that the holder of a mineral right created by less than all of the co-owners cannot operate or permit operations on the property without the collective consent of 80% of the co-owners.

Ex:  A, B, C, D, and E each own and undivided 1/5th of a tract of land. A leases his interest in the land to X. If X wants to operate on the land, he would need at least 3 of the remaining 4 to consent (three 20% owners, plus the 20% he already leased from A, equaling 80%).

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Permalink Reply by Henry on January 16, 2014 at 1:27

Andrew and W. Marshal Shaw,

Thanks to both of you for correcting me.  I had no idea that this was so.   I stand corrected, and I am glad to have learned something.

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