Our BMT Trust signed a lease with an oil company 33 months ago for our mineral interest in 83.125 acres in Williams County, ND, including a moderate bonus per acre, $600+. The lessee, Oil Company, inserted apparently their standard Warranty clause, requiring the Lessor, our BMT Trust, to defend the Trust’s property’s Title and make restitution if it is not accurate. Being neophytes, we did not know at the time that mineral owners are advised to remove such a clause before signing a lease.
The Lessee’s analyst did a Title review in November 2010 before signing the lease with us, and concluded that the only other claim to this same property was not valid, This claim was based on a 1986 grant of a deed of 100 acres from JH, a resident of North Dakota, (whose husband AH had died several years earlier) to another husband and wife, who were also North Dakota residents,.
As of April 2012, another oil company drilled a productive well on our Trust’s property, but their division order title opinion states that the BMT Trust only has 57.125 acres. Even though our Lessee’s Landman thinks we should challenge the finding in court, both the oil producing company’s lawyers, the other mineral owners’ lawyer, and now our Lessee’s lawyers essentially agree that the deceased husband’s wife JH had at least a half interest in the property ever since she, JH, purchased the 100 acres in January 1952. The now deceased Father of the BMT Co-Trustees, RHB, purchased his 83.125 deed from a friend, PM, on April 14, 1952. PM in turn had purchased the 100-acre property April 7, 1952 from AH, without AH having his wife JH sign this deed selling their community property.
Our leasing oil company’s landman states he is sorry that their analyst made the title search error in November 2010, but that their lawyers state under the terms of our lease’s warranty clause, we must pay back some of the bonus money, based on $600+/acre on the 27 acres to which the preponderance of lawyers do not think we have title.
Ironically, the other major private mineral acre owner group’s out of state lawyer, who has drawn up the Stipulation of Cross Conveyance both of the major mineral owners are required to sign by the operating oil company, says he will represent us in court if necessary to challenge our Lessee oil company’s right to compensation under the lease warranty clause. He reasons, this is because regardless of the warranty clause they were not dilatory in their tile search before signing the lease. He further maintains it is too small an amount for them to go to court over and they will either give in or compromise. He also admonishes that in our duty as BMT Trustees we have the responsibility to challenge the Lessee’s claim. He admits that he has never made such a challenge against a lessee’s warranty clause for a mineral owner, but thinks Texas may have such a common law precedent.
Sorry to be so long, but I have two questions to ask based on your knowledge and experience on which I would appreciate your personal opinion before our BMT Trustees consider talking to more lawyers and in preparing to bring these issues before them.
(1). Is there any law or court precedent in North Dakota you are aware of that would take away a wife’s half ownership of community property, particularly if only she signed as the grantee/ purchaser of the original property deed, and then her husband did not get her name on a later deed as co-grantor when he sold the property. In other words, do we have much of a chance of legally getting some of the Trust’s 27 acres back?
(2). Is there any law or court precedent in North Dakota you are aware of in which the conditions in a lease warranty clause with no time limit in a notarized and recorded lease were later deemed invalid because the lessee’s analyst made a mistake in overestimating the legally available acreage in the Title search before signing the lease?