How long can hold out?

General Mineral Rights Discussion
1

My family has a small royalty interest in a producing well. Our paperwork is in order as we probated both our Mother’s and our Grandfather’s estates a couple of years ago, but the oil company is telling us that two sellers of our royalty interest, to our Grandfather back in the 1950s, need to have their royalty interest probated, since both sellers have passed on. The oil company says there is a possible cloud on the title. I have pulled the land records. One of the two sellers did not return her contract back to the Courthouse in a timely manner as our Grandfather’s paperwork was filed first. The contract was signed and dated correctly, just the filing at the courthouse was turned in 6 months later on one of the contracts. The other seller’s paperwork seems to be fine. The well has been producing for a year now. Is there anything we can do to get our checks cut to us?

Thanks

Joe

2

Joe, I think you will wind up having to do a quiet title action to clear your title. Once completed, quiet title should give you marketable title and after a couple of years with nobody contesting it should give perfect title, except for being tarnished by your present lease. Consult a real estate lawyer, not an oil and gas lawyer.

3

Quite often I have been able to get oil companies to place interests in pay status when there are issues like this by drafting an Affidavit of Heirship, having it signed by a disinterested person familiar with the facts, and recording it and sending it to the company.

It does not perfect title, but can often get your interest in pay status.

Call them and see if it is acceptable.

Dirk

4

Is the issue the Seller’s retained some interest or were married and the oil company is concerned they had a spouse with a community property interest? What did the seller file that was after your grandfather filed?

5

Hi

I guess I did not write that well enough. My Grandfather estate was probated in the early 70’s after his death. My mother was an only child and heir. She recently passed away and we probated her estate and our Grandfather’s estate to clear up some mineral issues. As for this well, our Grandfather took a royalty interest on a section of land from two different ladies at the same time. The only issue I can see from the land records was the contracts for the royalty interests were signed in January but one lady did not get her paperwork back and recorded at the Courthouse until July of that year. I think that was in 1950. So, there was a long delay in signing and recording. Signing dates are good, but there could be some confusing on recording dates. The other contract seems to have a good chain of title. Oh, the ladies were given their royalty rights a few days before they gave my Grandfather his royalty rights. He was an attorney so, I am assuming this transaction was to pay a legal fee.

6

The oil company has never told us why they have a concern. I am just guessing from my research. The oil company has told us they are requiring the two ladies estates, who gave my Grandfather his royalty interest, probated their estates. Well, a year later and still no money.

Wade Caldwell said:

Is the issue the Seller’s retained some interest or were married and the oil company is concerned they had a spouse with a community property interest? What did the seller file that was after your grandfather filed?

7

Joe Jackson said:

The oil company has never told us why they have a concern. I am just guessing from my research. The oil company has told us they are requiring the estates/families of two ladies to probate the royalty interests. Well, a year later and still no money.

The ladies were given their royalty interest by the land holder. A few days later, they gave my Grandfather some of their royalty interest to him. Only lady lived back east. She signed all the paperwork in both of their transactions, in January of 1950, but both recordings were done 6 months later. So there could be some confusing, but all the contract signing dates are proper.

Wade Caldwell said:

Is the issue the Seller’s retained some interest or were married and the oil company is concerned they had a spouse with a community property interest? What did the seller file that was after your grandfather filed?

8

To your first question, we do not know. The oil company is not telling us their concerns. The recording dates of the paperwork for one lady were late or delayed. The actual contract signings are all good with correct dates, just one lady did not get her paperwork back for proper recording at the courthouse.

9

Yes, check the language of the instrument where your grandfather got his mineral rights to make sure it is not something besides a regular mineral interest. If it is a regular mineral interest, contact an attorney.

10

Hey, Joe -

I’ve been looking over your message string and I do not understand why the company is “requiring the two ladies’ estates”.

Is there some verbiage in the consideration clause to the effect that the interests conveyed were for the probating of their respective estates? Or is the title issue with them, not your grandfather?

Where is the property located?

Hope this helps -

Charles

11

It is not a mineral interest. It is a royalty interest in all oil, gas and coal.

Wade Caldwell said:

Yes, check the language of the instrument where your grandfather got his mineral rights to make sure it is not something beside a regular mineral interest. If it is a regular mineral interest, contact an attorney.

12

Charles Emery Tooke III said:

Hey, Joe -

I’ve been looking over your message string and I do not understand why the company is “requiring the two ladies’ estates.”

Is there some verbiage in the consideration clause to the effect that the interests conveyed were for the probating of their respective estates? Or is the title issue with them, not your grandfather?

Where is the property located?

Hope this helps -

Charles

Charles Emery Tooke III Certified Professional Landman Fort Worth, Texas

HI Charles

At one time, they said our paperwork is not clear. But, my Grandfather was a very prominent Attorney in his day, so I think he knew what he was doing. He was always taking mineral interests and royalty interests for payment of his services. I have found over 50 mineral rights transactions in the county he lived in.

Let me go back and tell you more details. This property was land granted to the railroad. They sold the land to a rancher in the 1920’s and he lost the land during the Depreciation. A couple purchased the land in the late 1930’s from the county for back taxes. During the 1940’s, the new owner would sell the land to those two ladies (from above) and later buy back the land. I think they did that 3 times. Strange. A Landman in the Courthouse that day said they were avoiding taxes. So, in the early 1950’s, the primary landowner gave or sold these two ladies each 1% royalty interest. The reason is not stated. A few days later, my Grandfather was given some of the 1% royalty from each lady. One paper trail seems good. The other paper trail, as I mentioned, had late recording dates for both the 1% transaction and the amount given to my Grandfather. Those ladies lived back east. The dates on the contracts are in good order, just the recording for both contracts was recorded about 6 months after these contracts. Oh, it appears that the daughters of the original rancher tried to sue for mineral rights two different times and lost both times. My grandfather was their attorney for at least one of those lawsuits. I am not sure if that matters at all.

So, at first the oil company said our paperwork was not in order, so we fixed it. Now, they are saying those two ladies’ families need to probate the wills as they are not comfortable with something, but they will not tell us. We have no idea why or what the status is, or when they passed away. I guess it was a long time ago.

I think you know as much as I do now.

Thanks for your help

13

Joe -

Like one of the fellows mentioned before, the Doctrine of After Acquired Title resolved any issues involving the late filing - even if the late filing woman had died in the interim.

I might be missing something, but when the ladies each deeded part of their interest to your father, his interest immediately became a completely separate interest, unrelated to theirs in any way.

The further chain of title of the interests they retained has nothing to do with the future chain of title of your father’s interests. Why would they be insisting on your providing probate matters on the two ladies?

Ask them for a copy of the Title Opinion, or at least that part of it where the Examining Attorney makes that requirement. I want to read that.

Charles

14

Hi Charles,

They are not requiring us to do the probate, but they are holding everything up until those two families get the probates done. The well has been producing for over a year now.

So, why I am at, let me ask you all this question. We have a royalty interest in this well and not a mineral interest. The original split was a 1% royalty interest to each lady and my Grandfather later was given 1/3 of the 1% from each lady. Does this mean that 1% of the royalties would be split between the ladies’ heirs and my family? For example: The well generated $100,000 in oil sales for a month which are to be divided among the owners. 1% of $100,000 would be $1,000 royalty split and further divided between the lady heirs and my family. So, that would mean $333 to be paid to my family. Or, 0.00333 of the gross royalties. Is that the way this would work?

Thanks

Ted

Charles Emery Tooke III said:

Joe -

Like one of the fellows mentioned before, the Doctrine of After Acquired Title resolved any issues involving the late filing - even if the late filing woman had died in the interim.

I might be missing something, but when the ladies each deeded part of their interest to your father, his interest immediately became a completely separate interest, unrelated to theirs in any way.

The further chain of title of the interests they retained has nothing to do with the future chain of title of your father’s interests. Why would they be insisting on your providing probate matters on the two ladies?

Ask them for a copy of the Title Opinion, or at least that part of it where the Examining Attorney makes that requirement. I want to read that.

Charles

15

Hi

I am back home and I am reviewing the Assignment of Royalty documents. The first one is a classic fill in the blank “Assignment of Royalty” (no 3g Assignment of Royalty (Southern Form) Kintzel Blue Print Co, Casper, Wy) between the mineral right owner and to each of the two ladies. One set per lady. This is for 1/2 of 1% Royalty of all oil and of all gas produced and saved from the hereinafter said lands in the County of Rosebud. This is followed by Township information and more boilerplate legal stuff. This was signed 21st day of January 1955.

This was followed by my Grandfather typing up another Assignment of Royalty, that gives him 1/6 of 1% Royalty. It appears the legal wording is the same other than my grandfather listed our Grandmother as Joint Tenants in Common with rights of survivorship. My grandfather outlived our Grandmother and we reopened their probates, after my mother’s death, to take care of all these mineral rights he had. We did not know about this one, but I searched the land records and there is no release from my Grandfather. The only difference in the forms is one is a “fill in the blank” and the other form is completely typed out with the same language. Oh, this was signed on 7th day of February 1955.

Recording information. One set of Assignment of Royalty has the lady’s assignment on 11th of February at 9 am and my Grandfather’s Assignment was recorded on the same day at 9:05. Seems all correct. Now for the other lady’s assignment to her, that was recorded on 25th day of February, 1955 while the assignment to my Grandfather was recorded on 7th day of February 1955 at 9:10. So, the recording of the first assignment to the lady was after my Grandfather’s assignment to him. The original document was signed 21st day of January, 1955 and assigned to my Grandfather on 7th day of February. This is the only issue I see, but you have stated that is not an issue. From my reading of title work in the past, it was never an issue too, as we have 60 years of time.

So, I hope this helps you and you can give us some advice.

16

I got this from my brother who said it was in an email to him about this issue. Maybe he summed it up, but it will shed more light onto the issue.

There is a title requirement in which a Stipulation of Interest and Cross Conveyance is needed to be executed by the ladies that deeded the royalties to Grandpa and us before revenues can be disbursed. The ladies are both deceased and their heirs are working on legal matters to transfer their interests which had apparently never been transferred. No one on their end can sign the Stipulation of Interest and Cross Conveyance until their estates are complete and the royalties transferred.

17

We opened our grandfather’s estate up mostly to transfer all the mineral rights that were being passed onto the grandkids, after our mother’s passing, into a newly formed company that we set up. We did not know about this one, since it was a Royalty interest and not a mineral interest. After we found out, we did place this into our new company. I found over 50 mineral listings in this County alone and our grandfather had other mineral interests in other counties too. Too bad nobody wants to drill on them. We thought by creating a company and placing all of these mineral rights into the company was the best option. We now have equal shares in the company.

I believe that our estate attorney did make it possible to pass on more mineral rights to the company if any more are found without reopening the estate. I’m not sure of the legal term. Some of these transactions are pushing 70 years and our records are spotty.

18

Mr. Tooke, (whom I know to be a competent land professional), asks some very pertinent questions.

What the “oil company” requires to put the interest into paying status might seem excessive, but they don’t want to pay the same interest twice.

This seems to be a matter that can be resolved by a quiet title action more easily than messing with a sixty year old probate matter.

But I’d advise against waiting longer than four years from the initial date of production, or else you risk losing some $$$ due to the running of the statute of limitations on recovery of monies due. And you’d be well advised to check that time limit with an attorney, because it may be a shorter period, depending on the State the well is located in.

Phillip David Haskett

Registered Professional Landman

Nacogdoches, Texas

Charles Emery Tooke III said:

Hey, Joe -

I’ve been looking over your message string and I do not understand why the company is “requiring the two ladies’ estates”.

Is there some verbiage in the consideration clause to the effect that the interests conveyed were for the probating of their respective estates? Or is the title issue with them, not your grandfather?

Where is the property located?

Hope this helps -

Charles

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

19

Joe,

I have to agree that it sounds as if the oil company or purchaser is asking for something which has no bearing on the interest held by your family. Although they refuse to tell you what the real issue is, try asking them to send you a copy of the title requirement in their division order title opinion which has caused them to suspend your revenues. If they do not have a title opinion which justifies their action, you may well need to bring in an attorney to remind them of a possible breach of contract under the lease terms.

20

Hey, Joe -

Now, that I can understand. There must have been some sort of confusion in the original paperwork to your Grandfather.

Can’t do anything but wait for the ladies’ heirs to straighten out their paperwork.

At least you have money piling up somewhere!