Ohio Marketable Title Act

[coro]

Hello folks, I am reaching out again because of the latest news on my mineral rights.

I was supposed to see my first check September or October. Nothing came in the mail so I reached out to the senior landman at Ascent. This was his reply:

Ms. Fox,

I do have some disappointing news. The surface owner of the tract your lease covers has a potential claim to the oil and gas. Your claim to the oil and gas, along with several others, is based on being a successor to previous owners of the tract who conveyed the surface rights but reserved the oil and gas rights in a 1945 deed.

Unfortunately, Ohio has a law called the Ohio Marketable Title Act which invalidates oil and gas reservations that are more than 40 years old and vests those oil and gas rights in the surface owner under certain circumstances. The law is written ambiguously, and it is not clear whether those circumstances apply in this case. The Ohio Supreme Court recently issued several rulings interpreting the law, but those rulings have raised more questions.

As of now, the oil and gas royalties attributable to the 1945 reservation are being held in suspense since it is not clear who has the better legal claim. The royalties will continue to accrue in suspense and will be paid once there is a clear determination of ownership. This can come in two ways. The Ohio Supreme Court may issue a ruling that clarifies the matter, or you and the other successors to the reservation can try and reach an agreement with the surface owner, which is Ohio River Collieries Company.

I know this must be very confusing and frustrating. Ohio law regarding mineral ownership has been evolving over the last few years, and it has left many potential mineral owners in the same predicament. Hopefully the Ohio courts or the legislature will provide clarification at some point. If you like, I am available to discuss the matter in more detail.

What should I do? (If anything, I’m in Wisconsin, may have no legal standing in Ohio.)

It seems the Ohio legislation with Ohio River Collieries Company literally grabbed my royalty payments out from under me!

I signed a contract with Ascent in 2018. How can the surface land owners cancel that contract based on legislation passed in 2019?

Yikes… as my mom said… it’s always something!

I greatly appreciate any feedback. I must not be alone in this situation.

[M_Barnes]

Ohio is one of several states that have a dormant minerals act. Not sure what your statute says, but in some of the other states, the mineral owner must claim the minerals every so often to keep them. Other states automatically revert after a certain number of years. Read your statute and see if you have an option to claim. Since you had an “active” lease, that might help. You may just have to wait on the legal wrangling to finish.

[coro]

Thanks for responding! I thought more folks would be in my situation, glad they are not!

I have been learning a lot the last 24 hours. I have been talking to the senior landman at Ascent. He explained to me that it’s the Marketable Title Act. That sometime in 2019 the courts “muddied the waters” of surface land owners and mineral rights that are on deeds, but over 40 years old. Something about how fractured interests get after decades of inheritance and the word “inheritance” not being in the deed even though my father’s name is in the deed.

Complicated to say the least and the Dormant Mineral Act is not really the issue, as I’ve been told.

At this point, I have talked to a couple of attorneys and they say I am not alone in Belmont County, others are not happy either and need answers. Ascent has a clause where they will not pay out if ownership is in question. I get all of that, but I thought with Ascent verifying my ownership, there would not be an issue, but it’s the courts. The 7th Court of Appeals in Youngstown is involved as is the Supreme Court of Ohio.

Two takeaways thus far… 1) I am glad I joined NARO. They are a group of the most wonderful people that I reached out to and are trying to get me information. Very grateful for the kind hearts they have. 2) I am grateful for an understanding landman! He has received the brunt of my frustrations and is willing to help me the best he can. How his help plays out has yet to be determined, but at least he opened the door of hope, to somehow see if I can keep my small interest, possibly working with the surface land owner that may have legal right to all of the family’s interest now.

It’s an emotional situation to be expecting something, especially now the wellheads are producing and to be told, at this point in time, not 2019, that we may have lost all interest.

It’s a waiting game now, but thanks again for replying. Interacting with others that have knowledge is always appreciated.

[M_Barnes]

Ah, interesting on the Marketable title portion. My first read of your question sounded more like dormant minerals. Good luck on getting it straightened out.

The OHIO NARO group is a good set of folks who really try to help their owners get good info.

[Djefferis]

As mentioned - this appears to be a DMA issue.

In short - there are actions that likely are required of an owner in minerals to preserve the interest. Failing to take these actions open the door for a surface owner to “rejoin” the minerals with their deed by filing for abandonment.

Hire an expert on the topic - do not rely on a landman (no matter how knowledgeable they appear) or attempt to resolve it yourself. The operator is more than happy to allow things to be held up for years in a court until a rightful owner can be determined. Royalties held in suspense are likely NOT being paid - just basically being considered as an IOU to the operator to the owner once determined.

My first question would be how long has the person listed on the mineral interest in 1945 been deceased (assuming it’s unlikely someone who held property 1945 would be the one who signed a lease in 2019 - 70 some years later). After this person passed - did the next of kin take any action to update the mineral interest into their name? Failing to do so within 20 years following the death of the last party named likely is all the surface owner will need to prove to have a case to rejoin interest.

Failing to preserve the interest though is only half the issue. The surface owner would need to demonstrate that they attempted to locate any known heirs holding rights and notified them of the need to act to preserve or the minerals would be considered abandoned and revert to the surface owner. There are a variety of ways this can be done - including service by publication if no other reasonable means of location are possible. Any relatives still in Belmont County and until when? Services such as findagrave can be viable options to locate descendants of deceased owners who may have left the area.

If ORC is the surface owner now who has a claim - I suggest you look into who you are likely up against. This is not some equally uneducated on the law landowner - this is a well organized property owner who likely has a significant head start on you and has probably filed the abandonment from the start of the mineral boom in the mid 2000s if they owned it at that time. Time is never on your side and even less so when you’re fighting someone who has dealt with this a time or 2 before and has good representation already in place.

The fact someone paid you for a lease is meaningless / I can offer a lease on the Brooklyn Bridge and if someone is dumb enough to buy it - it’s their fault. It doesn’t make me owner of the bridge nor does it grant me any privilege of claim in the eyes of the law if its ownership comes into question.

Not to say all is lost - just be prepared. As someone whose family has tangled a time or 2 on similar matters - it may seem the only “winners” in this are the lawyers. Unless you are talking a significant amount of land and minerals - and a solid case - most will likely not do a contingency fee deal. Fighting even for 50 acres is not worth their time and expenses for 1/3 of the recovery. Larger landowners are well aware the average person isn’t prepared to expend 20k on a retainer with no guarantee of recovery and will likely float a stupid low offer to keep this type of case out of the courts: it’s still a relatively untried theory of law and some of the lower courts have been known to go rogue on their decisions. No one wants to be remembered as the person who lost a major decision and spent the next decade fighting (and paying) to get it overturned on appeal. Likewise - if they took some action to rejoin minerals (even if it may not have been as complete as it could have been)- they know the burden of proof shifts from them to the plaintiffs - and they have a much easier road to victory. Good luck / trust me it is winnable - we have fought and recovered a few times on similar matters - but it’s like winning the lottery - you need to do a lot of work and in the end you may only get a proportionate share of the interest depending on your family and the number of descendants between you and the last titled owner.

[coro]

Wow! You have much knowledge! I have spent days digging into this and talking to many people and an attorney or two. Being several states away is a challenge also, but legally, from several sources, one being the senior landman who also has a law degree, made it clear it is a MTA issue, not a DMA issue. I found paperwork where the land owner, a Thomas G. Gentile owner of ORCC, filed in 11/21, a notice of failure to file. I found out the tract I am involved with is complicated, 1/2 of it was involved with a company that does not exist anymore and that what that was about. I can see how each person’s situation is unique. I signed with Ascent Resources. They determined that I am the daughter of the person on the deed, my 1/2 sister is on the deed, my aunts, uncles…many family members. I get what you are saying about the lease aspect though, and I thought since I signed in 2018, that my ownership was determined so I did not abandon anything. Also, it gets complicated, it’s not about “abandoned” minerals,(I’ve been told) it’s about the verbiage of “inheritance” not being in the original deed from 1945. I have a copy of the deed and money was paid for access necessary to get said coal, gas or oil.

For me, from what I have learned thus far, it’s all about the MTA. It’s about the state of Ohio “cleaning up” decades of fractured percentages inherited by folks that don’t even know they own a teeny, tiny % due to estates being inherited by more and more distant relatives.

My dad’s side of the family hasn’t lived down that way for decades…no relatives down there now.

The landman is not a low level guy, and he has that law degree, so I respect what he has been telling me. He also knows all the twists and turns of the tract I am involved with. He said to give him a few weeks to see if anything changes. He said I may be able to negotiate with owner of ORCC for a % of my mineral rights that he is “acquiring”. He mentioned I could sell my interest, but if I don’t own them now, how could I sell it? I get calls and letters often to sell.

I’m a scrapper, so I will not let this slip away from me. The potential of the courts siding for the mineral rights owner may be very possible from the latest articles I have read in National Law Review. In the meantime the payout sits in suspense until owners are verified, that could take years I assume…

Frustrating to say the least, but I will be proactive in figuring this out, hire an attorney if I have to and do lots research.

Thanks again for sharing all your knowledge. This seems like experience is better than words on paper kinda world! I am new at all of this, yet it’s taken 5 years to get to this point, just as a payout was to come then “legislation” rears its ugly head!

[Djefferis]

Again - stop obtaining your advice from the landman involved. Does not matter where he obtained an education at or how long he had been on the job. He does NOT represent your interest - he represents those of his employer. Would you ask a buyer’s agent to perform the inspection on a home you wanted to sell and rely on their assessment?

Regardless of what law applies - the first question that needs to be answered is this - whose name is on the deed that reserved all coal/oil/gas and is that the exact language used?

Ascent paid you money believing you to be the owner and signed a lease with you - so what? Legally - who they believe to be legal and proper owner has zero bearing here. Fact is - it’s a very common tact for them to sign any and all possible outcomes - and they may well have done so with the belief you would be easiest to deal with and secure a deal with. Others offering to buy are likely doing so based solely on the fact that lease is public record and they know the site is soon going to be active. They aren’t making offers based on their belief you are the “rightful” owner - and the moment they found out the title was “muddied” they would let you know it’s your problem to fix and until then their offer was on hold. Of course if you win and the deal was still favorable for them - then they would hold you to fulfill the sale.

So you have found a notice was filed 11/21 by the surface owner - how did you find out about this notice and what action have you taken and when? These will be the first questions anyone asked to adjudicate the case will be asking. Saying you’re aware of a notice and failing to take action once you became aware is rarely positive.

Negotiating a percentage - again - why? If you own things outright / why would you negotiate to give away a part to a stranger?

These are things you need to be talking to a competent attorney about and not posting on a forum. Your willingness to fight means nil if you have no idea of the rules of the fight or the weapons required in the fight. Again - this is not a “new” scenario - it happens every time there is a boom somewhere in minerals and someone wants to buy/lease. If anytime in the past someone potentially reserved interest in said minerals / these cases come to light. There has been interest in oil/gas and obviously coal in SE Ohio for well over 100 years - coal has now passed and has little to no value but for the last 20 years there has been a significant uptick in oil/gas. Good luck.

[coro]

I posted on this forum to see if anyone else holding mineral interests is being affected, having their royalty payout put in suspense, by the Marketable Title Act.

If I was told in 2019 that the surface owner MAY own the mineral rights, I might not have been so upset. The fact I was alerted the same week I was to see my first payout was extremely suspect.

I hear what you are saying about the land man, he works for Ascent. I hear what you are saying about getting a competent attorney, but they cost big money and my interest is small so I have to weigh out the financial risk versus the reward.

The deed clearly states my father’s name and his heirs have the right to obtain oil and gas on said tract.

At this point in time, the courts have no definitive decision yet about severing deeds from the surface owners, from what I understand. I called the Belmont County Clerk to see if there were any transactions on the property; that’s when she found the failure to file, but that is not pertinent to our acreage.

After reading your response, I feel as if my family has been used to sign leases so Ascent can get the DPU and a permit to drill. Now that the wells are producing, Ascent cannot pay out royalties due to “legislation” from 2019.

If this is the way big energy destroys the little guys from getting royalty payments, I must say it is a pretty great way to shut us out.

Big energy wins, big law firms win, big property owners win… little guy loses with no way to fight the good fight.

Incredibly depressing, after 5 years of involvement, to say the least.

But thanks for your response.

[Jeffrey_Beunier]

MTA issue is different than DMA. Essentially, under MTA - if the surface deed has transferred without the mention of a reservation of minerals for a period exceeding 40 years, then due to the marketable title provisions of Ohio code, the minerals revert back to the surface. DMA sometimes conflicts with MTA and can be confusing. A title attorney would be helpful. You would need to review the chain of title for your parcel and see when the last deed which mentioned the reservation of minerals was recorded.

This has absolutely nothing to do with big energy at all, or the little guy - it’s OH Supreme Court. This actually can cause issues for the oil companies as the OH law has changed in opposite directions so often that it’s resulted in them paying significant lease bonuses out to the wrong individuals.