Question on Co-Tenancy (Tenants in Common)

General Mineral Rights Discussion
1

This is for the smart legal minds out there. I think I see a problem, but I am not sure.

Co-Ownership, in all its forms, gives each co-tenant the right to use, occupy and possess each part of the property, but not exclusively. Co-tenants may not exclude other co-tenants right of such tenants from possessing, using or occupying the same part of parcel. This undivided right of possession forms the basis of the co-tenancy relationship.

Co-tenants may terminate the co-tenancy at any time by partitioning, which changes the co-ownership to sole ownership. Partitioning divides the property according to value, not area, and may occur either voluntarily or judicially.

Voluntary partitioning requires an agreement among the co-tenants to divide the property in a certain manner.

After exchanging deeds, each former co-tenant owns a certain parcel outright.

Judicial partitioning is done by the court. If the court finds the property cannot be divided fairly and equally, it orders the property to be sold with all the proceeds divided among the owners according to their undivided interest.

HERE IS MY ISSUE.

A royalty buyer attempts to purchase a royalty or mineral interest. The royalty or mineral owner refuses. The buyer then says, "Well, just sell me half (or a quarter, or whatever)." The buyer has just created a co-tenancy situation if the transaction transpires.

He is a clever, devious mineral/royalty buyer and knows that a well is to be drilled and has a high probability of success. He then offers to buy the rest of the interest and the seller refuses.

At this point cannot he go to the court for a judicial partition of the property in value and at the sale, be the highest bidder and own the entire property outright? This clever buyer has the deeper pockets and has placed himself in a position to capture all of the interest of his co-tenant.

I would think that a sale of a portion of rights could include a stipulation that neither buyer nor seller will judicially partition the property.

Does my thinking hold water? Is this a potential problem waiting to happen?

Thanks for everybody taking a look at this and offering opinions. I would appreciate opinions from legal minds.

Best,

Buddy Cotten
2

Buddy , that's what happened to our family. Oil company obtained or bought or whatever a portion of the mineral rights. They went after stepkids outside the family and obtained interest from them. The attorneys then filed the partition suit and all the litigation that goes with it. They force you to spend your money to obtain council but, not as much as they will spend. If they can get a judge who will side with them you are in a no win situation. In our area of Wv. the district judge ruled against partition in the last hearing I saw. That will not stop the companies from filing more in hopes the owners don't have the funds to fight them. The legislature needs to open up this matter to halt the companies from doing this. Once a person/company gets a hold of some your mineral tract they are the same as a partner until they "force" your hand. The code in Wv. states that lessees can not file partition when it comes to oil/gas mineral rights. When the company buys some of the interest, that makes them an owner so, there lies the problem. The partition reads, the unsigned heirs are holding them up from developing their interests. We sure need that word stipulation in the law. That word is as critical as the words the company uses to change a whole paragraph in their favor. If the legislature would have passed the forced pooling bill last month the company would have had their way. There would have been 7 people on a panel that would deal with your fate.

3

I'm confused by the scenario in general. Was the interest not sold as undivided?

4

Dear Mr. Murray,

In my scenario, the interest was sold as undivided. A divided interest creates no co-tenancy situation.

The whole thing revolves around the premise that you are never forced into co-ownership with another and the interest can be moved from undivided to voluntary division or a partition by licitation.

Best,

Buddy Cotten

Jordan Murray said:

I'm confused by the scenario in general. Was the interest not sold as undivided?

5

Buddy-

If surface is owned also, the court has to find it is not capable of being partitioned before it is sold, which is pretty tough to show. I think a buyer of part of the minerals and surface would be taking a big risk counting on their being a sale instead of a partition. Even if there is a sale, the partial buyer also runs the risk a third party shows up and bids up the price, which would defeat the ultimate goal of trying to acquire the other owners property at a cheap price.

In short, yes it could happen, but if the property is of any size, they will usually find it can be partitioned.

6

Obviously many different scenarios could happen in a situation like this. As a mineral owner with no surface, if the tract is large enough there may be one part of the property that has more potential than the other part. If I was an undivided interest owner, I would not necessarily want to be partitioned to receive only a "piece" out of the entire tract. What if you don't end up with the piece over the "sweet spot" (should one exist)? This all goes back to how informed the other mineral owners are with their property. Sometimes an undivided interest over an entire tract is more valuable than being partitioned to just one piece of the tract. As a mineral owner, I would argue against partitioning by either method of remedy under the law, unless they want to give me a piece that I had prior knowledge to where the reservoir may lie in the tract. This is clearly a situation where one party could take advantage of another if the court allowed it.

7

Dear Wade,

I’m sorry. In this case it is minerals only.

Buddy

8

Buddy-

Partitioning of minerals follows similar principals as surface. They seek to divide the minerals according to value, not according to size. So the issues Kitchens mentions, or if part of the land has a bad lease on it, where another has a better lease or is open, are all factors the court may take into consideration in partitioning. I think it would be even more difficult to block a mineral partition and force a sale, because there are probably fewer circumstances where the court would find it impractical to partition minerals.