Dear Mr. Walker,
First, we cannot make an informed comment without seeing the language of the reservation. If a 1/16 NPRI was reserved, then the NPRI is fixed and not floating. In your case, if the lease provided for a 22.5% royalty, then subtracting a 1/16 NPRI would leave you with a 16.25% net effective royalty.
As to royalty acres, there is great disagreement over exactly what a royalty acre represents. In theory, a royalty acre is the full royalty share in one mineral acre. Most will agree that there are 8 royalty acres in one mineral acre, absent any language to the contrary.
As to breach of contract, it really depends on what the contract says. If there is a provision for proportionate reduction in price in the event of title failure, then you might be on the hook. It all depends on what the contract provides and what the NPRI reservation provides.
As to a proportionate reduction, it would seem to me that the effect would be .0625/.225, or 27.78%, which appears to be in line with what the buyer is getting at. HOWEVER, royalty is not minerals. It is a subset of minerals and depending on the state where the lands are located, may not even be considered real property. I find their claim problematic, since they are seeking a reduction in price for this transaction. What about if the next lease provides for a 25% royalty? Following their logic, then they would owe you a rebate.
There is a way to skin the cat. One way might be to reduce the mineral acres conveyed by 28%, but convey the full royalty interest in the 19 mineral acres. That would level things out, it seems to me.
Ms. Mosley did give good advice. Get a lawyer who knows what they are doing and find out what your contract provides for in the event of title failure or issues. Also find out exactly what the 1938 deed provides for.
It is very late at night as I type this, but you are requesting a quick reply. Take this advice as you receive it and best of luck and fortune to you.
Buddy Cotten