Royalty checks are not worth legal cost of transfer

Law & Legal
1

If you have inherited a lot of small override interests, and the legal requirements to sell cost me half of the interest income, should I just offer the company a price for each quitclaim the amount (gross) paid to me in 2012 using 1099 Misc. Totals? I have bundled them together, and no takers. Only a few might be worth negotiating.

I already went through 6 months of legal fees and proceedings, recordings, hours of info list creation, phone calls etc. Because my deceased father did not move his interest to the family trust. Now that I have all but one trouble maker-Clayton Williams of Midland: Ward, Burleson and Fayette, still holding funds from me with the excuse that I’m only entitled to father’s half.

The answers they have given for this is “Community Property Law” although they agree the trust, will and admit to probate list his trust as new owner. No divorce involved, no separate payments, property acquired during marriage. They could be using original trust language that states that property should be divided after first deceased. The purpose of that is to avoid estate taxes. Could they legally use that?

I have 8 other royalty companies that completed transfer as promised. Clayton Williams is only holdout. Wells are in Burleson. Even my own estate attorney seems to believe they are right, just trying to correct a division order.

I don’t believe this is true, but this production only pays $700 a year, plus the $800 they are holding in suspense.

This is not worth going to court over, I’ll bet I could clear it up fast by offering to sell it back. They seem money motivated to stall.

Any thoughts about why they would be doing this?

2

If they are paying at least half, I would hang on to it. Conoco has been holding some money they owe me for about 4 years, I didn’t get division orders until I started a lawsuit, and there is still a well outside the lawsuit that they claim they can’t find my interest in. I know well the urge to get things settled immediately, I’m not even getting paid half. If I were getting paid half I would wait them into the ground. There is always the chance new wells will be drilled, and eventually there might be enough money there to make it worth going after the other half. I’d say that you might need to consult another estate attorney, but even if he thought he could go after and get the money in court it might be too costly. I would say just hang in there, collect the half and hopefully win another day. If you did sell, I would sell to someone else other than Clayton Williams, why give them the satisfaction. I would also tell the new buyer I would cooperate if they wanted to go after the money in suspense, just for the satisfaction. I wish you better luck in the future.

3

I don’t have a lease, just a decimal interest in the liquids that come out of the hole. My dad created a trust, but did not include these wells in the trust. I had to submit a probated will, trust, and admit to probate for recording at the well’s location County in Texas. The fees are from $4 to $64 first page. They had to send back a proof of recording which is a copy of the will with Book, Vol. Page # on each page (original) and a stamp by the County Recorder. Had to send that to operating company to get a new division order. This process took 8 months of going back and forth by mail. Long story short, I will have to repeat the process above because the original trust is in my dad’s name. I have gained the legal right to sell, but I don’t want to send all that paperwork just to change the name of the trust to mine. These wells have depleted significantly in the last 2 years, and you never know when they will just shut down. I feel like complaining to someone in authority in Texas about the complete chaos property transfers have become.

4

I see, you have an NPRI for that particular hole in the ground. The general principle still holds though I think because they could always stimulate that formation again or recomplete in another formation.

5

Suzan-

I’m not a lawyer. As I understand part of the issue, you have gained the legal right to sell the deed and Williams accepts this authority. Could you quit claim the deed from you to your living trust, assuming you have one? You would now have the title in your living trust and authority to transact business for that trust, including administration of the mineral rights and royalties and you’ve kept the title in the family. I’m in the same process of having to decide whether to open 3 probates from my grandfather, grandmother, to their son, my father. I feel your pain with the issues, exorbitant filing fees and other emotionally draining factors.

Again, please remember, I am not a lawyer, it’s just an idea.

6

Susan,

This response to your problem was submitted to me by a friend. She is not a Forum member but asked me to respond for her.

Clint Liles

— (The following is per my understanding as a layman without a background in the legal profession so always seek appropriate professional advice!)

Fortunately in Texas citizens are blessed with multiple advantages:

  • One of the best probate systems in the nation (recall Howard Hughes being flown to Texas to die). This is something a layman could probably present themselves and minimize cost. Contact appropriate probate court directly for guidance.

  • Escheated Funds: there is a point in time at which a company has to surrender “abandoned” assets so withheld money would be turned over to the State of Texas Escheated Funds. The appointed fiduciary must file a claim and submit credentials, proof of right to claim, etc. to receive assets. They collect a small fee (still 1.5%?) for services. Assets are probably retained until claimed. Can go direct.

Re: Why are they doing this? The old adage “because they can” applies. If they run you off, they eliminate cost of maintaining this account, etc. If you surrender or sell your mineral rights, they are forever gone and no one knows what the future might bring. (Might be nothing but who knows?) Another important answer and more likely one is because they have to. If this is truly to correct a division order, it appears it is to properly protect both parties and get things right. Legal advisors should be able to determine if that is the case.

Other options you may want to consider: sell to other owners of this same mineral estate interest; or other private individuals, companies or brokers. Last two might offer less but you don’t know until you ask. An ad in area paper might spark interest. Before you take action, you might inquire where deeds are filed if anyone has been doing searches in the area for mineral owners as a gauge of area activity as well as the mineral forum. Also consider just how much trouble it is to have hundreds of dollars of free money to spend each year. Others would gladly bear that burden. Or you could donate it to a favorite charity, etc.

Hope this helps – good luck!

Clint Liles friend…

7

Hello Clint and friend:

Your advice agrees with my thinking (strategy) of dealing with these Override decimal interest in the producing wells. I am not a lease or surface owner, my only interest is the liquids that come out of that particular well. I don’t think field activity affects me. You suggested the Escheated Funds. Also known as the Texas Unclaimed Money Funds could be the least expensive and labor saving strategy out there. I think the wait time is 5 years, but not sure. Then there is quitclaim, I sent 2 forms I found on the internet, to some drippers about a month ago. If they ignore that, the well is surely worthless.

Finding original deeds would be very costly and time consuming (unless they free up that info for the internet).

The royalties that did send new division orders and checks first are the least valuable. More money = more hassle. Over the last 15 years the production of these wells were bought and sold several times (trying to flip leases and profit on the difference). Easy for them, but I’m required to prove all of these recordings to make a paper trail—because they can make me. Went through that transferring these assets into my father’s trust. Had to figure it all out myself. No advice from anyone! Trial and error, and I still had to pay just under $3,000 in fees. I earned a little over $4,000 a year.

I would gladly give it to charity—they might feel ripped off after trying to gain ownership. That’s why the profit people don’t want to bother.

As for Clayton Williams, he started all of this in the mid 1970’s by using this OR interest for bonus pay and is the only company still stalling.

Is there a standard offer letter? I’m just going to make up a number based on 1 year of income. I want the buyer to be responsible for legal costs of transfer. Every county and company is different, so I can’t determine price. I just use that wording for the consideration part.

BTW: I could not find any info about Howard Hughes flying to Texas because of Probate Law. He was really sick, and died in flight between Acapulco and Houston. No other details.

Thanks for your input. I’ve solicited a lot of free advice. My conclusion is that there is no Texas Probate Law governing minerals because everyone just does their own thing!

Susan,

This response to your problem was submitted to me by a friend. She is not a Forum member but asked me to respond for her.

— (The following is per my understanding as a layman without a background in the legal profession so always seek appropriate professional advice!)

Fortunately in Texas citizens are blessed with multiple advantages:

– one of the best probate systems in the nation (recall Howard Hughes being flown to Texas to die). This is something a layman could probably present themselves and minimize cost. Contact appropriate probate court directly for guidance.

– Escheated Funds: there is a point in time at which a company has to surrender “abandoned” assets so withheld money would be turned over to the State of Texas Escheated Funds. The appointed fiduciary must file a claim and submit credentials, proof of right to claim, etc. to receive assets. They collect a small fee (still 1.5%?) for services. Assets are probably retained until claimed. Can go direct.

Re: Why are they doing this? The old adage “because they can” applies. If they run you off, they eliminate cost of maintaining this account, etc. If you surrender or sell your mineral rights, they are forever gone and no one knows what the future might bring. (Might be nothing but who knows?) Another important answer and more likely one is because they have to. If this is truly to correct a division order, it appears it is to properly protect both parties and get things right. Legal advisors should be able to determine if that is the case.

Other options you may want to consider: sell to other owners of this same mineral estate interest; or other private individuals, companies or brokers. Last two might offer less but you don’t know until you ask. An ad in area paper might spark interest. Before you take action, you might inquire where deeds are filed if anyone has been doing searches in the area for mineral owners as a gauge of area activity as well as the mineral forum. Also consider just how much trouble it is to have hundreds of dollars of free money to spend each year. Others would gladly bear that burden. Or you could donate it to a favorite charity, etc.

Hope this helps — good luck!

8



Suzan C. Holten said:

Hello Clint and friend:

Your advice agrees with my thinking (stategy) of dealing with these Overide decimal interest in the producing wells. I am not a lease or surface owner, my only interest is the liquids that come out of that particular well. I don't think field activity affects me. You suggested the Escheated Funds. Also known as the Texas Unclaimed Money Funds could be the least expensive and labor saving strategy out there. I think the wait time is 5 years, but not sure. Then there is quitclaim, I sent 2 forms I found on the internet, to some drippers about a month ago. If they ignore that, the well is surely worthless.

Finding original deeds would be very costly and time consuming (unless they free up that info for the internet)

The royalties that did send new division orders and checks first are the least valuable. More money = more hassle. Over the last 15 years the production of these wells were bought and sold several times. (trying to flip leases and profit on the difference. Easy for them, but I'm required to prove all of these recordings to make a paper trail-because they can make me. Went through that transferring these assets into my father's trust. Had to figure it all out myself. No advice from anyone! trial and error, and I still had to pay just under $3,000 in fees. I earned a little over $4,000 - a year.

I would gladly give it to charity-they might feel ripped off after trying to gain ownership. That's why the profit [people don't want to bother.

As for Clayton Williams, he started all of this in the mid 1970's by using this OR interest for bonus pay. and is the only company still stalling.

Is there a standard offer letter? I'm just going to make up a number based on 1 year of income. I want the buyer to be responsible for legal costs of transfer, Every county and company is different, so I can't determine price. I just use that wording for the consideration part.

BTW: I could not find any info about Howard Hughes flying to Texas because of Probate Law. He was really sick, and died in flight between Acapulco and Houston. No other details.

Thanks for your input. I've solicited a lot of free advice. My conclusion is that there is no Texas Probate Law governing minerals because everyone just does their own thing!

Susan,

This response to your problem was submitted to me by a friend. She is not a Forum member but asked me to respond for her. Clint Liles

--- (The following is per my understanding as a layman without a background in the legal profession so always seek appropriate professional advice!)

Fortunately in Texas citizens are blessed with multiple advantages :

-- one of the best probate systems in the nation (recall Howard Hughes being flown to Texas to die). This is something a layman could probably present themselves and minimize cost. Contact appropriate probate court directly for guidance.

-- Escheated Funds: there is a point in time at which a company has to surrender "abandoned" assets so withheld money would be turned over to the State of Texas Escheated Funds. The appointed fiduciary must file a claim and submit credentials, proof of right to claim, etc. to receive assets. They collect a small fee (still 1.5%?) for services. Assets are probably retained until claimed. Can go direct.

Re: Why are they doing this? The old adage "because they can" applies. If they run you off, they eliminate cost of maintaining this account, etc. If you surrender or sell your mineral rights, they are forever gone and no one knows what the future might bring. (Might be nothing but who knows?) Another important answer and more likely one is because they have to. If this is truly to correct a division order, it appears it is to properly protect both parties and get things right. Legal advisors should be able to determine if that is the case.

Other options you may want to consider: sell to other owners of this same mineral estate interest; or other private individuals, companies or brokers. Last two might offer less but you don't know until you ask. An ad in area paper might spark interest. Before you take action, you might inquire where deeds are filed if anyone has been doing searches in the area for mineral owners as a gauge of area activity as well as the mineral forum. Also consider just how much trouble it is to have hundreds of dollars of free money to spend each year. Others would gladly bear that burden. Or you could donate it to a favorite charity, etc.

Hope this helps -- good luck!

Clint Liles friend..........

9

John Davids said:

Suzan-

I’m not a lawyer. As I understand part of the issue, you have gained the legal right to sell the deed and Williams accepts this authority. Could you quit claim the deed from you to your living trust, assuming you have one. You would now have the title in your living trust and authority to transact business for that trust, including administration of the mineral rights and royalties and you’ve kept the title in the family. I’m in the same process of having to decide whether to open 3 probates from my grandfather, grandmother, to their son, my father. I feel your pain with the issues, exorbitant filing fees and other emotionally draining factors.

Again, please remember, I am not a lawyer, it’s just an idea.

Best Regards- John

John: I think they (county clerks and estate lawyers of all stripes) are trying to milk us for all they can get. They really stick together. It’s like they wrote the probate law themselves.

10

Actually the probate laws in Texas are simple and protect everyone. Your father’s probate would pass title to half the interest to his heir(s), apparently you. You can then deed the interest into an existing trust or create a minerals trust to hold the interest. You want to get these into a trust that can be extended forever or that has the right to sell the property and distribute the funds at the point the heirs determine. The other half of the mineral interest is likely owned by your mother if this was community property. Williams is saying that is the case. She can deed that half to the same trust. Problem solved. Put all the minerals in the same trust and you are done and will never be doing a probate on these small interest again. The tech is changing constantly in the oil business. If you simply sell these interest you are likely giving someone else a windfall.

11

I agree. But have thoughts to add. When were the mineral rights obtained and how? If father and mother purchased, then half belonged to father and half to mother. If father inherited, then this is separate property and not subject to community property laws. But since not mentioned in trust or will, distribution is per state law. If spouse was alive when owner died, spouse receives half, children split the other half equally.

I am not a lawyer but that is how this layman understands Texas Probate law.

Clayton Williams is agreeable to 1/2. You need to prove how the other 1/2 flows down. Who inherited the other half and are they still alive or has their part of the 1/2 passed onto their spouse and children.

12

Hello All Mineral owners who were kind enough to send me advice:

Clayton Williams chose to disregard my father’s trust that clearly names me beneficiary after my mother’s passing, which happened in July. They just wanted me to probate mom’s will. Instead of just telling me that, they spent 3 months arguing with me about “community property.”

The only thing they will agree to is to buy back my interest. I feel that is my only choice - so not worth the fight. So what is the motive? These properties were deeded to my father for geophysical consulting work instead of $$. Maybe this “barter” agreement, made in the early 70’s, was not executed properly, or the records are lost.

According to CW, I have: (my mother’s half in suspense = $1,987) (Paid out my father’s half = 1,279.91). The last check I was supposed to receive was voided on 9/14/12. I haven’t been paid since.

I’ve been told you can multiply a year’s income by 5: 1,987 x 1,279 = $16,339.15. I’m still missing Oct, Nov, Dec payments. I should charge more for the “pain and suffering” CW caused me for an entire year. My God! The man is worth over 40 million! Why is he picking on me!

13

My opinion. I would not sell. You may consider it not worth the cost now but I know that your children will disagree decades from now. Your father obviously thought they were valuable or he would not have agreed to accept them as payment for his services.

You should probate your mother’s will. You have no idea how troublesome it is to probate wills decades after the person died so that the oil company will pay royalties to the heirs. But if you push they will pay per the state statutes. So, if you had no siblings, your state statute probably says that you inherit from your mother. If you had siblings or half siblings or stepsiblings it will get more complicated. I would search on the web for your state probate laws and read them. That is what I did and the oil company sent leases to all the heirs per the laws of the state. Since your mother’s death was recent, it shouldn’t be too much trouble or expense to probate her will. Her royalties in suspense should be funds available to pay the probate lawyer. Then royalties after that is gravy to her heirs with no further legal debating.

14

Deborah. Thanks for your advice. I am changing attorneys because I have been misled and my interest ignored.

I know Texas law would find I am the rightful heir of my parents estate even if they had no will or trust. I have no children or siblings, only my husband’s family.

If Clayton Williams wanted my mother’s probated will to satisfy their community property claim, why didn’t they just tell me that instead of sending me e-mails with crazy stories that defy common sense?

They never answered my question of why they ignored the trust. I had no problems with the other 8 oil companies who received identical paperwork from me. I’ll never know the truth. I either sell my interest to them or take them to court.

This discussion board is great. Everyone has replied back with advice that I really appreciate. I think Texas law needs to be changed because there is no protection for the little guy (me) from big money interests like Clayton Williams without going to court.

Deborah Kopen said:

My opinion. I would not sell. You may consider it not worth the cost now but I know that your children will disagree decades from now. Your father obviously thought they were valuable or he would not have agreed to accept them as payment for his services.

You should probate your mother’s will. You have no idea how troublesome it is to probate wills decades after the person died so that the oil company will pay royalties to the heirs. But if you push they will pay per the state statutes. So, if you had no siblings, your state statute probably says that you inherit from your mother. If you had siblings or half siblings or stepsiblings it will get more complicated. I would search on the web for your state probate laws and read them. That is what I did and the oil company sent leases to all the heirs per the laws of the state. Since your mother’s death was recent, it shouldn’t be too much trouble or expense to probate her will. Her royalties in suspense should be funds available to pay the probate lawyer. Then royalties after that is gravy to her heirs with no further legal debating.

15

How do you think he GOT to $40 million, by being generous?

Suzan C. Holten said:

Clayton Williams is worth over 40 Million! Why is he picking on me!

16

R. W., she appears to have an Overriding Royalty Interest (ORRI), an expense borne by the working-interest owners on the JIB, not a Non-Participating Royalty Interest (NPRI), an expense borne by the mineral owners on the JIB.

r w kennedy said:

I see, you have an NPRI for that particular hole in the ground. The general principle still hold though I think because they could always stimulate that formation again or recomplete in another formation.

17

The mother cannot change her Will to deed her community one-half (1/2) interest to the Trust because she is deceased.

Steve said:

The other half of the mineral interest is likely owned by your mother if this was community property. Williams is saying that is the case. She can deed that half to the same trust. Problem solved.

18

In Texas, the laws of descent and distribution (who inherits without a Will) are very complex. If your mother re-married after your father died and he survived her, or if she had a child by any man other than your father, they would have a claim under intestacy. Whether or not you had a spouse, children, or siblings would have no bearing on who would inherit your mother’s Estate.

Suzan C. Holten said:

I know Texas law would find I am the rightful heir of my parents estate even if they had no will or trust. I have no children or siblings, only my husband’s family.

19

Partly by being forgiven for back taxes back about the time he was running for Governor of Texas. It usually takes money to make money and I think it would have given him a severe cramp to have had to pay up.

Pete Wrench said:

How do you think he GOT to $40 million, by being generous?

Suzan C. Holten said:

Clayton Williams is worth over 40 Million! Why is he picking on me!

20

Yes of course, I misspoke. Sorry.

Pete Wrench said:

R. W., she appears to have an Overriding Royalty Interest (ORRI), an expense borne by the working-interest owners on the JIB, not a Non-Participating Royalty Interest (NPRI), an expense borne by the mineral owners on the JIB.

r w kennedy said:

I see, you have an NPRI for that particular hole in the ground. The general principle still holds though I think because they could always stimulate that formation again or recomplete in another formation.