Royalty Deed Clause Clarification

I’m researching a property in Marion County and looking at a deed from 1898. It conveys “all the following described property, oil and gas rights and privileges…all the undivided 1/16 of all the oil and 1/2 of the gas royalty in and underlying that certain tract of land…” The last line of the deed after the property description has this sentence: “It is fully understood that this deed shall not hold any of the leasing privileges as to interfere with any rental on any leases.” Does this clause mean that the leasing rights are being reserved? or that the deed is NOT reserving them?

The 1898 deed is reserving a NPRI interest to the mineral estate. The heirs to the grantor have the rights to collect 1/2 gas royalties but no rights to negotiate leases or collect bonuses or rentals.

The grantee has the right to 1/6 oil and 1/2 gas with the rights to negotiate leases and collect rental and/or bonuses.

Throwing in that “in and underlying” points toward this being a reservation of oil and gas in place, not just royalties. However, I wouldn’t want to say 100% that’s the case without looking at any other deeds/leases/etc. that the parties to this deed might have drawn up later.

Not a lawyer, but although I agree with Nick on that deed conveying a non-participating royalty interest, the part I think could be debatable is how much royalty interest the grantee is entitle to. Since the grantor retained the right to negotiate the terms of leases they are the one who decide the royalty amount and other lease terms they are willing to accept.

Unless the law in West Virginia is different from Texas, I expect you could find a lot of case law involving interpretation of that type deed wording. In many Texas cases court’s decisions, and huge differences to two competing parties, came down to use of the word “of”. Saying “1/2 of the gas royalty” is interpreted very differently than “a 1/2 gas royalty”, and the deed stating “all of the undivided 1/16 of the oil”, could mean the intent was for the grantee to receive 1/2 of the 1/8th royalty that in 1898 was probably a standard royalty amount. Texas courts use what is called the “four corners” standard, meaning everything stated in a deed has to be considered in determining the grantor’s intent but that “of” can be critical.

If you are considering buying the property covered by that deed or the interpretation of that wording makes a difference in how you value it, you might be worth having an attorney familiar with oil & gas review it.

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