I just finished transferring my father’s oil property rights into my name after finally being notified by the current lease operator in Long Beach/Signal Hill. They will be paying me unpaid royalties that have accrued from 2004 - now. My question is I was never notified after my stepmother died in 1990, and have inquired about those unpaid royalties, also (I am the sole heir). I am being told that the previous lease operator would have any records, but they’re also telling me that my window of opportunity to claim the royalties from 1990 - 2004 is probably long gone. It does not seem fair to me that a lease operator can profit for those years, and not have to pay those 14 years of royalties, or attempt to find the rightful heir. Obviously no one from the lease operator tried very hard to find me. My cousins have received their royalties for years, and we each have 1/4 interest . Any advice?
Contact the operating company first. If your cousins have been getting royalties, then with the proper probate documents, you may have a chance. The next step is to look in the unclaimed funds with the state treasurer in the state of residence of the deceased and also the state in which the minerals were owned and also possibly Delaware. The operators do turn over the funds after a certain period of time.
Don’t forget that property taxes are assessed against those interests in California also. It is possible for them to sold on the courthouse steps for delinquent taxes, just like a house would.
what do you do when you find out that your heir to way way more then you realized…like WAY more…and it will probably effect others ? like they may no longer be heirs anymore.
The current operating company did provide the previous operator’s contact information for me. I have checked with the State of California’s Unclaimed Property, but didn’t find anything. Everything is based here in California, so nothing out of state. Thank you so much, M. I will proceed with contacting the previous operator, and hope they can shed some light on these “missing” royalties.
Great, thank you! That’s somewhere I’ve never checked.
M - What is your reference to Delaware?
I just checked Delaware. Not my CA property, but something from Shell. I am amazed because I thought I already transferred Shell interests!
Also, IMHO, I think some of these companies are just plain crooks! Small royalty owners don’t stand a chance against them due to legal fees.
Delaware is the state where many companies have their domicile due to the favorable tax code. If they cannot find royalty owners, they will deposit lost funds in the state treasurer’s fund. However, I am not sure of the statute of limitations on their state funds. It may be shorter than some other states. I usually check it once a year just to make sure something is not stuck there. I also check that states where the operators of my minerals have their domiciles, just in case.
Ahh. That makes sense, and I will check. I’m learning as I go. Thank you, M!
First, my condolences on your loss.
This is going to be long, so I hope you have a cup of coffee. I’ll preface by saying I’m NOT an attorney and none of my comments should be taken as legal advice.
I’ve been on both sides of your situation and it’s not easy for either party. When an operator makes a royalty payment that is returned or otherwise undeliverable (either paper checks or direct deposit) as the interest is currently set up in their system, they put the interest in “suspense.” That just means no more payments will be issued until the operator receives documentation to re-establish the payment method. Royalty payments can be “suspensed” for many reasons, the most common are that the royalty owner changes banks, moves, conveys the interest to another party, or passes on. An operator will also suspense an interest if they have a good faith reason to believe the royalty interest has been conveyed to another party. By suspensing an interest, the operator is protecting the funds from being paid to someone other than the correct owner of the interest.
Most states have some kind of statute that governs how suspensed royalties are to be treated and what constitutes a good faith reason to suspense a royalty interest. Generally, suspensed royalties are resolved quickly. The owner doesn’t receive a payment and calls the operator and they can resolve what documents are needed to return the interest to “pay” status. In the case of an owner passing on, the probate court adjudicates the ownership and either issues a Decree of Distribution or an Executor/Executrix of the estate conveys the royalty interest by a deed to be recorded in the property records of the county where the interest is located. That new owner of the interest will generally contact the operator to resume the payments. If nobody contacts the operator, they have no way of knowing who the interest was conveyed to, could be a church, friend, immediate family, distant relative, scholarship fund, charitable organization, etc. The operator also doesn’t have a way of knowing if the estate was probated or in what county of what state.
Long story long, the suspensed royalties just sit there in an account until the operator receives documentation of who the new owner is. After a period of time, state law directs the operator to escheat the funds to the state. Some states have multiple agencies, any of which may take custody of unclaimed funds under various circumstances: state controller, treasurer, secretary of state, and probably others. It may even be held by county or municipal government branch, in some cases. The government holds the funds for a certain period of time and if they remain unclaimed, the government may transfer the funds to its treasury.
When an operator sells a property to another operator, it will generally transfer suspensed accounts and funds to continue to be held in suspense, but cannot transfer what has been escheated to the government (as the government has custody of those funds).
I hope this helps you understand the process and aids your search. The best suggestion I can offer is to read the royalty payment statute, unclaimed funds statute, and escheat statute for the state where the property is located, for the state where the previous operator had its principal office at that time, and for the state where the checks were last paid. Those statutes will describe what the operator had to do with the funds and should guide you to what agency may now have them. Check with those agencies for your family member’s name, “heirs of” that family member, their spouse’s name, your name and any brothers’ or sisters’ names. It’s also worth checking with county agencies where the well is located. If the potential sum of money justifies the expense of counsel, it may be of benefit to consult and potentially hire a licensed, experienced attorney to advise you. Best wishes.
Excellent answer. I would also add that one needs to check in the “unclaimed” funds agency for the states where the mineral owner lived. There may be multiple states if the owner moved. Use the official sites and not someone “offering to help” as they will charge you a fee for something you can do yourself for free. The states may take out any income tax that is due and that is normal.
Thank you for your thorough response. My father died 42 years ago, so this was a delightful little surprise from him all these years later. I’ve checked with Unclaimed Property/Money for CA, TX, and DE. Nothing there. And the current oil company did not receive these funds when they took over in 2004 (or so I’m being told), so I’m hoping that the old lease operator still has them somewhere. My father died intestate (from what I’ve uncovered), and my stepmother was the overseer of it all. I am my father’s only heir. I’m really hoping I don’t have to resort to hiring an attorney. I finalized the documentation for the property just this week! Court approved, and now recorded. Thank you again, and I’ll keep you posted on what I can find through the previous oil lease operator.
You’re very welcome. I hope it helps. My best guess is that the funds were escheated to the state in which the previous operator had its principal office, or wherever their Division Order group (often called “Owner Relations” now) was located.
If you know who the operator was, it might take a little digging to figure out previous office locations, but regulatory filings for the well, usually available online, may have the company office address listed. In CA, oil and gas development is regulated by DOGGR. If you have an API number or legal description for the well(s), you can run a search through DOGGR’s website. There have also been a lot of companies who have been bought by or merged with other companies. The regulatory filings will have the company’s name at the time they were filed, they’re scans of whatever paperwork was submitted to the state over the years.
Feel free to ask questions if you need help. I work in the industry so I have some resources and information that may be helpful if you get stuck in a search somewhere.
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