My husband and I own mineral interests in Texas through a trust left to us by his parents. The trust is managed these days by one of the largest banks in the world. The minerals were leased about four years ago for three years. No drilling was done and the lease expired last summer. In the meantime, wells have been permitted and dug all around us - there has been production at some of them.
The bank has been less than trustworthy in some of its investments for our trust, and we have protested vociferously, so we aren't getting along with the bank at this point. We asked if there has been any interest in our property, considering all the permitting and drilling going on near us. The bank, which has its own O&G lawyers, said there was an inquiry to which the bank responded, but the inquirers never got back to the lawyers and the inquiry is now considered "stale." In light of our other problems with the bank, we're not sure whether to believe the bank or not. We're wondering if it's likely that so much would be going on around us, and yet no one is interested in our property. More wells haven been permitted on adjacent properties within the last week. Our property is Reeves Co, Block 13, Section 185. We own a half interest in 457.88 acres. (Husband's sister own the other half interest.) Thanks for your help.
Liz…my dad set up a trust in the even that something happened to my mother, who otherwise would be the trustee. Her lousy estate attorney said the trust carries over to her estate but there is nothing in the language of my dad’s will that states such. My suggestion is to get a probate lawyer and take the bank to court and show the judge where during the period of time the bank has been the trustee, the estate has not grown (maybe even shrunk) and see if the judge will not set aside the trusteeship or name you and your husband as the trustees instead of the bank.
Thanks for the suggestion - and best luck with your mother's trust. In an ideal world, maybe we could do what you suggest! Unfortunately, the trust isn't that big and the giant bank is permitted by law to use the trust corpus to pay to fight any lawsuits we might file against them. Believe me, this bank wins those lawsuits. We've checked. So the trust would be gone and we would be no further ahead.
The minerals (if there are any on the two properties we have rights to) have the potential to dwarf the trust as it stands. Even the bonus payments would have the potential to dwarf the trust. This is why we're really wondering about the bank. They do get some sort of payment for negotiating the lease, but nearly all of the bonus money and any royalties would come to us directly. So the bank doesn't have much incentive to negotiate in good faith. I'm not saying they aren't telling the truth, btw! We really don't know. That's why we're trying to find out if it's likely no one wants the minerals on this property.
If the State still holds right to the minerals consider calling them (Drew Reid, 512-475-1534). The bank has a fiduciary responsibility to both you and the State, if they are involved. If they’re a large bank, they may not care too much about your 457 acres, but they may care if the State calls.
Do a Google search on Title 42 section 1983 or maybe its 1982 of the United States code that allows for civil redress for violation of an individuals civil rights. The last time...i..e when I was a Internation Relations major and had to take Constitutional law as an elective, it is the right of every citizen to seek redress (file a suit against those who have wronged them regardless of language that says you cannot). I would find a good civil rights lawyer who is experienced in this particular Title and section.
Liz M. said:
Thanks for the suggestion - and best luck with your mother's trust. In an ideal world, maybe we could do what you suggest! Unfortunately, the trust isn't that big and the giant bank is permitted by law to use the trust corpus to pay to fight any lawsuits we might file against them. Believe me, this bank wins those lawsuits. We've checked. So the trust would be gone and we would be no further ahead.
The minerals (if there are any on the two properties we have rights to) have the potential to dwarf the trust as it stands. Even the bonus payments would have the potential to dwarf the trust. This is why we're really wondering about the bank. They do get some sort of payment for negotiating the lease, but nearly all of the bonus money and any royalties would come to us directly. So the bank doesn't have much incentive to negotiate in good faith. I'm not saying they aren't telling the truth, btw! We really don't know. That's why we're trying to find out if it's likely no one wants the minerals on this property.
We could file a lawsuit. That’s not the problem. The problem is that the bank will use our own trust to finance their end of the battle. That is the law. They have very good, very expensive lawyers - they could spin the lawsuit out as long as they wanted, and it wouldn’t take long for them to use up the trust. In the meantime, we have to finance our own end of the lawsuit. If by some miracle, they lost and the court found in our favor, they would have to give that money back to the trust and probably pay our court costs. But they almost never lose. The law is set up so that it is nearly impossible for trust recipients to win these lawsuits. And the trust will be gone. So it goes. We do what we can to keep them honest short of taking them to court.
Oh, now I’m confused! I thought we had the rights to the minerals! Does the state hold rights too?
Jules Michel said:
If the State still holds right to the minerals consider calling them (Drew Reid, 512-475-1534). The bank has a fiduciary responsibility to both you and the State, if they are involved. If they're a large bank, they may not care too much about your 457 acres, but they may care if the State calls.
1. I would ask for the mineral book on all properties in the trust that they manage for the group.
2. I would ask for gross/net acres per tract.
3. Reeves County is very hot in places. I negotiated a 3 year paid up lease (on my form) for $1000 per acre, 1/4 royalty and no deducts and the other bells and whistles.
4. Bank trusts are notorious for fees. Yours probably charges at least 2% of each dollar that goes in and goes out.
5. I have never found bank trusts to be in touch with local activity. When someone calls about Reeves County, they go to the Rolodex and say its XX Bonus and XX Royalty. They likely use US Lease Price Report, which is NOTORIOUS for its inaccuracy, but enables them to defend their actions.
6. Trust Departments are inflexible on lease forms. Sometimes you just have to give some to get some. To be inflexible loses leasing and drilling opportunities. And like my old Dad said, "Son, when you are drilling, you are dangerous."
7. If I were not entirely confident of my actions, I would make sure that I had professionals on my side.
It's important to know what you have in order to know what to do. You can start by calling Reid who should be able to tell you what you have rights to. Read Buddy Cotten's comment for acting further on what you find out.
Oh, now I'm confused! I thought we had the rights to the minerals! Does the state hold rights too?
Jules Michel said:
If the State still holds right to the minerals consider calling them (Drew Reid, 512-475-1534). The bank has a fiduciary responsibility to both you and the State, if they are involved. If they're a large bank, they may not care too much about your 457 acres, but they may care if the State calls.
I was just thinking about something where you could file your suit, get 3 times the damages plus attorney's fees. Go to http://library.findlaw.com/2000/Mar/1/130722.html and read if any of the mentioned acts covered under the DTPA happens to apply in your situation.
If the answer is an overwhelming, the most stupid jury in the world would see this, answer, then find a DPTA lawyer. Which big city are you near? Because I know a lot of lawyers in DFW and HOU who are absolute geniuses at making companies squeal like small pigs using the DPTA.
Jack
Liz M. said:
We *could* file a lawsuit. That's not the problem. The problem is that the bank will use our own trust to finance their end of the battle. That is the law. They have very good, very expensive lawyers - they could spin the lawsuit out as long as they wanted, and it wouldn't take long for them to use up the trust. In the meantime, we have to finance our own end of the lawsuit. If by some miracle, they lost and the court found in our favor, they would have to give that money back to the trust and probably pay our court costs. But they almost never lose. The law is set up so that it is nearly impossible for trust recipients to win these lawsuits. And the trust will be gone. So it goes. We do what we can to keep them honest short of taking them to court.
Thanks, Jack. We'll look into it, though I'm pretty sure that for trusts, the bank is bound only by the Texas Trust Act, and not by the statute you mention. Thanks again.
Jack Ross said:
Liz,
I was just thinking about something where you could file your suit, get 3 times the damages plus attorney's fees. Go to http://library.findlaw.com/2000/Mar/1/130722.html and read if any of the mentioned acts covered under the DTPA happens to apply in your situation.
Thanks, Buddy. What is a mineral book? I tried to find a definition online, but have had no luck!
This huge bank - though it is headquartered in NYC - has O&G lawyers in Texas. The one handling our acreage is in San Antonio. So I assume he knows the going rates around the state.
Thanks, Jules. We have a pretty good idea of what we (through the trust) own, because it was pretty clearly delineated in the will. And this same bank handled the first leasing four years ago, so things must be very clear in the records, too. None of the confusion I read about in posts from other mineral rights' owners!
Bank Trust Departments are very conservative by their nature and charters. As far as minerals go, the same trust departments are usually passive managers rather than pro-active managers that take offered deals without risk to the corpus. In many cases, the oil and gas deals are taken from companies in the area that the bank services that may also be clients thereby putting them into a "conflict of interest" situation. The banks don't charge much of a management fee but always get their due and charge the client for any special management costs. That is just the way it is with Trust Departments.
Check the trust documents carefully to see if you and your husband now qualify as "beneficiaries" of the trust. If you do qualify, read on and find out how the trust can be terminated at your will as beneficiaries. If you are truly dissatisfied with the bank's management style, consider terminating the trust, placing the assets in an LLC and contract with pro-active managers under a business plan that you approve.
Root Family Holdings, LLC with minerals in 6 states including Texas, is composed of three siblings that became beneficiaries after their step mother died and did as I have suggested above. I doubt if your trust is permanent and if the mineral potential is as great as you think and you would like to pass the mineral potential on, consider getting our of the Trust and into an entity you can have more direction over.
Thanks, Gary, but the trust continues after our deaths, and there are succeeding beneficiaries. It wouldn't be easy to break it, and we're not that interested in doing so. My in-laws wanted the body of the trust to end up at two charities, and we'd like their wishes to be fulfilled. It's their money, after all! In the meantime, however, we are trying to keep the trust from being mismanaged and stolen by the bank, and to get the income my in-laws wanted us to get.
To everyone - thanks so much for your concern about the trust! But that's truly not what I'm asking about. I'm really interested in finding our whether it is likely that there is no interest in our property when there is so much going on around us. And I guess I'm a little concerned that whatever oil and gas we have might be sucked out without payment by the wells that are permitted near our property line. Is that possible? Again, it's Reeves Co. Tx, Block 13, Section 185.
That's what I was afraid of. Of course, if the bank is telling the truth, then there is no interest in our property at this point, and so there is nothing to be done.
We didn't choose this bank, believe me! In-laws had the trust with a local San Antonio bank they'd dealt with for years, and all was pretty good when the trust was with that bank. But some years after in-laws' deaths, that bank got bought out - and the next (bigger) bank got bought out, and so forth and so on, until we are with one of the biggest banks in the world. Not our choice, and wouldn't have been in-law's choice either.
Thanks for your help!
r w kennedy said:
Yes, it's possible Liz for your acres to suffer drainage. I would also never trust a bank to administer a trust; I have heard too many horror stories.