Curing Title Defects
Curing Title Defects
Presented by
Duncan Strickland
And
Giustina Persich
Inexperienced Pompous
Lawyer Cares About Client
Two Faced
The Oil and Gas Lease is signed by only one spouse and the record indicates the covered property is the community property of both spouses
it
t f b th
The Title Attorney wants:
The
Title Attorney wants:
a) A Ratification Agreement executed by the
non signing spouse which ratifies,
non‐signing
ratifies adopts and
confirms the oil and gas lease signed by the
other spouse.
spouse
Concern:
Unleased interest.
Waive?
One or More of the Property Owners Are Married
Are Married
The Oil and Gas Lease is signed by only one spouse and there is no i di ti
indication of whether the property is community or separate
f h th th
t i
it
t
The Title Attorney wants:
a) An investigation to determine whether or not any portion of the
Subject Property is the Homestead of the spouses and/or,
and/or
b) An Affidavit from a disinterested person stating whether either
spouse used or occupied the Subject Property as homestead
c) If the answer to either a) or b) is yes: A Ratification Agreement
executed by the non‐signing spouse which ratifies, adopts and
confirms the lease.
Concerns:
Unleased Interest
Waive?
One or More of the Property Owners Are Married
Are Married
The Oil and Gas Lease is signed by both spouses, but the
property appears to be the separate property of only one
spouse.
Title Attorney wants:
a) An investigation to determine whether or not any
portion of the of the Subject Property is the Homestead of
the spouses;
b)If the answer to a) is no: An Affidavit executed by the
non‐owner spouse which disclaims any Homestead rights
in and to the Subject
j Property.
p y
Concerns: Lease into a Stranger in Title
Waive?
Co‐Tenancy
Husband and Wife buy a piece of property along with a third party. The
G t
Grantees
d nott specify
do
if their
th i ownership
hi interest
i t
t in
i the
th Deed.
D d All three
th
parties sign the same oil and gas lease. Do all parties own a 1/3
interest each in the property? Or do the husband and wife own a ½
interest together
g
as communityy p
property
p y and the other p
partyy owningg
the remaining ½ interest in the property?
Title Attorney wants
a) A Stipulation of Interest Agreement executed by all three
parties, which stipulates to their individual ownership interest in
the property
Concerns:
I
Incorrect payment of royalties f
li
Waive?
Prior Oil and Gas Leases
There are numerous oil and gas leases covering the Subject Property whose
primary terms have expired due to time.
time There are no releases of these leases
in the abstract.
Title Attorney wants: a)) An Affidavit of Non‐Production from two or more disinterested and
credible witnesses having personal knowledge of the history of production
of oil, gas and other hydrocarbons from the Subject Property;
b) Obtain information from the Railroad Commission of Texas regarding
wells located on Subject Property and lands pooled therewith (if the
lease(s) provided for pooling), including the production history of such
wells, including whether or not these wells are plugged, or are actively
producing.
Concerns:
Leasing the correct parties
Waive?
Life Estates / Open Mine Doctrine
Surviving spouse owns a life estate in the Subject Property. Her son
owns a remainder
i d interest
i t
t in
i the
th same property,
t Surviving
S i i spouse
executes an oil and gas lease covering the land, but the son does not
execute the lease nor any other lease covering the land.
Title Attorney wants:
Title Attorney wants:
a) A Ratification Agreement executed by the son which ratifies,
adopts and confirms the oil and gas lease signed by his mother;
b) A Stipulation of Interest between the two parties outlining the
manner in which the royalty payments should be disbursed.
Concern:
Unleased Interest
Waive?
Tax Certificates
There are no Tax Certificates in the abstract
Title Attorney wants: a) Obtain from all taxing authorities in the County that cover the
Subject Property, Tax Certificates which show the status of the
payment of county,
county state,
state school and other pertinent ad valorem
taxes assessed against Subject Property; for all years up to and
including the end of the year in which the subject lease was filed of
record
b) Should any taxes remain unpaid, ensure these taxes are paid.
Concerns:
Subject Property being sold at tax sale.
j
p y
g
Taxes/liens being superior to leases
Waive?
Title cannot be traced back to a date where ownership was granted by a sovereign
ownership was granted by a sovereign • Title Attorney wants:
– Affidavits of Use and Possession from two or more
disinterested people (who would be available to be called
as a witness) with personal knowledge of the use,
possession,
i
occupancy, and
d claims
l i off the
h land
l d for
f the
h past
twenty‐five years
– Mineral Classification Letter from the Texas GLO
• Concerns
– Adverse Possession (longest SOL is 25 years in Texas)
– Prior reservation of minerals
Prior reservation of minerals
– Mineral classification of the land
• Waive?
Scenarios ‐ Affidavit
• Title
Title can be traced back to 1920
can be traced back to 1920 and no earlier and no earlier
conveyance of the Subject Land can be found.
Scenarios ‐ Affidavit
• Title can be traced back to 1920 and no earlier
conveyance of the Subject Land can be found.
• Title can be traced back to 1920 and no earlier
conveyance of the Subject Land can be found
and the minerals were reserved in a
conveyance dated Sept. 28, 1941.
Scenarios ‐ Affidavit
• Title
t e ca
can be ttraced
aced bac
back to 1920
9 0 aand
d no
o ea
earlier
e
conveyance of the Subject Land can be found.
• Title can be traced back to 1920 and no earlier
conveyance of the Subject Land can be found and
the minerals were reserved in a conveyance
d t d Sept.
dated
S t 28,
28 1941.
1941
• Title can be traced back to 1920 and no earlier
conveyance of the Subject Land can be found and
the minerals were leased on Sept. 28, 1941, and a
well was drilled shortlyy thereafter.
Scenarios ‐ Affidavit
• Title can be traced back to 1920 and no earlier
conveyance of the Subject Land can be found.
• Title can be traced back to 1920 and no earlier
conveyance of the Subject Land can be found and the
minerals were reserved in a conveyance dated Sept.
28, 1941.
• Title can be traced back to 1920 and no earlier
conveyance of the Subject Land can be found and the
minerals were leased on Sept. 28, 1941, and a well was
drilled shortly thereafter.
thereafter
• Title can be traced back to 1900 and no earlier
conveyance of the Subject Land can be found.
Scenarios ‐ Affidavit
• Title can be traced back to 1920 and no earlier conveyance of the
S bj t Land
Subject
L d can be
b found.
f
d
• Title can be traced back to 1920 and no earlier conveyance of the
Subject Land can be found and the minerals were reserved in a
conveyance dated Sept.
Sept 28,
28 1941.
1941
• Title can be traced back to 1920 and no earlier conveyance of the
Subject Land can be found and the minerals were leased on Sept.
28, 1941, and a well was drilled shortly thereafter that produced for
20 years before it was plugged.
• Title can be traced back to 1900 and no earlier conveyance of the
Subject Land can be found.
• Title
Ti l can be
b traced
d back
b k to 1859 and
d no earlier
li conveyance off the
h
Subject Land can be found.
Title cannot be traced back to a date where ownership was granted by a sovereign
ownership was granted by a sovereign • Title Attorney wants:
– Affidavits of Use and Possession from two or more
disinterested people (who would be available to be called
as a witness) with personal knowledge of the use,
possession,
i
occupancy, and
d claims
l i off the
h land
l d for
f the
h past
twenty‐five years
– Mineral Classification Letter from the Texas GLO
• Concerns
– Adverse Possession (longest SOL is 25 years in Texas)
– Prior reservation of minerals
– Mineral classification of the land
• Waive?
Scenarios – Mineral Classification
• Patent was issued prior to 9‐1‐1895.
– Mineral Release Act of 1895
• Land was sold prior to 9‐1‐1895 but Patent pursuant to the
sale was not issued until after 9‐1‐1895.
– Witherspoon v. Green, 274 S.W. 170 (Tex. Civ. App. 1925)
• Patent was issued between 9‐1‐1895 and 6‐29‐1931.
– Mining Act of 1895 ‐ “all
all school,
school asylum,
asylum and public lands
lands”
– Relinquishment Act of 1919 – public lands with a mineral
classification
• Patent was issued after 6
6‐29‐1931
29 1931.
– Sales Act of 1931
– Wintermann v. McDonald, 129 Tex. 275, 102 S.W.2d 167, reh’g
denied, 129 Tex. 286, 104 S.W.2d 4 (1937)
Deeds of Trust, mortgage, mechanic’s liens and materialman’ss liens
liens, and materialman
• Title Attorney wants:
– A release, or
– a subordination of the lien (subordinating its
secured interest in the land to the lessee’s interest
in the lease))
• Concerns
– Foreclosure of the lien could interfere with the
lease
• Waive?
Scenarios ‐ Mortgages
• Lease was executed Jan.
Jan 1,
1 2010.
2010 Lien was
executed in 2000 and is a 30‐ year mortgage
(last payment is due 1
1‐1‐2030)
1 2030).
Scenarios ‐ Mortgages
• Lease was executed Jan.
Jan 1,
1 2010.
2010
executed in 2000 and is a 30‐ year
(last payment is due 1
1‐1‐2030)
1 2030).
• Lease was executed Jan. 1, 2010.
executed in 1978 and is a 30‐
30 year
(last payment is due 12‐31‐2008).
Lien was
mortgage
Lien was
mortgage
Texas Civil Practice and Remedies Code
• Section 16.035 states that an action for foreclosure of a
vendor’s,
d ’ mortgage, deed
d d off trust, or voluntary
l
mechanic’s
h
’
and materialman’s lien must be instituted, or a sale made
under a power of sale in a mortgage or deed of trust, within
four (4) years after the cause of action accrues.
accrues
• Exceptions:
– Section 16.062 provides for a suspension of the statute of
limitations for 12 months after the death of either the
debtor or the lender.
– Section 16.036 provides that a properly executed and
recorded extension of the real property lien will keep the
lien in effect for four years after the extended maturity
date of the debt
Scenarios ‐ Mortgages
• Lease was executed Jan. 1, 2010. Lien was executed in
2000 and is a 30‐ year mortgage (last payment is due 1‐
1‐2030).
• Lease was executed Jan. 1, 2010. Lien was executed in
1978 and is a 30‐ year mortgage (last payment is due
12‐31‐2008).
• Lease was executed Jan.
Jan 1,
1 2010.
2010 Lien was executed in
1980 and is a 30‐ year mortgage (last payment is due
12‐31‐2010). However, a “First Amended Deed of
Trust” was executed Jan.
Trust
Jan 15,
15 2013 that replaced the
original lien of $5 million with one of $10 million and
provided for payments for the next 30 years.
Scenarios ‐ Mortgages
• Lease was executed Jan. 1, 2010. Lien was executed in 2000 and is
a 30‐
30 year mortgage
t
(l t paymentt is
(last
i due
d 1‐1‐2030).
1 1 2030)
• Lease was executed Jan. 1, 2010. Lien was executed in 1978 and is
a 30‐ year mortgage (last payment is due 12‐31‐2008).
• Lease was executed Jan.
Jan 1,
1 2010.
2010 Lien was executed in 1980 and is
a 30‐ year mortgage (last payment is due 12‐31‐2010). However, a
“First Amended Deed of Trust” was executed Jan. 15, 2013 that
replaced the original lien of $5 million with one of $10 million and
provided for payments for the next 30 years.
• Lease was executed Jan. 1, 2010. Lien was executed in 1975 and is
a 30‐ year mortgage (last payment is due 12‐31‐2005) and there is
no recorded extension of said lien and your company is not the lien
holder.
Heirs of a decedent cannot be determined or found
determined or found • Title
t e Attorney
tto ey wants:
a ts:
– Certified copies of the proper probate or
administration of the estate of decedent or
– Affidavit of Heirship and Stipulation of Interest
– Receivership Lease
• Concerns
– Not knowing who owns what
– Not having 100% of minerals under lease
• Waive?
Scenarios – Missing Heirs
• Mr
Mr. Adams died in 2000,
2000 at the age of 59.
59 No
probate or administration of the estate of
decedent can be found,
found but an instrument
was found containing a recital that he had
several adult children when he died.
died Also,
Also
two people executed separate leases with a 3
year primary term with another oil and gas
company in 2008, but the leases have since
expired.
expired
Scenarios – Missing Heirs
• Mr. Adams died in 2000, at the age of 59. No probate
or administration of the estate of decedent can be
found, but an instrument was found containing a
recital that he had several adult children when he
died. Also, two people executed separate leases with a
3 year primary term with another oil and gas company
in 2008, but the leases have since expired.
p
• If additional research doesn’t produce any results,
then a receivership lease may be sought under Section
64 091 of the Texas Civil Practice and Remedies Code
64.091
and the bonus and royalty must be paid into the clerk
of the court.
Scenarios – Missing Heirs
• Mr. Adams died Jan. 1, 2000, at the age of 59. No probate or
administration of the estate of decedent can be found, but an
instrument contained a recital that he had several adult children when
he died. Two people executed separate leases with a 3 year primary
term with another oil and gas company in 2008, but the leases have
since expired.
• Additional research determined that he had four adult children,, in
total, when he died, including the two who previously signed leases.
Scenarios – Missing Heirs
• Mr. Adams died Jan. 1, 2000, at the age of 59. No probate or
administration of the estate of decedent can be found, but an
instrument contained a recital that he had several adult children when
he died. Two people executed separate leases with a 3 year primary
term with another oil and gas company in 2008, but the leases have
since expired.
• Additional research determined that he had four adult children,, in
total, when he died, including the two who previously signed leases.
– Two options:
• Still do a receivership lease and have the bonus and royalty paid into the clerk of
the court.
• Sign the two children you know to leases and…
– treat the rest as nonleasing co‐tenants?
Scenarios – Missing Heirs
• Mr. Adams died Jan. 1, 2000, at the age of 59. No probate or
administration of the estate of decedent can be found, but an
instrument contained a recital that he had several adult children when
he died. Two people executed separate leases with a 3 year primary
term with another oil and gas company in 2008,
2008 but the leases have
since expired.
• Additional research determined that he had four adult children, in
total, when he died, including the two who previously signed leases.
– First, sign the two children you know to leases
– Second,
• gget an Affidavit of Heirship
p from the two children yyou know and others
who know them all (and lease the children you didn’t know before you
record it)
• Get a Stipulation of Interest signed by all heirs
Federal or State Estate Tax Return
• Title Attorney wants:
– Copy of Federal or State Estate Tax Return with
Subject Land listed in the inventory of the estate
and confirmation of payment
• Concerns
– Having foreclosure of the land void the lease
• Waive?
Scenarios – Estate Tax Return
• Mr
Mr. Adams died Jan. 1, 2000, at the age of 59. Adams died Jan 1 2000 at the age of 59
The records regarding the probate proceedings of his estate do not include a
proceedings of his estate do not include a federal estate tax return.
Scenarios – Estate Tax Return
• Mr. Adams died Jan. 1, 2000, at the age of 59. The records regarding the probate proceedings of his estate do not include a federal estate tax return.
– Doesn’t need to be recorded to be a perfected lien
– Valid for 10 years
Scenarios – Estate Tax Return
• Mr. Adams died Jan. 1, 2010. The records regarding the probate proceedings of his estate do not include a federal estate tax return.
– Doesn’t need to be recorded to be a perfected lien
– Valid for 10 years from date of death
• Mr. Adams died Jan. 1, 2000. The records regarding the probate proceedings of his estate do not include a federal estate tax return.
Scenarios – Estate Tax Return
• Mr. Adams died Jan. 1, 2010. The records regarding the probate
proceedings of his estate do not include a federal estate tax return.
– Doesn’t need to be recorded to be a perfected lien
– Valid for 10 years from date of death
• Mr. Adams died Jan. 1, 2000. The records regarding the probate
proceedings of his estate do not include a federal estate tax return.
– Can be extended by notification to the executor/administrator of the estate
– This would usually be found in the probate file
Scenarios – Estate Tax Return
• Mr. Adams died Jan. 1, 2010. The records regarding the probate
proceedings of his estate do not include a federal estate tax return.
– Doesn’t need to be recorded to be a perfected lien
– Valid for 10 years from date of death
• Mr. Adams died Jan. 1, 2000. The records regarding the probate
proceedings of his estate do not include a federal estate tax return.
– Can be extended by notification to the executor/administrator of the estate
– This would usually be found in the probate file
• Mr. Adams died Jan. 1, 2010. The records regarding the probate
proceedings of his estate do include a federal estate tax return but the
Subject Property is not listed in the inventory.
Scenarios – Estate Tax Return
• Mr. Adams died Jan. 1, 2010. The records regarding the probate
proceedings off his
h estate do not include
l
a federal
f
l estate tax return.
– Doesn’t need to be recorded to be a perfected lien
– Valid for 10 years from date of death
• Mr. Adams died Jan. 1, 2000. The records regarding the probate
proceedings of his estate do not include a federal estate tax return.
– Can be extended by notification to the executor/administrator of the estate
– This would usually be found in the probate file
• Mr. Adams died Jan. 1, 2010. The records regarding the probate
proceedings
p
g of his estate do include a federal estate tax return but the
Subject Property is not listed in the inventory.
– U.S. could still go after the Subject Property because estate taxes were not paid on
it, but will they????
Duncan H. Strickland
(281) 203‐5758
duncan.strickland@steptoe‐johnson.com
Giustina L. Persich
(281) 203‐5766
giustina.persich@steptoe‐johnson.com