I got my Minerals from Uncle Bob

Are you sure about that?

When the petroleum landman in the field either runs title or is given a mineral ownership report from which he or she is to lease the mineral owners, he or she can sometimes encounter situations he wasn’t counting on. These same issues are associated with surface title, too.

• Title Petroleum Landman – Susie, I didn’t find anything in the county records that indicates where you obtained your mineral interest, but I did see where you leased them.
• Susie - I inherited them from my Uncle Bob.
• Title Petroleum Landman - Do you have proof of this?
• Susie - No, he died in another state, but my grandmother said that he named me in his will.  She told me how much I owned and where.  My boyfriend is a landman and he was the one that leased my minerals.
• Title Petroleum Landman - What state did Uncle Bob die in?
• Susie - Not sure – I really did not know him and I never met him.
• Title Petroleum Landman – We can lease you, but we need to know what state Uncle Bob died in and we need you to sign an Affidavit of Death and Heirship and we will need a copy of Uncle Bob’s death certificate.

Most companies, for leasing purposes, will accept this affidavit as sufficient title curative in order to pay for a lease.

What if?

Further examination of Susie’s claim demonstrated that no probate existed in the county and state where her minerals were located, and no Intestate Administration was found.  Then, two years after this discovery, a will was found, and Susie was not named as a devisee in the will.

The question here is, is there a time limit for a lost will to be admitted to probate in the state and county where her minerals are located? What if Susie was an heir under intestate succession? And what would need to be done to incorporate the devisees of the lost will and their interests of ownership?

The drilling order title opinion and division order title opinion may suggest further title curative for ‘marketable title’, thus addressing the issue of perfecting Susie’s title. Note, there are many situations that may arise when investigating court proceedings which may make the verification process of mineral ownership difficult at best. 

The landman noted in his report that Susie appeared for the first time in the chain-of-title when leasing her alleged mineral interest. 

At that point, Susie was a stranger in the title chain.  There were no previous transactions of record regarding her mineral ownership. 

Therefore:

Should the oil company go ahead and acquire a new lease from her as a protective measure?

Should the company drill the well before confirming her claims and be prepared to suspend the associated proceeds?

Should the company test and/or produce the well before confirming her claims?

The answer is: It depends on how many mineral acres are owned and what percentage of the spacing unit they represent.

Questions regarding the time frames allotted by the state where a lost will can be admitted to probate should include:

What, if any, are the risks for Susie at this point?

What, if any, are the risks for the landman at this point?

What, if any, are the risks for the oil company at this point?

FIRST – Did Susie warrant title in her oil and gas lease?

SECOND – Has she been paid for any production royalties?

THIRD - Has she exercised any participation rights in the well?

If the answer is YES to any of these then there may be a problem, especially regarding number three. Let’s look at some scenarios:

Did she warrant title in the lease?

Susie: 

No – The company could suffer the loss of the lease bonus.

No – Could result in unrecoverable costs for title research.

Yes – Susie may have to refund money paid to her (if she has it).

Title Petroleum Landmen:

Trying to create an accurate title report.

Company Landmen:

Deciding on taking a lease.

There are many critical title issues surrounding wills, foreign wills, heirship documents and their timely filing of record or admission to probates. And broken chains of title can go unresolved due to the landman’s inability to “connect the dots” of intestate succession.

Even though title petroleum landmen are not attorneys and the oil company they work for has a legal department, they must know what to do incase time is of the essence and the attorneys are not available.  With that said, should the landman make the decision as to what to do? Not understanding these types of issues or how to cure them could hinder your company’s ability in deciding whether to put a lease block together or drill a well. 

If a will is thought to be valid but has not been timely admitted to probate, the property of the deceased person could be distributed under the laws of intestate succession of the state where the property is located, not in the state where the decedent was living at the time of death.  For an example of timely submission: In the State of Oklahoma, the family has one year to admit the will to probate, or the court could invoke intestacy.

So, what happens if it is not submitted for probate within state statutes? In Texas, for example, after four years the property will be distributed by the laws of intestate succession of Texas.  Other states may have similar laws regarding time frames to admit the will to probate.  In the case of Susie not being named in Uncle Bob’s will and his will was lost but found and was not considered timely admitted for Probate, if Susie can prove she is a legal heir, then she could obtain ownership through intestate succession.

The remaining step would be to verify her claimed interest as being correct and obtain the appropriate ‘title curative’ documents or the intestate administration.

WILLS – INTESTATE SUCCESSION – OKLAHOMA OS Title 84-8:

Under this Oklahoma statute, “the rights of a purchaser or encumbrancer of real property in good faith, and for value, derived from any person claiming the same by succession, are not impaired by any devise made by the decedent from whom succession is claimed, unless the instrument containing such devise has been duly admitted to probate by a court of this state having jurisdiction to administer upon the estate of the decedent within two (2) years after the death of the decedent, or unless within one (1) year after the death of the decedent a petition to admit said will to probate has been duly filed in the court of this state having jurisdiction to admit said will to probate and the proceedings have been pursued by the petitioner with diligence.”

The time limitation imposed on admitting a will to probate varies from state to state. Below are the time periods for a few of the states:

Another example is, let’s say you are making lease calls, and you call the number on your ownership report for John and Mary Smith.  A subdued female voice says “hello”.  You ask for Mr. Smith, and she informs you that he has passed away.  What do you do?  After expressing your sympathies, there is a series of questions you must know to ask to determine your next step. 

A General Guideline

1. When did your husband pass away, Mrs. Smith? (get the date & location) Where was his residence at the time of his death?
2. Did he have a will? 
3. (If yes) Has it been admitted to probate and if so, was it in _______ County?
4. (If no) Did you have children together?  If yes, ask for their names and ages.
5. If she indicates that one or more have died, ask for the name, and contact information for their spouse so you can get the details regarding the date of death, names, ages, and addresses of their children, date they were married and whether he/she had a will.
6. Did Mr. Smith ever adopt any children or take a child into the home to raise? Remember that adopted children have the same status as a natural child.
7. Remember that adopted children have the same status as a natural child. Were either of you ever married before?  If yes, were there children from your (or his) previous marriage?  Get names and addresses if possible.

8. Did the marriage end in divorce or did the spouse die?
9. Repeat the questions if there was more than one previous marriage.
10. If the decedent did not have children, are his parents living, and if so, what are their names and address?
11. If the decedent did not have children or living parents, did he/she have brothers or sisters?  Get names and contact information for all.  Were there any deceased brothers or sisters?  Did they have children?  Get names and contact information.
12. Obviously, the answers to all these questions are necessary to prepare an Affidavit of Death and Heirship.
13. Who can sign the affidavit?  It is generally a good practice to enlist the aid of someone who is well familiar with the decedent’s marital and family history. 
14. It is best if the person is a “disinterested third party”, meaning he/she will not inherit any of the decedent’s estate.  If such a person is not available and a family member is the only option, try to get a relative who will not be in line to inherit anything from the decedent. Why is this important to the landman? 
15. Remember, if an oil and gas lease is to be taken prior to completing probate of a decedent’s estate, it should be taken from the duly appointed executor or executrix, or where the Uniform Probate Code is in effect, from the personal representative.
16. One thing to remember when taking an oil and gas lease and dealing with the estate of a deceased person is the possibility of sale of the property during the administration of the estate – before the estate is closed. 
17. Therefore, an oil and gas lease taken from a devisee named in the will, while administration of the estate is still open, would not be considered safe until the estate is closed.

Why is it important to know something about the Uniform Probate Code (UPC)? Consider the following example: In Payne v. Stalley - a Michigan lawyer relied on the official text of the Uniform Probate Code and failed to check the statute as it had been adopted in Florida.  Florida was one of the original 16 states who adopted the UPC.  As a result, the lawyer missed a filing deadline on a $3,760,909.49 claim. 

The Florida appellate court pointed out, “We cannot rewrite Florida probate law to accommodate a Michigan attorney being more familiar with the Uniform Probate Code” in Michigan rather than as revised in Florida.  The Uniform Law Commission no longer lists Florida as one of the states that has adopted the code.

For the property to be distributed to the legal heirs of the decedent, an intestate administration must be done.  The court will appoint an administrator/administratrix to be the legal representative of the estate.  This is often the surviving spouse or adult child of the decedent.  Prior to final settlement of the estate, an oil & gas lease should be executed by this individual and must be approved by the court.

When it comes to oil and gas leasing and chaining title you should be aware of the following scenarios.

What happens if a person finds an original will that had been lost for 4 years after the decedent died and then they try to admit it to probate (Texas)?

Can a life estate be established via a will and if so, can it name successor life tenants?

Can a testator create a life estate possessory interest before the life tenant dies?

Can you place time restrictions on the possession of any of the property, such as in the case of a mineral or royalty interest?

Obviously, I have only scratched the surface on title curative issues, but I wanted to present a common and sometimes difficult situations to understand and cure on a timely basis.