I once ordered some school uniforms for Helen, and the website I ordered them from said that the processing time would be 5-6 days. At around 6 days I checked in on the progress of my order online and the status was still listed as “In Progress”. I gave it a few more days and then called the company to find out what was going on. I was told that the order had been held up because one of the items I bought was no longer available, and I would have to wait several months to receive it. When I told the customer service representative that I would at least like to receive the other items, she finally said she could go ahead and cancel the backordered item so that my order could finally begin to process. I was disappointed that no one had reached out to me before that to let me know about the issue. If I hadn’t called, I guess everything would still just be sitting there. Obviously, there is a failure in that company’s communication process.
As a landman, don’t let there be a failure in your communication process. If an assignment is more complicated (and will therefore take longer) than originally expected, let your manager know. Don’t wait until they contact you to find out why you haven’t turned it in yet. Be proactive and communicate, communicate, communicate.
Before you can begin to adverse, you need to establish your chain of title. You do this by starting with the most recent vesting deed (you can find out who is the owner of the surface by checking with the auditor and/or treasurer). You then work backwards to determine how each grantor received interest. Traditionally, this has meant searching the grantee’s index to find the relevant deed. Sometimes the volume and page where the prior deed was recorded is mentioned in the subsequent deed. That information can certainly be helpful; but don’t just take their word for it. Verify that it is correct by using deed plotting software and comparing the described tract to the later description or to historical maps. Nowadays, many title searches are done online, but the same concept still applies. One additional thing to take into account when doing online searches is that oftentimes names can be misspelled and therefore they may not come up in your search. Try multiple spellings to make sure you cover all of your bases and find all of the necessary documents.
Once your chain of title has been established, it is time to begin adversing. Essentially, for each person/company that owned interest in the subject tract, you will search for conveyances from them, either in the grantor’s index or online, for the entire time period that they owned interest in the property. If they only convey a portion of their interest, you need to continue to “run them forward” until the entire interest is conveyed/devised (or until present day, whichever is later). Anyone that you find to have received an interest during your adversing will also need to be adversed themselves during the time period they owned an interest in the subject tract. That goes not only for surface and mineral interest owners, but anyone who received an interest, including leasehold interest owners and royalty interest owners.
So why does adversing really matter? When you establish your chain of title, you are really just finding out how each person received interest. While useful for your next step in the process, in and of itself, it doesn’t help in determining what exactly each interest owner owns in the parcel today. In order to determine what they received, when they received “all right, title, and interest”, from the grantor, for example, you need to know what that grantor actually owned. The process must then be repeated for each grantor until you get back to the patent (or however far back you have been asked to run the title). While tax records and deed references may help to point you in the right direction, by no means should you rely on them in lieu of adversing. In fact, adversing is really the main point of an abstractor’s job. What did each person do with their interest in the parcel during the time period that they owned an interest? To whom did they convey/devise it? What exactly did they convey/devise (a surface interest, mineral interest, leasehold interest, etc.)? In what percentages did they convey/devise it? These questions will help you figure out what each person/company owns in the parcel today and whether there are any potential issues to be aware of.
The Mother Hubbard clause is essentially a “cover-all” clause by which small strips of land may be covered by a lease, even if they were not specifically or adequately described within it. It serves to correct minor deficiencies in the description of the leased premises. You can usually identify it by the words “contiguous”, “adjacent to” and/ or “adjoining”. For example: “This lease also covers and includes, in addition to that above described, all land, if any, contiguous or adjacent to or adjoining the land above described…”
The exact language can vary, so you will need to read it carefully in order to determine what is covered. You will also need to be familiar with where the lands explicitly covered by the lease lie. If applicable, you will need to identify the location(s) of any small strips of land owned by the lessor and determine where they lie in comparison to the leased premises. It is possible that the inclusion of a Mother Hubbard clause in a lease may cause a parcel, or a portion of a parcel, that would otherwise be open of record, to be considered as leased.
I recently read an article stating that people are working longer hours than ever while working from home. It can be really hard to switch gears when you aren’t commuting between the office and home. One of my biggest tips (one that I have employed since high school) is to engage in some sort of physical activity at the end of the work day to let my mind know it is time to unwind.
In high school I took a bunch of honors classes and had a lot of homework each night. I would really focus and try to get as much of it done at school as I possibly could. My last class of the day was cheerleading though, so it forced me to stop thinking about my homework and to focus instead on my athletic performance. It is a habit I have carried with me ever since. In every location I worked as a landman, once my day was done, I would go on a walk, if the weather permitted. Helen and I continue that tradition even now. If the weather is bad, we usually do yoga instead.
There is just something about forcing your mind to focus on a physical activity that helps it to let go of any of the mental stress or concerns you dealt with during the day. It is a great way to transition to a fun and relaxing evening and I thought it may be helpful to share my technique with you all.
An amendment is a document whereby the lessor and lessee agree to change a lease. If the original lease contained an error, or if new terms were later negotiated, then an amendment is needed. Oftentimes, the amendment will be dated effective as of the date of the original lease, in which case, you can treat it as if its terms were in place back when the original lease was signed.
Unsurprisingly, an extension is just what it sounds like. It is a document by which the parties to a lease agree to extend the primary term for a certain number of years. It allows a lease to continue in effect, without the need for production, for a period of time longer than what was originally agreed to. A new bonus payment to the lessor generally accompanies an extension.
A release releases the parties from their obligations under a lease. A partial release releases them as it relates only to specific acreage and/or depths. In the case of a partial release, the lease would continue in effect except for whatever portion was released.
There are a few different types of property descriptions you will come across in a conveyance or lease. Depending on the area(s) in which you work, you will definitely be familiar with one or more of them. Let’s talk a bit more about some of the most common ones below.
This type of description could be written as “the Northwest quarter of the Southwest quarter of Section X, Township Y, Range Z”. After identifying the section, township, range, quadrant, and location within the quadrant of your subject parcel, and comparing it with the description in the deed, you will easily be able to determine whether or not a document conveys interest in your parcel.
Metes and Bounds
If you see a description along the lines of the following: “Starting at the old oak and then north X degrees west Y feet, then north X degrees west Y feet, then north X degrees east Y feet, and then south x degrees east Y feet, containing Z acres, more or less”, you are dealing with a metes and bounds description. This means that someone has surveyed the tract and that hopefully you will be able to plot it out yourself using a deed plotting program. If so, then you can compare the shape of your tract with the shape of the plot to determine whether or not some or all of your parcel was included in the conveyance. With this type of description, you will need to be aware that the shape of the tracts may change over time, so it may be helpful to compare the tracts to a historical map, if possible. Also, be aware, that depending on the quality of the description, you may not always be able to plot it out. This will be the case if directions or measurements are omitted from the description.
Sometimes, a tract of land is described by the names of the owners of the tracts that surround it. In this case, you will definitely need to compare the information listed with a historical map in order to determine whether or not you subject tract is included in the conveyance.
A royalty interest entitles a mineral owner to certain payments from a lessee if oil & gas are produced from his/her property or from a unit of which his/her property is a part.
Sometimes a mineral interest owner assigns a non-participating royalty interest in a tract to another party. That party will then have a right to receive royalties under any lease covering that property if oil & gas is produced, but they will not have the right to execute a lease themselves.
On the flip side of things, sometimes a lessee assigns an overriding royalty interest in a particular lease to another party or reserves an ORRI when assigning a lease. The party holding the overriding royalty interest will then have the right to receive royalty payments during the life of the lease if oil & gas are produced. Once the lease expires, so does the ORRI.
A person or company that owns working interest in a lease has the right to explore, drill and produce oil and gas. The working interest owner is responsible for the costs associated with such activities, but this cost may be shared amongst multiple working interest owners. If a parcel is leased, then the lessee and/or its assignees own the working interest in that particular lease. If it is not leased, then the mineral owner owns the right to explore, drill and produce oil and gas on his/her own land. In most cases, an individual landowner would lack the resources and know-how to do so, but if an oil and gas company owns the mineral rights to a parcel, they could produce the oil and gas from that parcel themselves.
Because an individual landowner has the right to explore, drill, and produce oil and gas from his/her land, but is often unable to do so, it makes more sense to lease those rights to a company that has the requisite knowledge and capital. By executing a lease, the mineral owner typically allows the lessee and/or subsequent assignees to explore for, and produce, the oil and gas in exchange for bonus and royalty payments. A royalty interest entitles the royalty owner to a portion of the revenue from any oil & gas without the accompanying risk or responsibility for the costs. Thus, both parties benefit. The lessor benefits from the revenue received from the oil & gas that he/she would have otherwise been unable to access, and the lessor is able to produce oil and gas without having to purchase the mineral interest outright. In a couple weeks we will talk more about some different types of royalty interests.
In the past, an entire lease was usually filed of record, but in more modern times, you will often see a memorandum (memo) filed in place of the lease itself. A memo is basically a summary of a lease.
A memo provides notice of a lease without disclosing confidential information. It is a concept somewhat similar to that of a deed that references “$1 and other good and valuable consideration”. The grantee in such a deed did not only pay $1 for the property. That phrase is used in the deed to show that consideration was paid (without which the deed would not be valid), but keeps private the actual amount. Likewise, a memo lets others know that a lease was taken but keeps private information relating to payments and/or royalties.
When negotiating a lease with a landowner, be aware that a lease and memo will generally both be included in the lease packet for the landowner to sign. When you come across one in your chain of title, you can treat it the same as if you had come across an oil and gas lease.
A general warranty deed is a deed in which the seller warrants title to the property being conveyed. This basically means that the grantor promises that the property is free from encumbrances and that he/she will defend the grantee against any rightful claims of third parties. You can think of it as the grantor taking responsibility for the accuracy of the title up until the point of sale. That doesn’t mean that you, as a landman, should rely on those claims, but they may help provide some clarification and/or insight into your chain of title.
Just as it sounds, a limited warranty deed offers a more limited warranty than does a general warranty deed. A limited warranty deed may also be called a special warranty deed. The grantor in this type of deed warrants that the title is free and clear from other claims only during the time of his/her ownership. With this type of deed, no promises are made as to the title prior to the grantor receiving interest.
A quitclaim deed does not contain any type of warranty as to the accuracy of title. It is a deed in which a grantor releases any claims he/she may have to the property. Keep in mind that just because someone executes a quitclaim deed, it does not necessarily mean that he/she actually owned any interest in the property.