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. There are a few things you should always keep in mind when determining heirship for an individual who died intestate while owning interest in a parcel:
1. As usual, the exact laws vary by state, so, regardless of where the decedent lived, make sure you are apply the laws of the state in which the property lies. The main difference among the state statutes is the portion of interest allotted to the decedent’s spouse. 2. Additionally, the laws of descent and distribution have changed throughout the years. Make sure to apply the ones that were in place at the time of the decedent’s death (as opposed to the current laws). Updates to the spouse’s portion make up the majority of the changes in the statutes throughout time. 3. Although you always need to refer back to the relevant statutes when determining heirship, it is helpful to remember that, if you don’t take into account the spouse’s portion, the decedent’s interest is generally distributed in the following order:
4. Finally, when calculating interest, do not distribute a decedent’s interest to someone who predeceased him or her. A deceased person cannot inherit interest. Sometimes a decedent doesn’t specifically devise the subject tract to anyone. Rather, you may see more general language, such as that referring to “all rest, residue, and remainder”, “all my real property”, and/or “all my personal property”.
“All rest, residue and remainder” refers to any other property not specifically bequeathed or devised within the will. Let’s take a look at the other two in more detail below. Real property is basically land and anything attached to the land (such as a house or other permanent structure). Oil and gas interests, as well as royalty interests, are generally considered real property. As always, make sure to familiarize yourself with the relevant statutes of the state in which the property lies. Pretty much any other type of property is considered personal property. Once oil and gas is produced, it becomes personal property. Usually in a will, the decedent does not leave physical extracted oil & gas to an heir; rather he/she leaves the interest in the oil and gas (real property) to that heir. If the decedent left his/her personal property to one heir and his/her real property to another, you will need to know which one received the mineral interest in order to continue running title accurately. Traditionally, the word “devise” relates to real property and the word “bequeath” relates to personal property. Often the words are used interchangeably, but I recommend using “devise” in your runsheets when referring to the gifting of real property via will. How quickly you respond to an email depends on several factors, but in general, I recommend responding to any emails that directly relate to your project/work within an hour, at the latest, during business hours. It is understandable that you may be on the road or somewhere without great cell service, but do your best to stay in contact with your manager and/or client. Sometimes you may receive an email to which you can’t provide an immediate response. In that case, my advice is to send a short message acknowledging receipt of the email and letting the other person know the next steps you will take in order to be able to properly address the question/issue and the timeframe in which you expect to do so.
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. 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. 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. Affidavits of heirship are documents by which an affiant swears to certain facts relating to the heirship of an individual. Although they help establish evidence of heirship, they do not transfer interest.
As always, the specific requirements vary by state. However, affidavits of heirship generally need to be sworn to by a disinterested third party in front of a notary. In this sense, “disinterested” means someone who doesn’t stand to gain as an heir. The affiant must also be personally familiar with the facts stated within the affidavit. If a decedent in your chain died intestate and your client/employer has requested you to cure title, then you will need to procure and file an affidavit of heirship. If you are having trouble identifying the heirs or crediting interest amongst them, have no fear, because next week, for our final week covering probates and intestate succession, we will be talking about descent and distribution. |