Q: What is a “severed mineral interest”?
you buy a property, you may find you don’t own everything on that property. For
example, a past owner may have sold the house and land, but kept an interest in
minerals that might be found underneath the property. This is called a “severed
mineral interest.” While it could be a reservation of gold or silver, today such
an interest is usually in oil and gas. This severed interest may take different
forms. A past owner may have reserved all mineral rights, all the oil and gas rights,
half of the oil and gas royalty rights, the oil and gas leasing rights and part
of the royalty rights, or some variation of these.
Q: How do I know if my property has a severed
deed may spell this out, but to be certain, you should have a qualified person
do a complete oil and gas mineral search. This would involve an examination of
public records going back to the 1880s.
Q: Should I simply assume that I have the right
to sign an oil and gas lease?
you sign, and later it is determined that you do not own all of the oil and gas
rights, you will be notified and told to eliminate any outstanding oil and gas
interests. However, eliminating those interests after signing a lease may be
more difficult or costly.
For example, if a severed oil
and gas interest was only for part of the royalty interest, then the
owner of that interest has no right to lease the property. That royalty
interest would mean something only if oil and gas were being produced on the
property. If you are currently leasing the property, the potential value of
that royalty interest is automatically more valuable, so the owner of the
interest would likely fight to keep that interest.
Should I sign an oil and gas lease if I
do not own all of the oil and gas rights?
you do not own all of the oil and gas rights, it may be unwise to sign a lease
for the reasons stated above.
Q: If my property has an oil and gas problem,
should I fix the problem or wait to see if the oil and gas company takes care
oil and gas company will rarely take the legal action needed to eliminate an outstanding
oil and gas interest affecting your property. Let’s say you own only half of
the oil and gas leasing rights, while a previous owner has reserved the other half
for his or her heirs. The oil and gas company may approach those heirs instead
of you, and acquire their signatures on the lease. To avoid such a scenario,
you should attempt to eliminate the severed minimal interest before signing a
Q: What can I do to eliminate any outstanding severed
oil and gas interests on my property?
have several options, depending on what the deeds in your chain of title say and
whether there is any oil and gas production on your property. One option is
based on the 1989 Ohio Dormant Minerals Act. This remedy can be used only if,
within the last 20 years, there has been no oil and gas production and no claim
filed or recorded to preserve that interest. An amendment to this act,
effective June 30, 2006, now requires that a notice be given to the holder of
the severed mineral interest.
You may also be able to use the Ohio
Marketable Title Act, depending on the wording used in the deeds in the chain
of title, beginning with the most recent deed that has been of record for at
least 40 years. This option would require you to file a Quiet Title Action in court, which involves more time and costs than the first
option. This remedy is also not available if there has been oil and gas
production on your property in recent years.
If the severed mineral interest was
created using “words of inheritance” (such as “heirs and assigns”) in a deed made
before June 13, 1925, you may be able to argue that the reservation was valid
only during the lifetime of the individual who made the reservation, unless the
deed includes words of inheritance or succession. After June 13, 1925, words of
inheritance were no longer required to create a fee simple estate.
This “Law You Can Use” column was provided by the Ohio State
Bar Association. It was prepared by Woodsfield attorney Richard A. Yoss of the
Yoss Law Office. Articles appearing in this column are intended to provide
broad, general information about the law. Before applying this information to a
specific legal problem, readers are urged to seek advice from an attorney.
Labels: minerals, oil and gas, property