A notary seal may be missing or date expired. The repercussions of this defect vary by state. The instrument needs to be re-acknowledged and re-recorded.
Often, parties or instruments are vague in the description of who or what is being conveyed. To remedy, a stipulation of interests occur. This means that all current owners must come together to and stipulate how their interests are divided.
Attempted Testamentary Dispositions
Sometimes, deeds are recorded several years after they are executed and acknowledged. If the deed is not delivered in the lifetime of the grantor then it is invalid.
A conveying interest should be defined by “an undivided 1/3 interest” not “my right, title, and interest”. The latter causes the fraction of each conveyance to be divided furth every time the grantor conveys an interest. This can be remedied by adding a stipulation of interest of the parties involved in this conveyance.
Delay Rental Payments
An examiner needs to ensure that the validity of active oil and gas leases are intact by the payment of delay rentals.
Disclaimers of Interest
A disclaimer of interest is not that same as a curative instrument and should be interpreted as such.
The Duhig Rule
An owner may try to convey more property than they actually own. When full effect cannot be given to the granted interest because of previous outstanding interest, priority will be given to the granted interest (rather than to the reserved interest) until the full effect is given to the granted interest.
The examiner needs to make certain that the name in documents is the same name being signed without any variation.
If an expired lease was never released or released with a defect the lease could be held by production.
Inchoate Spousal Rights
An inchoate spousal right is the right of a widow to take on the property of her deceased husband. Signatures of the spouse may be missing and will need to be corrected.
Leases Held by Production
Often, a lease has expired but continues to produce due to held by production. Sometimes, a lease hasn’t actually expired but wasn’t recorded so it’s listed as expired in the courthouse.
It is difficult to determine with 100% certainty who is entitled to execute leases and who is entitled to receive the landowners share of production due to complex rules that oversees rights of owners in present and future interests.
Mergers of Interest
Often, an intent to merge interests is present but that is not enough to merge interests. The owner of the interests to be merged must execute, acknowledge, and record a recital of intent.
Conveyances that list both undivided interests and mineral interests in the same instrument are ambiguous
It is important to know the distinction of minerals that are “produced and saved” as a royalty or minerals that are “in, on, and under” as a mineral interest.
Frequently, chains of title end abruptly and are picked up again at a later date with a stranger to title. This suggests the last owner is now deceased and an heir has supposedly inherited their interests. It is imperative that proper probate procedures are followed to be certain that heirship now has ownership.
While some variations such as &/and or Co./Company have leniency. Party names such as J Paul Jones does not mean the same thing as John P Jones.
No Interest of Record
An examiner may find that the client actually does not have any interests in the documents of the courthouse. This could be due to a farmout agreement.
After July 17, 1914, an examiner can run into a problem with patent reservations. The filing system at the time was unorganized with different slips of paper added to each document for “organization”. When looking at a patent from the US to a patentee it cannot be assumed that the minerals were passed along. To remedy this, obtain a certified document from the BLM.
Possession of the surface does not constitute possession of minerals below the surface.
Powers of Attorney
The examiner needs to obtain a certified copy of the power of attorney to ensure the party has the authority to make the decisions to sell or lease.
Proportionate Reduction Clauses
These documents are typically incorrectly drafted. It provides for reduction of rentals and royalties owed to the lessor in the event the lessor owns less than the full mineral estate.
Real Property Taxes
The examiner may find that there is no information on property taxes or may find they are not paid.
If a mortgage is signed before a lease is executed the interest of the lessee is subject to appropriation by the mortgage. To remedy this, the examiner should require that the mortgage subordinate its interest to the lessee.
Tax Sales and Foreclosures
It is difficult to determine whether all required procedures of tax sales and foreclosures have been followed. Usually, defective documents come in the form of an assessment, limited assessment, lack of jurisdiction, and lack of due process.
An examiner will find a section of unleased minerals in the area they are searching. To remedy, obtain a lease for the mineral interests or force-pool the owners if permitted.