In Wenske v. Ealy, No. 16-0353, 2017 WL 2719330 (Tex. June 23, 2017), the Texas Supreme Court has recently changed the way that Texas courts will interpret language surrounding subject-to clauses. In doing so, the Court has sought once again to “cast off rigid, mechanical rules of deed construction” and “warned against quick resort to these default or arbitrary rules.” In brief, the court’s decision means that clearing title in Texas just got tougher. In such an environment, land departments are increasingly relying on technology, including landman software, to assess acreage opportunities better.
In Wenske, the Court states that the subject-to clause that referenced a prior reservation of a non-participating royalty interest (NPRI) did not allocate the entirety of the burden of said NPRI to the grantee in said deed. Instead, it merely acted to limit the warranty of the grantors in said deed and provided that the prior reserved NPRI should burden both the grantor and grantee in said deed.
The specific holding in Wenske is less significant than the Court’s expression of a desire to “(1) a focus on the intent of the parties, expressed by the language within the four corners of the deed, and (2) harmonizing all parts of an instrument, even if particular parts appears contradictory or inconsistent.” In doing so, the Court removes certainty considering title matters previously considered to be settled.
In his article, “Breaking: Traditional Rules of Construction for Mineral Deed Upended By Texas Supreme Court,” Thomas Ciarlone of Kane Russell Coleman Logan PC notes that this ruling “has the potential to open the floodgates to large volume of new litigation challenging the allocations of royalty burdens among mineral lessors.” At Tracts, we concur, believing that the Court’s removal of bright-line rules is going to make the tough job of clearing title even more difficult.
Tracts: Modern Landman Software
Considering the Court’s desire to move towards an examination of each deed on a case-by-case basis, the need for flexible landman software that allows for adjustments on the fly is essential. Tracts allows E&P companies to quickly review and alter deed interpretations affecting all of its acreage. Our dynamic system provides for changes to a single deed interpretation to immediately flow through to all other affected documents. Instead of a single change requiring hours of re-calculation, Tracts instantly calculates the entire tract saving countless hours.
Contact us to learn more about how E&P companies and Mineral Buyers are using SAAS products like Tracts to fuel their own digital revolutions.