title requirements remain unsatisfied at the time of the issuance of the supplemental title opinion. That is, does the title examiner set forth the ownership schedule as it appears as of the close of the abstract/run sheet or as if all title requirements had been or would be satisfied? The difference in presentment of the ownership schedule is significant. Many times the ownership schedule, if presented without assuming that any title requirements will be satisfied (based only on the record title) can often lead to the listing of owners who did NOT own/grant a mineral lease on their interest in the lands to the client company. Example - A father/owner in the chain of title appears to have died. Did he die testate or intestate? The record title reviewed by the examining attorney does not reflect an answer. Technically, the estate of the father owns the mineral interest until it is determined if he died testate or intestate and who his heirs/devisees were at the time of his death. The landman assumed the father died intestate and took leases from his heirs at law. However, the landman did not note his assumption or any other information in the runsheet. The title examiner can either (i) show the mineral owners to be those whom the landman leased and rely on a requirement dealing with the death of the father or (ii) list the estate of the deceased father as the owner of the mineral estate and show it unleased. You may be sure no oil company client wants its ownership schedule to be different from the lessors it reflects own the mineral interest! This question is especially important if the client company initially attempts to verify that all of its lessors own a mineral interest in the subject property. Many client companies look first to the ownership schedule to confirm that the lessors in the leases covering the examined lands match the ownership schedule. Title attorneys have the option to set out the ownership schedule either as reflected as of the date of the close of the title documentation or as the ownership schedule should look if all title requirements have been satisfied. In the author’s experience, most client companies insist that the ownership schedule reflect all of the client company’s lessors with
title requirements to confirm same. The result is the same ultimately but undue confidence can be imparted to the client company concerning whether or not the outstanding requirements were reviewed AT THE SAME TIME as the ownership schedule was reviewed. How the ownership schedule is set forth should be discussed with the client company or, in the opinion of the author, if not discussed, set forth as it appears of record subject to curative actions.
Step Three
O is now in possession of an original title opinion which sets forth the ownership of the surface and mineral estates under Blackacre and which contains numerous title requirements. Among those title requirements is the request for a full thirty (30) year use and occupancy affidavit as well as an on-the- ground survey of the lands under examination. Time is short. O has a surveyor draw out the metes and bounds description from his office only and confirms that the survey closes. Some lands, whether all of the leased lands or not, are completely fenced with a three-strand barbed- wire fence capable of turning cattle. O, not the examining attorney, decides to waive the formal survey as well as the affidavit of use and occupancy requirement. Remember, a full 100 acres lies outside of the fence. Would the affidavit of use and occupancy have shown any third-party claimants to the 100 acres? Unknown since this requirement was waived.
Issue 1 – Who waives title requirements and
thus, who has the risk of loss?
The owner of the original title opinion has the ultimate decision whether to accept the schedule of ownership as written (with no satisfaction of any title requirements), to satisfy all title requirements or to satisfy some and not others. That decision is solely one for the client with advice from the examining attorney. As stated earlier, the examining attorney does not waive title requirements unless he/she wishes to accept all attendant risk associated with such waiver (including monetary loss if the title fails in whole or in part). Once apprised of
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N at i onal A ssociation of D i v i s i on O rder A nalys t s
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