the risks of waiving the title requirement, it is up to the client to advise the examining attorney of its decision to waive a title requirement. Thereafter, the examining attorney should note in a subsequent supplemental title opinion that one or more specific title requirements have been waived by the client company. Such notice thus qualifies the ownership schedule and its accuracy and correctly allocates the risk to the client company. Even if the client does not advise the examining attorney of its waiver of one or more title requirements, if title fails due to such waiver (not addressing a title requirement), all diminution in value and title loss is and remains the sole responsibility of the client. Example – In the above example, O waived the obtaining of an on the ground survey and affidavit of use and occupancy. If told by O, the examining attorney should memorialize such waiver in a supplemental title opinion. Special care should be taken by the examining attorney to point out that it cannot assure the client company that its Ownership Schedule is correct. If it ultimately comes to light and is proven that A did not own the mineral estate in the 100 acre tract, for whatever reason, title will have failed to that 100 acres. The examining attorney is protected because it advised the client company about the waiver of both title requirements, either of which would have put the client company on notice to do additional title research. It is happening all too often today that the client company processes all curative data “internally”. That is, one or more members of management, usually the landman in charge of the area and/or his/her supervisor, are charged with determining whether the curative materials, usually submitted by the field landman working the area, satisfy the requirement(s) it purports to satisfy. For instance, where H & W both die intestate, the client company representative(s) will review the submitted affidavit of heirship and determine that the specific requirement calling for same was satisfied. No action will be taken other than the review of the heirship affidavit and perhaps a notation of the satisfaction of the requirement either directly on the title opinion or via a separate memo. No supplemental title opinion will be
requested to be issued until the well is drilled and completed as a producing well. The client company is thereafter presumed to know (since no attorney, including the examining attorney, was consulted) that it had assumed all attendant risks that the information contained in the affidavit of heirship is correct. The only problem with this “internal” waiver is when the client attorney requests a division order title opinion from its then examining attorney. How will the examining attorney address the deaths of H & W and adjust the Ownership Schedule when it did not participate in the waiver process? This common question runs throughout any title opinion issued for drilling purposes where the client company internally waives one or more title requirements and then, after production is established, requests a division order opinion. Equally as significant, no longer will the client company’s title have even a remote chance of being marketable – defensible at best. Why is a title requirement waived? Until the examining attorney informs his client that the title to a tract is a marketable title, the assumption of any risk for any loss resulting from not working (waiving) a title requirement rests solely on the client. If the client company waives a title requirement, how is the examining attorney to treat such waiver? That is, what is the effect of the waiver? The author always acknowledged the client waiver and then requested, in writing, that the client company advise how to treat the waiver. For example, where an affidavit of use and occupancy/ survey requirements are waived, the client company may respond to such request by advising the examining attorney that the waiver of such requirements is to be treated by the examining attorney as a statement of assumed fact (by the client company) that all of Examined Lands are within the fence and that there are no third parties occupying any of the Examined Lands? Without the client company’s input, the examining attorney simply cannot provide a conclusion of ownership.
The following are the basic reasons a client
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G rowth T hrough E ducat i on - J uly / A ugus t / S ept ember 2023
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