acres). Without going into any detail about the case, the description was more than “technically incorrect” – it was and is, in the opinion of the author, void due to violation of the Texas Statute of Frauds. There never was an actual 493 acre tract properly described and available for lease. The examining attorney made no requirement to cure the description problem “…because captioned land has been described in numerous instruments and estates in the aforementioned manner and occupied with a common understanding of where the property boundaries are located for almost 80 years…” Thus, the description of the “493 acre tract”, per the title examiner, was at least technically incorrect. In the author’s opinion, this description was VOID. How was this description problem to be cured for supplemental title opinion purposes? What was the proper title requirement? HINT: No curative requirement was ever made in any of the additional division order/supplemental title opinions covering the examined lands. When different examining attorneys in the additional supplemental opinions addressed this description issue as raised in the original title opinion, they did so without title requirement/title curative materials to review. The third (supplemental) title opinion issued for the “493 acre tract” contained a potentially incorrect title conclusion. First, the examining attorney expressly stated that he did not have a copy of the actual lease nor did he examine same. How can the obvious title problem with the lease description be addressed without first examining the actual lease? The examining attorney then held the requirement dealing with the lease description problem was “Deemed Satisfied.” No question was ever raised in any subsequent title opinion concerning the potential violation of the Texas Statute of Frauds and the very real possibility that the lease was void based on the Statute of Frauds violation. More importantly, who “deemed” the requirement satisfied? Or, more correctly, who waived the title requirement since no title curative materials were ever called for or submitted? That is, did the client company waive the requirement? Unknown. The last two title opinions reviewed by the author
continued the “Deemed Satisfied” conclusion regarding the lease description with the last title opinion questioning what “Deemed Satisfied” meant in the context of validating the lease description. One principle this case and other cases dealing with oil and gas production illustrate is that, prior to drilling one or more wells on leased/pooled acreage, the diligent operator always secures an original title opinion for the proposed well location. What is much more uncertain is, where one or more title problems are identified in the title opinion and curative actions are recommended, whether the operator addressed the title problem(s) via a supplemental title opinion or ignored the title problem (waived the title requirement internally) and did not secure a supplemental title opinion. This article will address, among other issues: (i) as between the title attorney and client, who waives a title requirement or deems the title requirement satisfied (whatever that means); (ii) why a supplemental title opinion is a necessary title document that must be secured to enable the client company to know and understand the quality of its title with satisfied/un-satisfied/waived title requirements; (iii) what types of curative materials can satisfy a title requirement but cause the examining attorney to have to advise the client company that, at best, it has defensible title to the lands under examination and (iv) how an un- marketable title can be made marketable. Key to obtaining a clear title to drill (marketable title if possible; defensible title for sure) is to have, if possible, the proper title requirement made in the original/supplemental title opinion to “cure” outstanding title problems. As Ellison demonstrates, even more important is the need to furnish to the client company appropriate curative materials so that the examining attorney, in one or more supplemental title opinions, can address the title issues and deem them: (i) satisfied or (ii) not satisfied. The examining attorney then, depending on the individual facts arising out of each chain of title, can: (i) make additional requirements; ii) advise the client, if the client wishes to waive the title requirement that, at best, it will be drilling
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G rowth T hrough E ducat i on - A pr i l / M ay / J une 2023
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