Validity of 2013 Correction Deed
three paragraphs (Par. I, II and III) found in Exhibit “A” attached to this article. The Court initiates its legal reasoning in Par. I by initially stating that the express language found in §5.029 of the Correction Deed statutes allows the Court to hold it was unclear exactly what the Texas Legislature intended. That is, did it intend for the original parties (if “available” – an undefined term i.e. not physically present or not locatable or refused to sign - Unknown) to sign a correction deed correcting a material mistake OR did it intend for an alternate (heir, successor or assign) to sign once it acquired an interest in the original conveyance. The court of appeals chose the latter interpretation thus simplifying who has to sign a correction deed – any party owning an interest in the lands at issue. Rather than keeping its analysis simple, the Court forgot that its ultimate policy consideration was to protect the integrity of the Texas real property filing system (deed records) and thus the validity of already established titles to lands and interests therein. In this the Court failed. Instead, it affirmed initially that an original party (John), no longer owning any interest in the royalty estate in the lands at issue, could by his execution of a correction deed eight (8) years after the original deed into him, reduce his grantee’s interest (Yates Energy/EOG Resources et al.) from a 25% fee royalty interest in the lands at issue to a life estate in a 25% fee royalty interest in the lands at issue. Such reduction in interest could legally be made WITHOUT the present owners of the interest (Yates Energy/EOG Resources et al.) agreeing to such reduction of interest. As decided by the Court, Yates Energy/EOG Resources et al. may be BFPs for value but they will have to prove that they qualify as such on remand. The Court’s interpretation and the required remand (additional litigation) thus defeats the very stated purpose of the Correction Deed Statutes – less litigation. Par. II and III attempt to draw a difference between where a transfer of title or the absence of the original party has taken place. If the “if applicable” clause is triggered and only the heirs (an individual is deceased) or a successor (assumedly a merger of two companies by stock transfer leaving only the successor company) can be located, the Court holds
The first issue before the Court was whether the 2013 Correction Deed was a valid correction deed and thus complied with Tex. Prop. Code § 5.029(b) (1), which provides in part the following: “(b) A correction instrument under this section must be: (1) executed by each party to the recorded original instrument of conveyance the correction instrument is executed to correct or, if applicable , a party’s heirs, successors, or assigns;”…(emphasis added). It is important to keep in mind that neither Yates Energy nor EOG Resources (or its subsequent grantees) executed the 2013 Correction Deed . More importantly, as a result of the 2013 Correction Deed being executed only by the original parties (John owning no royalty interest in the lands at issue at the time of his execution) and this decision, Yates Energy/EOG Resources et al.’s royalty interest in the lands at issue terminated on the date of John’s death. Equally as important, effective the date of this opinion it was then known that the 25% remainder mineral interest in the lands at issue was unleased . John did not have any authority to lease same beyond his lifetime (unless the lessees thereunder had obtained leases/top leases from said remaindermen. The opinion does not address this issue). The argument comes down to this: (i) could ONLY the Bank and original grantees (under the February 1, 2005 distribution deed) execute a correction deed limiting John’s interest to a life estate in and to twenty-five percent (25%) of the minerals in the subject lands where an intervening third party had a valid conveyance of John’s royalty interest OR (ii) were the subsequent owners of royalty interests (Yates Energy/EOG Resources et al.) also required to join the 2013 Correction Deed in order for the court to find it to be a valid correction deed effectively reducing John’s conveyed fee simple interest in 25% of the mineral estate to a life estate only?
The crux of the decision appears to occur in the
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G rowth T hrough E ducat i on - J uly / A ugus t / S ept ember 2022
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