seems to be the streamlined interaction facilitated by legal precedent rather than solely the avoidance of liability. Conversely, in Oklahoma, the Surface Damages Act mandates a more interactive and legally prescriptive relationship between surface owners and Operators. Since 1982, this Act has required Operators to formally notify and negotiate with surface owners regarding potential damages before drilling can begin, backed by financial guarantees. The legal consequences for non-compliance, including the possibility of treble damages, make understanding surface ownership not just beneficial but essential for operational compliance and risk management. Therefore, incorporating surface ownership details in Oklahoma title opinions is an additional aid to clients to help ensure compliance with the law, thereby safeguarding all parties from potential legal and financial consequences. This significant difference in legal approach to the surface/mineral owner relationship between the two states underscores why Oklahoma practitioners must consider surface ownership with greater detail and significance than their Texas counterparts.
the loan. This means the lender’s interest is a lien right, not ownership. In contrast, the Deed of Trust, in a title theory state, gives legal title to a trustee appointed by the lender until the loan is paid off. This trustee holds the title on behalf of the lender, providing more security in the event of default—by allowing for a non-judicial foreclosure process. The key distinction lies in who holds legal title during the loan term: the borrower in lien theory, and a trustee in title theory. However, for title examiners this is a distinction without much difference. Typically, title examiners in Oklahoma will treat the Deed of Trust the same way as they treat a Mortgage—that is, an examiner will list them both as an “encumbrance” or lien upon title; rather than a straight-up transfer of title. In fact, I know of no instance where an examining attorney showed ownership of an oil and gas property in the name of the trustee-bank/ lender under a Deed of Trust instead of the oil company-equitable title holder/borrow. It just does not happen! [insert lawyer weasel word here (“usually”).] In conclusion, the differences between a Deed of Trust and a Mortgage may be significant in theory, but in practice, they often blur in the realm of title examination. While historically distinct, the evolution of non-judicial foreclosure laws across states has minimized their practical disparity, streamlining processes for lenders and title examiners alike. 24 To be clear, however, where a Deed of Trust appears in the Oklahoma land records it is a tell-tail sign that it was drafted by someone trained in a “title theory” state. “Husband and Wife” (Community Property) vs. Co-Tenancy (Common Law Property) 5. 22 As to “Lien Theory” and “Title Theory” in mortgage law, see e . g ., Teachers Ins. and Annuity Ass’n of America v. Oklahoma Tower Associates Ltd. Partnership , 1990 OK 97, 798 P.2d 618. 23 Id . at ¶4 and ¶7. 24 For Texas non-judicial foreclosure procedures, see Tex. Prop. Code § 51.002. Sale of Real Property Under Contract Lien. For Oklahoma Power of Sale Mortgage Foreclosure Act, see , 46 Okla. Stat. § 40 et . seq .
Deed of Trust vs. Mortgage
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“Lien Theory” and “Title Theory”: 22 It has become common place in Oklahoma for Deeds of Trust to be recorded in the land records. The primary difference between a Mortgage and a Deed of Trust lies in how they secure a loan. In a Mortgage ( i . e ., Oklahoma), the borrower grants the lender a lien against the property as security for the loan, while retaining legal title to the property (“lien theory”). In contrast, a Deed of Trust ( i . e ., Texas) involves three parties: the borrower, the lender, and a trustee. The borrower transfers legal title to the property to the trustee, who holds it until the loan is paid off (“title theory”). 23 If the borrower defaults, the trustee has the power to initiate foreclosure proceedings and sell the property to satisfy the debt, typically without court involvement. As such, in a lien theory state, the borrower under the Mortgage holds legal title to the property, while the lender places a lien on it as security for
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G rowth T hrough E ducat i on - J uly / A ugus t / S ept ember 2025
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