A trust that owns a diverse portfolio of oil/gas assets in Oklahoma is transferring all of its assets into an LLC owned by the trust beneficiaries.
The trust does not have perfect land records and does not know all of the tracts that it owns in certain counties. It owns many non-producing tracts.
Are countywide conveyances valid in Oklahoma? (For example: Grantor conveys to Grantee all of its right title and interest it may own in any lands situated in Coal County, Oklahoma). Is this language sufficient to convey the interests from Grantor to Grantee? This language would be a valid conveyance in the State of Texas.
Any thoughts or opinions on how to validly transfer unknown tracts in Oklahoma is greatly appreciated. Thanks in advance.
Interesting question. The deed is first filed in the reception record which is the legal record for the county. Tract Books and Grantor/Grantee Indexes are a convenience provided by the Clerk and are not the legal record. Ask yourself the purpose of the deed. Is it to inform interested parties or to provide color of title on unknown properties?
You can make an any and all grant in the deed for notice purposes. Depending on the Trust document, you may be able to appoint a Power of Attorney for any unknown properties. Best practice is conveyance by a proper legal description. I will be interested in the responses
I would do my best to find the sections on-line first on okcounty records. But yes its valid if you list all of the sections, township and ranges in the county, you cant just put all of coal county. The clerks assistant that has to input it into the index will just despise your group as they enter it into every index they have, 36 sections per t/r, believe Coal County has 15 different ones, so looking at 540 sections youre going to have to file it on.
A countywide conveyance worked for us very well (covered Oklahoma, Arkansas, and Texas) when my parents transferred all their minerals into an LLC in 2003. But it’s not for everyone, you need a really good inventory to start with.
In Texas, a deed which cites everything owned in the county in general terms will transfer title. Some people selling minerals have been caught up by the all-inclusive language and sold interests that were not intended. An Oklahoma title attorney can best advise as to current Oklahoma law. In the situation above, the beneficiaries should be careful to review the trust language to make sure that they comply. For example, the trust may specify that all assets must be distributed to the beneficiaries, and therefore there may need to be a deed into the beneficiaries and then a second deed from them to the LLC. Is the trust terminating or will it continue to hold cash and other assets? Is the trust sited in OK or was it formed in another state? Are trustee(s) and beneficiaries the same or different? Is there anyone with life estate or otherwise entitled to income for some time who is not one of the residual beneficiaries? It may also be advisable to have any deed from trust signed by both the trustee(s) and the beneficiaries. I suggest consulting with an estate and trust attorney about the trust terms and conditions.
@Bob77 I believe Clerks in OK charge for indexing beyond a certain number of tracts, listing all sections could be very expensive. By using an “all in the county” notice along with the known tracts should be sufficient notice in this day of digital records.
Commonly called a “Mother Hubbard” clause, used in oil and gas leases, it is intended to cover errors or missing legal descriptions. James is correct, the best practice is to identify the tracts. Ultimately, a division order analyst’s position on such language can make the difference between it being treated as in or excluded. If a complete conveyance is intended, then it is better to use an all-inclusive language in a deed or conveyance.
If there is a mixed bag (ownership of ORRIs, leases, etc) it may be better to made the transfer cover all interests by deed, assignment and conveyance etc.
On a similar note, probate orders routinely include an “after discovered asset” phrase which is helpful if there are later discovered minerals. In Oklahoma, there is no need to reopen the probate case, just file the appropriate notice in the county with the omitted minerals.
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They are valid between the parties. The Trust can’t deny it didn’t convey the property to the LLC.
But it is not constructive notice to third parties. So, a landman looking to find the owner or a pooling application is going to list the Trust. Further, some oil companies may not pay the LLC until a supplemental deed containing a correct legal description is recorded.
Further, as it is not constructive notice, if the Trustee is ever somebody not in the family, they could sell it to a third party.
TennisDaze: I believe that the Texas Supreme Court has ruled that the “general” conveyance is only good as long as there is a “specific” conveyance that is accurate. My case was supported by that ruling. Something new may have occurred since that time.
If you think it is important, you should spend some time &/or money researching the county clerk’s records in Coal County (assume that is the county you are interested in). You can do this yourself or hire a Landman. This way you have a record of the ownership. You can use the Reception Records, Grantor/Grantee Indexes and Miscellaneous Indexes found in the County Clerk’s Office to search for your owners. You should be able to limit your search to a specific time frame to help expedite the process.
As others have mentioned, it is most likely that an Operator will require you to provide documentation as to ownership before there is any distribution of production revenue. That is the mineral owners responsibility in Oklahoma.
Lastly, finding these assets will help in putting a value on them for any future tax purposes.
Good Luck.
I want to pose a question to @Richard_Winblad and @Tim_Dowd, if they feel comfortable. If the clerk makes an error in posting to the proper tract index, has there been constructive notice since the deed is filed in the reception record? This is a bit off point, but you can see the discussion area.
Legally, it is valid in Oklahoma only if the deed is filed in each county named in the deed.
However, i would advise against it. Texas has Grantor/Grantee books so it works. Oklahoma does not so your deed will be a non-indexed general instrument and difficult to find. Further, even though its legal, an operator likely wont accept it.
Devin, OK maintains a Reception Record as wells as a Grantor/Grantee Index just like TX. Clerks in OK also maintain Tract Indexes. The Reception Record annotates the Book/Page or Instrument Number, the File Date, and Grantor/Grantee. The legal record in TX is the Reception Record. I have seen several errors with deputy clerks not properly recording in various indexes.
hard to say. There is a 1922 case that says that once a party delivers an instrument for recording, then it is constructive notice even if it is subsequently lost, or transcribed incorrectly.
However, in many states, the rule has changed through time such that an error will not be constructive notice. The concept, which is just as illogical as the former rule, is that the filer is required to make sure that his instrument is properly indexed.
Oh I agree, thats why I prefaced my statement with, Id do my best to find the sections on-line first on okcounty records. From my understanding, this isnt a title issue, just a recording issue so that in the future, oil and gas companies are able to locate the interests. The only possible way do that is if the doccument is filed against a section in which they own in, so an all in the county clause would not help as the clerk will not file it against every section except for those listed.
You would want to contact the clerk and inform them of the erroneous filing.
I don’t have an opinion on whether there is constructive notice if the mistake on behalf of the clerk. The case of 249 P. 373
119 Okla. 145, 1926 OK 649
SMITHv.RAY. is interesting.
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Smith v Ray is interesting for consideration.The remaining portion is not directed at @Richard_Winblad. It is for any others that believe a catch all description serves as a valid legal description in OK.
An “all properties in county” description (State of OK) will be considered by the Recorder as a invalid legal description since it does not allow the Clerk to complete their obligation to maintain a tract index for all properties. If a Clerk were to accept such a document for recording, they would have to record against all tracts listed in the County. The current recording statutory fee applies to the first 25 descriptions with additional charges for for all tracts above the 25 limit. Recording payment has to paid in advance. A review of the Grantor/Grantee index and Reception Record for accurate property descriptions would be more economical.
People may have used a catch all description in a deed that included other proper legal descriptions so the instrument could be recorded. In those cases, the Clerk would most likely ignore the catch all since it was not a recordable description; however, the deed is still recordable for the valid descriptions. Just because such a document is recorded in OK does not mean the catch all is a valid description. It provides only a notice that you may have unknown properties in the county.
Typically we file blanket deeds in Texas and Kansas. The caveat is we list the proper legal descriptions of all of known tracts, and add the language to include any property not specifically listed but owned by the grantor in that county to also convey.
In the past when we’ve discovered other tracts owned by a seller, we go back to the seller and pay them an additional sum to record a deed with the newly discovered tracts. It makes for a better chain of title in the long run.
The point here is it is better to record your initial deeds with at least your currently known / verified legal descriptions, in addition to the blanket language. The worst thing I see in title records is when someone records a blanket deed with seemingly vague (and likely unverified) or no legal descriptions whatsoever. The more accurately they are described today, the less question there should be in the future.