Division order/warrant title

I was trained by my father to never warrant/certify/guarantee title in a lease or division order. We don't do the title work so are never 100% sure. We have the deeds and believe we own what we own but can't warrant etc.

I have always crossed out the language and inserted the word believes in our documents and never had issue with it.

I am in dispute with a company that will not release funds to me because I won't sign a division order with the word warrant in it. The lease doesn't have a warranty clause.

How can I get my money from them?

This is an OKLAHOMA property.

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Beth,

A few points:

1) There is no statutory requirement in Oklahoma for a division order. There is also case law saying it is not required for payment. HULL v. SUN REFINING AND MARKETING CO. 1989

http://www.leagle.com/decision/19892061789P2d1272_12047

2) By statute, a DO cannot change the terms of the lease.

§52-570.11. Division orders.

A division order is an instrument for the purpose of directing the distribution of proceeds from the sale of oil, gas, casinghead gas or other related hydrocarbons which warrants in writing the division of interest and the name, address and tax identification number of each interest owner with a provision requiring notice of change of ownership. A division order is executed to enable the first purchaser of the production or holder of proceeds to make remittance of proceeds directly to the owners legally entitled thereto and does not relieve the lessee of any liabilities or obligations under the oil and gas lease. Terms of a division order which conflict with the terms of any oil and gas lease are invalid, unless previously agreed to by the affected parties. This subsection shall only apply to division orders executed on or after July 1, 1989.

3) There is statutory requirement for them to pay you within 6 months of the 1st date of production. If you have marketable title, they owe you 12% interest if it is paid late. 6% if title is not marketable.

Oklahoma §52-570.10 covers it. Here are the key parts but you can pull the entire Title 52 here http://www.oklegislature.gov/osstatuestitle.html

B. 1. Proceeds from the sale of oil or gas production from an oil or gas well shall be paid to persons legally entitled thereto:

a. commencing not later than six (6) months after the date of first sale, and

b. thereafter not later than the last day of the second succeeding month after the end of the month within which such production is sold.

D. 1. Except as otherwise provided in paragraph 2 of this subsection, where proceeds from the sale of oil or gas production or some portion of such proceeds are not paid prior to the end of the applicable time periods provided in this section, that portion not timely paid shall earn interest at the rate of twelve percent (12%) per annum to be compounded annually, calculated from the end of the month in which such production is sold until the day paid.

2. a. Where such proceeds are not paid because the title thereto is not marketable, such proceeds shall earn interest at the rate of six percent (6%) per annum to be compounded annually, calculated from the end of the month in which such production was sold until such time as the title to such interest becomes marketable. Marketability of title shall be determined in accordance with the then current title examination standards of the Oklahoma Bar Association.

_____________________________

I don't know 100% of your situation. But from what you have stated, AND if I were in that situation, AND did not want to warrant the title.... I would: send them the NADOA division order without a SSN. Include a IRS W-9 with the SSN. I would include a letter that you agree with the decimal calculation of my interest but do not agree to other language in the DO. State you are including a standard NADOA division order as a courtesy since Oklahoma Statutes do not require a signed division order per HULL v. SUN REFINING AND MARKETING CO. And respectfully request to be placed in a pay status per OK §52-570.10.


I'm not sure what the outcome would be. Legally you should be in the right here..... realistically there could be a lawsuit to get it settled. Hull vs Sun provided costs and legal fees to the lessor.

I'm not an attorney and you are on your own if you decide to proceed with this info! ;) Maybe someone else with chime in here. But please let us know how it comes out (and please identify the stubborn operator/purchaser)

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