How long can a company avoid acknowledging heirship?

Ownership and Title
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This is my first post to this forum. I have looked for other topics along this line but haven’t found a relevant other post.

My family inherited non-executive mineral rights from our great-grandfather, and also from a great-uncle many years ago. We’ve had activity over the years and no company has ever questioned, delayed, or denied the rights on either of the inheritances. In the past year there are some new companies drilling and producing; revenue is coming in from numerous companies on both inherited portions. Overall, things are going smoothly, as has always been the case.

We’re having problems with one of the new companies though. They are dragging their feet on division orders for the portion we received from our great uncle. They’ve not questioned the portion received from our great-grandfather. This is the first time anyone has had a problem with it; the documentation via wills, etc. is extensive and according to one other current lessee, “crystal clear.” So, we’re very puzzled why this one company is questioning the chain of heirship from the great-uncle. The great-uncle’s portion went back to his brothers and sisters, via directions from the great-grandfather’s will. The documentation is clear. No other company has ever questioned it over a 25 year span of time.

The land man in this situation has not returned calls or emails I’ve left him since November 2012. The only response I’ve gotten about it is that his attorney “has questions.” My sister and I have grown impatient with what feels like avoidance. The company is paying us on the inheritance received directly from our great-grandfather; they’re just dragging their feet on the portion from the great-uncle.

Can anyone advise us about how to best proceed to get a response from the company? Thanks in advance for your thoughts.

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The answer to the title question is as long as you will allow it. Have you had a lawyer send a demand letter yet? This is an unfortunate part of the average lease, unless the lease makes the timely payment of royalty a condition of the lease which will terminate in the absence of the royalty payments, all you can do is sue them and the operator knows this, after you win the suit and the operator pays you, they could decide to not pay you again until you sue them again. I, in your place would have my lawyer send them a letter immediately and if that didn’t do the job I would bite the bullet and sue them. If you are leased you have two options if they will not pay. You can forget about it or you can sue.

In all the research I have done, I have not found a statute anywhere that says the operator must pay a lessor. I have found where the law says they owe interest if the lessor has marketable title and they don’t pay, which is far different from saying they must pay. I will say that I don’t think time is working for you. I think the longer you allow them to keep your money the harder they will resist paying you. I suggest you get a lawyer. I think there is another option, but I wouldn’t do it. You could spend years calling them pleading for them to pay you. Good luck whatever you decide.

Ps. I caught myself using lessee when I should have been saying lessor. Common problem I usually don’t make. I still think the logic is sound.

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Often this is due to not having marketable title. The oil company may choose to overlook the title issues if they are satisfied by heirship affidavits and other documentation. All too often the ownership was not probated for one (or several) transfers and the title is clouded. The company can be stuck in the middle. Mineral owners have the obligation to clear up the title issues, not the company. It does not usually stop them from leasing, but it can become a deal breaker when division orders are being developed.

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r w, we have not had an attorney send a letter yet; we’re hoping to avoid this going to that point. I am hoping to discover if there are any guidelines about this, or any methods anyone else has used (short of lawsuit) to get things to move along in a more timely manner. We’ve been dealing with this since August 2012. What’s stumped me about the delay is that the chain of heirship for the portion they are paying is exactly the same as the portion which is causing them question–that, and the fact that in 25 years, no one else has questioned it, ever.

You mentioned the importance of a lease requiring timely payment. As non-executive interest holders, I didn’t think we had a say in this; thought it was up to the executive rights holder (in this case, the land owner), to ensure any such protective language in the lease. If I’m missing something here, and if we non-executive rights holders have some say in this, please point out what I’m missing.

Thank you for your interest and help!

r w kennedy said:

The answer to the title question is as long as you will allow it. Have you had a lawyer send a demand letter yet? This is an unfortunate part of the average lease, unless the lease makes the timely payment of royalty a condition of the lease which will terminate in the absence of the royalty payments, all you can do is sue them and the operator knows this, after you win the suit and the operator pays you, they could decide to not pay you again until you sue them again. I, in your place would have my lawyer send them a letter immediately and if that didn’t do the job I would bite the bullet and sue them. If you are leased you have two options if they will not pay. you can forget about it or you can sue.

In all the research I have done, I have not found a statute anywhere that says the operator must pay a lessor. I have found where the law says they owe interest if the lessor has marketable title and they don’t pay, which is far different from saying they must pay. I will say that I don’t think time is working for you. I think the longer you allow them to keep your money the harder they will resist paying you. I suggest you get a lawyer. I think there is another option, but I wouldn’t do it. You could spend years calling them pleading for them to pay you. Good luck whatever you decide.

Ps. I caught myself using lessee when I should have been saying lessor. Common problem I usually don’t make. I still think the logic is sound.

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Rick, how would you define “marketable title”, exactly, where mineral rights only are involved…no surface rights or land ownership?

With regard to the share we’ve inherited from our great-grandfather directly via his daughter, there has never been any question, and his will was never probated, though it is recorded in the County where he lived in Arkansas, and also in the Texas County where the well is located. Our great-grandfather was an original co-owner of the land, and sold his surface rights, while retaining the mineral interests. The portion we receive from his son, our great-uncle, went back to the other siblings per instructions in the great-grandfather’s will. The great uncle was mentally impaired, in the legal guardianship of the family, and spent much time in an institution. That is why his father willed that his portion, upon his death, be returned to his siblings. The will was very clear about this. The great uncle himself never had a will.

We do not possess a title to the land itself. The mineral rights were retained when my great-grandfather sold the land, though, and this is documented in County records per my understanding from recent contact with other land men there. My grandmother’s will, and my father’s, and now my mother’s, have all been probated, and recorded in the County in question. No one has told us that the title is cloudy; we’ve been told it is “crystal clear.” But from what you’re saying here, sounds like some companies may want titles, or all wills to be probated, but it’s not necessarily required; is that what you mean to say?

Interestingly, I got a call from the land man today. He said that he is satisfied with our chain of heirship and the research about the other heirs and has passed it on to the attorney; he expects no problems at this point. That’s a relief; we desire no adversarial action unless there is no other recourse. We’ll let you know if it is finally resolved. I appreciate your interest and taking the time to share your knowledge with me!

Rick Howell said:

Often this is due to not having marketable title. The oil company may choose to overlook the title issues if they are satisfied by heirship affidavits and other documentation. All too often the ownership was not probated for one (or several) transfers and the title is clouded. The company can be stuck in the middle. Mineral Owners have the obligation to clear up the title issues, not the company. It does not usually stop them from leasing, but it can become a deal breaker when division orders are being developed.

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John, it would have been the executive’s responsibility to see that protective clauses were in the lease. You are right that as non-executives you had no way to ensure that such clauses were included in the lease.

John, the thing is that I don’t think there is a statute that says they must pay you.

I believe that if you point out the facts that they accept your chain of title in one instance, along with everyone else has historically accepted it, if you point it out a second time, send them copies of documents if you have them and if they still can’t see what you are getting at, either you are wrong… or they are deliberately not trying to understand your chain of title. If you are at the point where they are deliberately ignoring your chain of title, what else are you going to do? Calling them and telling them how sure you are will not change their minds or it would have already. They are not going to just wake up one morning months from now and say to themselves, “that John guy was right.” If they are paying others with the same chain of title and not paying you, they have made a decision. They will not go back on decision, until you give them good reason to and sorry, but a phone call is not a good enough reason, a letter to their legal dept. on a lawyer’s letterhead might, a lawsuit being filed would. If you filed a lawsuit, they would examine that chain of title again with a fine tooth comb because they don’t want to spend a lot of money on legal expenses and lose and have to pay you on top of it, when the whole point is to make money. Having an attorney send a letter usually isn’t that expensive nor does it obligate you to file a lawsuit, what it will do is bring to their attention that you are serious. I don’t think they are taking you seriously.

If you are standing on the first step of my front porch and you tell me you are going to leap to your death, I will ignore you because I don’t think you are serious. If you went and got a ladder and climbed to the roof of a 1 story house, I probably still wouldn’t think you were serious but I would call someone to get you down just in case. I would not risk that you were serious. I’m not saying you have to jump. I hope you get the letter sent.

I have 4 wells with Conoco, they said my brother’s interest was confirmed in 1 of the 4, that they kind of had him penciled in one one more. I have the exact chain of title, they said I had no interest in any wells. I tried to reason with them for 2 years. After Conoco was made party to my lawsuit, my interest in 4 wells is confirmed. My brother’s interest with the exact same chain of title is 1 well confirmed and still 1 well penciled in after 5 years because my brother is not party to my lawsuit and he has not even had a lawyer send a demand letter.

I hope you are catching my drift and that you will let everyone know how things sit 6 months from now. Good luck.

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Update: my sister and I are now being paid on the portion we inherited from our great-uncle, and just under the wire on the 6 months from drilling requirement. So there has been a happy ending to this story. Just wanted to share. Thank you to all for your comments and suggestions!

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