If the title to most of the property is clear, but a title defect affects a small portion of the property, how does that affect interest and their obligation to pay? Do they have to make payments and give 12% interest on the amount of property that there’s clear title to? Or does the defect allow them to delay paying anything, and eventually pay interest on the entire amount at a lower rate?
It depends upon the company. If you can clearly separate the clear title from the clouded title by legal description then send a request by certified return receipt letter to demand interest on the clear part and see what happens.
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Gail:
I would argue that the portion without title issues should not be delayed, therefore in Oklahoma a 12% rate would apply.
Ask for the division order analyst report for the property. It should spell out any caveats, errors or steps needed to clear the “clouded” portion.
It may state a quiet title or probate is needed.
Thank you for your responses.
The clear title and clouded title are separated by legal description. The area with the clouded title is a small plot within the entire leased area. Is it necessary to suspend payments from the area with a clouded title, so I can be paid what I am owed on the interest with clear title? Is that even possible?
Perhaps Richard can tell us the meaning of this portion of the Production Revenue Standards Act: 4. Any delay in determining the persons legally entitled to proceeds from production caused by unmarketable title shall not affect payments to persons whose title is marketable, or that portion of a person’s interest which is marketable.
Yes, if property is clouded in that area, then it expected that the funds will be placed in suspense.
It seems logical that you should be receiving payments for the portion that is not clouded. Assuming that there is not an issue clouding your remaining property, you should be getting paid.