I am assisting a friend with obtaining royalties owed to her. She purchased a house through a sheriff sale. The minerals rights did convey with the property.
She signed a paid up oil and gas lease that is on file with the court of the county with the previous operator Chesapeake. She never received payments from them.
TEP Total energies purchase the lease from Chesapeake. Royalties have been escheated to The state of Texas in the old property owner’s name.
Their statement to me was that it is the burden of the owner to notify leasing company of a change in ownership.
Since she signed a paid up lease with Chesapeake. It stands to reason that they were notified. TEP State she was not on the pay deck when it was transferred which is the reason that they have not paid her.
Wouldn’t the lease be notification enough that the property was conveyed in her name?
Wouldn’t it have been the responsibility of Chesapeake to submit an accurate list and the responsibility would be placed on TEP to ensure The mineral ownership was correct when they purchased.
Did she miss a step somewhere that place is the burden on her as TEP is now stating.
Regarding the phones that were escheated in error , they are stating It is her responsibility to file a claim with unclaimed property. I feel that it’s their responsibility to have the funds reversed back since it is their error. Am I correct ?
For whatever reason, Chesapeake did not update its records to reflect your friend’s title. Maybe the former owner also signed a lease. Perhaps when the drilling title opinion was done, the sheriff’s deed was missed. Regardless, TEP received a pay deck with the former owner’s name and proceeded accordingly. At this point, your friend needs to step up and get the recorded deed over to TEP. She also needs to ask TEP what else is needed to get herself in pay. In my experience, once the funds have escheated to State of Texas, then only the owner can get the money. Her goal needs to be to prevent any more money being escheated by getting in pay. So your friend needs to send all the proper documentation to the State to get the royalties. This would include the sheriff’s deed and whatever else the State requires, perhaps copies of relevant correspondence and an affidavit. They will help her with that.
Lot of unknowns here to get a solid answer. Did the developer retain the mineral rights that you dont know about and you assume she has the rights to them? Did the previous owner sign a lease before the sheriffs sale that started producing? Whats the language in the deed into her regarding minerals/producing property? Making an assumption here, given that its a house and in a development, the interest is likely very very small, so Chesapeake leased the interest twice, not worrying about the $200 or whatever she was paid to sign and when the drilling title opinion came back, your friend was not accredited with the ownership in the lot.
Thank you for responding. I answered your questions.
Did the developer retain the mineral rights that you dont know about and you assume she has the rights to them?
The minerals were not reserved. She clearly has the rights. Additionally the owner before her had the rights which were conveyed to her when she purchased in 2012.
Did the previous owner sign a lease before the sheriffs sale that started producing?
Yes he signed a lease on 12/8/2008. She signed a lease containing identical language on 08/16/2012The first of 4 units started production in March of 2011.
What’s the language in the deed into her regarding minerals/producing property?
Reservations from conveyance: None.
In August of 2011 A Declaration of Pooling was filed with his name listed on attachment a - the list of lease holders . First production was March 2011, My friend purchased the property March 2012 and signed a lease August of 2012. In her files were documents and correspondence with her about the wells. I can’t see how they can say she did not provide them with the deed. She states she did. Worse case scenario is they did not get the deed. They knew she was the owner and in that case, the royalties should have been placed in suspense in her name. Not paid in the name of the previous owner. Correct?
If prior owner signed a lease dated December 8 2008 with a 3 year primary term, then that lease would have been in effect when production commenced in 2011. The lease would provide that it would then stay in effect until production ceases. It would not expire upon sale or foreclosure of the property. Therefore the 2012 lease would not be effective. Her rights are entirely dependent on all the facts and circumstances and the exact wording of the deed or other recorded document. In some instances, the minerals can be conveyed but the seller can retain the royalty rights until the lease expires. Or the former owner could sell the royalty stream before an assignment to the purchaser (such as your friend) and the buyer of the royalty stream would be entitled to the income. You need to look at the deed records to make sure that there was not a sale of minerals or royalty stream before your friend acquired the property. The fact that there was not a reservation of minerals in the deed to your friend does not nullify any deed prior to March 2012 assigning the minerals or royalty stream to another person. If she was in correspondence with the operator and knew about about the producing wells, what didn’t she follow up and demand payment? Regardless as to how she never got in pay, she needs to send all the documentation to the current operator and get herself into pay (assuming that she is entitled to the royalties under the 2008 lease). At this point in time, it is her responsibility to get her title clear with the operator.