Ok, I know there is a lot of knowledge out there and I need some opinions please.
The question is "are title opinions proprietary?
Here is the background, about 18-24 months ago I signed a lease on a small tract that was being pooled. Everything went well, they hit a well and then the division order came. I thought it was wrong on my share giving me too much royalty.
I called the landman to discuss and my wife was listening on the speakerphone. We had a good discussion and my wife agreed with the land guy. She is pretty knowledgeable how all this works, so keep that in mind in your opinions please. Sometimes I do know when to shut up and go along. So I did.
Now, last week I get a call about another small tract, a different operator wants to lease and his point of view was also mine about the other tract.
I would like to get the title opinion to bolster my discussions with this new offer. I really am not concerned about the original landman being wrong, but I really don’t want to tell my wife she was wrong!
The heirs are the same, county is the same, legal description is the same except for the survey. One sixth undivided interest in X acres in the Xxx survey.
It is small, but I might not sign in the interest of harmony. I am sure some of you know how I feel.
Thanks
Generally, unless you have it in your lease they have to give you a copy of the title opinion, they are hard to get. You might ask for the title runsheet as a fallback.
Title opinions are quite expensive to the operators who in turn may create liabilities for themselves if the opinions are incorrect. There are many other reasons for operators to hold the information close.
I your case, you may have been relying on less reliable ownership information like a leasing company that offered to pay less bonus on fewer acres. The accuracy of title opinions is on a higher level by far than current ownership determinations for leasing. Also, in my experience with many clients with inherited minerals, there are often more mineral parcels that show up on detailed title exams than are indicated in wills, probates, and deeds of distribution.
I think your wife's instincts are correct along with Ronald Reagan when he said, "Trust but verify" Set aside some of the royalty income to do your own title opinion area wide. No telling what will urn up that you may not have known about. This procedure is quite important if you have been force pooled. Operators will often give the benefit to a lessee when title conflicts arise and leave it up to the pooled owner to prove them wrong.
Wade Caldwell said:
Generally, unless you have it in your lease they have to give you a copy of the title opinion, they are hard to get. You might ask for the title runsheet as a fallback.
Thanks so much Mr. Caldwell, I will ask for the title run sheet. That is a little more innocuous than asking for a title opinion.
Once again THANK YOU
As a division order analyst in the oil and gas industry, I'd like to answer your question "Is a title opinion proprietary?" Yes, it is, in addition to the reasons already given.
As a D.O. analyst I have been told by many title attorneys that a title opinion is actually a type of contract between the attorney who rendered it, and the person or company to whom it is addressed. In one of the paragraphs at or near the beginning of the opinion is a statement that says that the title contained in the opinion is certified from a certain date and time of day (or sovereignty in some cases) down through a certain date and time of day. This certification acts as a warranty which would allow errors and omissions insurance to kick in if the opinion is incorrect and the addressee suffers monetary damages as a result.
All of that said, it brings us to the two additional reasons why a formal, certified opinion is proprietary.
First, the warranty for the opinion applies only to the addressee. Anyone else seeing it and using it for any purpose, even if it results in monetary damages, is not protected by the warranty. However, there have been instances when the addressee provided an opinion to a third party, the third party incurred losses, and then tried to hold the addressee responsible for those losses to any degree.
Second, I have been told by attorneys that once the opinion is shared with a third party, the "attorney-client priviledge" is waived. I won't go into more detail on this one, only to say that if the addressee's ownership set out in the opinion should ever end up in a lawsuit, I have been told that it can be asserted that if it has been furnished to non-partner third parties, the opinion is not protected and must be furnished during discovery.
Division Order Analysts are instructed by the in-house legal department as a routine practice never to provide a copy of any title opinion to any outside party unless that party is a co-owner in the lease or well covered by the opinion, AND that third party has paid their share of the cost of having the opinion rendered.
Marsha,
But title opinions are routinely given out, at least the part that applies to that owner, when title curative requirements are in the opinion.
These opinions are invaluable to owners and every lease should require a copy be given. They show the other owners, and often explain title history.
Every oil company has the right to decide what level of risk they are willing to take in any given transaction, including whether or not to incur risk related to furnishing a full and complete copy of a title opinion to a non-partner when it is not contractually required. Working with a landowner or ORI owner to cure a title defect doesn't require furnishing the entire opinon. The routine procedure among the division order analysts, lease analysts, and land analysts working for the most active exploration and production companies is to furnish a copy of only the page or pages of the title opinion containing the attorney's discussion and recommended action for curing the defect. Providing those limited pages doesn't create the level of risk as providing the entire opinion.
An opinion certainly is valuable to owners, but it can also be used to "lease bust" a prospect area, so it's in the best interest of the company who paid for the opinion to guard it carefully. And you are correct, if the lease contains a provision requiring the Lessor to be furnished with a copy of any title opinion, the terms of that provision will control what is provided and to whom. There are some oil companies, however, that will not take a new lease from a Lessor with such a provision in it--they will negotiate a high enough bonus or other incentive to entice the Lessor to abandon the title opinion requirement, which would otherwise remain a requirement throughout the life of the lease.
Marsha has accurately described the producer's point of view. Since this is a forum for mineral owners, my view can be summed up as: Ask for it. As a fallback, ask for the portion that pertains to your ownership. If your lease does not require a copy be given, but you are being asked to provide some title curative to the landman, ask for the pages of the title opinion that describe what curative is needed and why.
Mr. Caldwell,
Thank you so much for your response, it worked. I approached the company and asked for the title opinion and then told them if it was proprietary I was willing to sign a non-disclosure agreement with them using either my own or their agreement. The guy I was talking to pushed me to a legal guy. I mentioned run sheets and his response were those are work products of the title opinion process. He has sent the data I needed.
To my surprise, having worked in aerospace and defense all my life, that same agreement with customers including the government exists in that work products part of a platform design are not proprietary unless the work product process itself is proprietary. The design is however proprietary.
Ms. Breazeale appreciate your response also.
Any future leases I enter will include a requirement for the title opinion.