Basic Land Title Documents

Basics of Title

Welcome back and a happy Monday to all of you reading this in a timely fashion, as you should be. Last time I discussed the two major players in land title research, the landman and the title attorney. We are going to jump in today and talk about some of the general types of legal documents that you might see in a landman’s abstract of a parcel and some things to think about when looking at transfer of ownership for any sort of real property.

The basic types of documents you'll find in an abstract can first be broken down into the two categories: conveyances; and encumbrances. Conveyances include all of the basic instruments used to buy or sell land. The most basic type of document that you'll see is a Deed. A deed can come in many forms depending on the time period and specific jurisdictions in which the land being sold is located. This means sometimes, in the title of these documents, you'll see the added words "warranty" or "general warranty." The warranties that are being referred to are just fancy ways for the seller to guarantee that: they did in fact own the land they're selling, they're selling it as advertised without any surprises, and that they've disclosed any encumbrances (which we'll discuss in a moment). These are terms that were more prevalent in older deeds in times when it wasn't quite as established that these warranties are basic concepts that are implicit in any deed for land or property today. 

A couple of subsets also exist under these basic conveyance instruments, for things like quitclaim deeds and sheriff's deeds. A quitclaim deed is slightly different from a simple deed in that what is being conveyed is either an actual or potential interest in what the person conveying the interest, otherwise known as the grantor, actually holds. Basically, these are deeds which bar the grantor from ever coming back and claiming they hold some small interest in the property, and are owed some type of compensation for that interest. The other variation, known as a sheriff's deed, is a document executed by a sheriff to a buyer who acquired their interest in the land at a public auction, or sheriff's sale. These deeds typically follow the repossession of land to satisfy debts, unpaid taxes, or when there is no known party to whom the land interest can be conveyed when the previous owner died. 

That last point brings me to the next form of conveyances, which are those that occur following the death of the current owner. Typically, upon the death of a current owner the first place to look when determining how land will be conveyed is in the Last Will and Testament of the deceased. Wills are submitted into probate courts that verify the validity of the documents and oversee the administration of the estate through the Will's instructions. In an abstract in Pennsylvania, you'll not see any other documents of conveyance if there is a duly probated Will. The land will simply pass as per the instructions in the Will. However, in places like Ohio, you will see a little bit more. In Ohio, following probate of the Will the Court issues and records in the County Recorder's office a Certificate of Transfer. The certificate of transfer is just a reflection of what's actually in the Will, but makes it much easier for reviewers to see who was alive at the time of the Will being probated. Sometimes, in West Virginia especially, you'll see no conveyances and no Wills to indicate how the land was conveyed. These are instances where landmen have to dig deeper into documentation; to determine who was alive at the time and how many pieces the whole interest was broken into. 

The other major type of documents you will find in an abstract are referred to as encumbrances. Encumbrances are instruments which follow the conveyance of land, and may need to be satisfied and removed from the title in order to sell or lease the land. Typically, the types of encumbrances which need to be satisfied are instruments such as: mortgages, liens, tax burdens, and unreleased leases. For oil and gas purposes, the timing of when these documents were recorded is also quite important; and a topic for another discussion. In essence, when a party tries to sell land with a lien or mortgage on it, the buyer would have to either take on that mortgage themselves, pay the entire balance prior to the sale, or find some way to negotiate for the mortgage to remain in the interest of the seller. For oil and gas operators, the existence of debts and mortgages on land, when considering executing a lease, spells out potential complications later if someone comes to collect on debts that have gone unpaid for a period of time. An even bigger issue might arise if there is a lease on the land for oil and gas drilling which appears to be void because of low production. This situation might turn into a prolonged, costly court battle which could result in the loss of wells drilled on already leased land. 

For our purposes, the other major types of encumbrances are what could be considered more passive. Rights-of-way and easements are instruments which typically allow for the construction of infrastructure, for example: pipelines, telephone and electric systems, and highways. Easements, however, can take the form of whatever the parties wish to agree upon as being a required activity on the land. This might include something as simple as a walking path over someone's land for their children to cross after school, or something as major as a permanent roadway access across private land. For oil and gas activities, these are important when considering planning surface activities, placements of pipelines, and deciding whether to build new structures or simply acquire and utilize what's already in place. 

Of course these are not by any means all of the documents you might and will come across in an abstract. But these give you the basics about what each type of document can, and is doing when you look through that stack of papers. If you have any interest in learning more about this topic, continue following along, or consider picking up any number of publications from organizations like the AAPL. Next in this series we will be looking at the different types of interests that may be conveyed ,or created, in the conveyances of land title. In the mean time, look out for my next post, which will address a broader series of topics on water law and water quality topics. 

            

Introduction To Land Title In Oil and Gas

Happy beginning of summer to everyone. I know it's not the official beginning of summer yet but when children start getting ready to leave for their break I just start to feel like it's summer already.Today I'm going to begin a series on some very fundamental areas of oil and gas law that are taking place here in Pennsylvania. We're going to start with the property law related to oil and gas drilling, and acquisition, and then I'll use that as a platform to begin talking about some contract and transaction issues that might be relevant to landowners and companies alike.

Land Title: Basic Actors

So, as I said, today is just going to be part of laying a foundation so we'll start with some very basic concepts. I'm sure all of you know that in order for someone to drill for oil underneath land they have to either own that land, own the minerals, or have an agreement to drill under the land, otherwise known as a lease. A lease can be either done individually or can be done as part of what's called a pool or unit. Pools and units allow oil companies to make sure that no matter where they're pulling oil and gas from, or which direction they're putting a horizontal lateral in the case of Fracturing, they are able to legally collect as much oil and gas as possible. it also helps to ensure that they're paying the correct people their fair share for what is pulled out of the ground.

It is at this point you might be thinking "well if you have these large tracts of land owned by many people each with their own leases that sounds really complicated." Bonus points for you for looking ahead. Ownership and correct royalty payments is hugely important for oil and gas companies. That's why they hire typically independent contractors known as landmen to do a lot of the legwork, or due diligence, to ensure all the ducks are in a row. 

A landman is typically an independent contractor who is assigned a specific parcel or series of parcels of land by a company to research. The land man will use any resources at their disposal including online and in the courthouse resources to trace back title for a given area of land to ensure one of two things. There either trying to ensure that a mineral deed that is being executed is being signed by the correct mineral owner, or they're trying to ensure that royalties being paid under an executed lease are being paid to the correct owner in the correct proportion.

Who are landmen and title attorneys, and why do we need them?

The land title industry is wide and quite varied. Entities like banks, insurance companies, real estate agencies, and oil companies all need specialize employees who can decipher the often vast and confusing title documentation, and make sense of them. Being a landman doesn't typically require any kind of advanced degree beyond a high school diploma, though some advanced skills would certainly help because it can be quite complicated.

The role of the landman is to ensure that clear and accurate understandings of land ownership are known by parties to a land transaction. A mistake in ownership can cause massive headaches in the long run because companies may have to pay out twice on the same royalty values if they never paid the correct owner.

A landman's work product is what's known as an abstract. An abstract is, hopefully, a full and complete record of ownership, transfers, liens, taxes, out sales, and other other actions that may have affected a given piece of land over the last 160 years or so. One big thing to note is that an abstract IS NOT a legal opinion. Abstractors don't need to be attorneys, though attorneys can be abstractors. In either case, unless the abstract also contains a certified title opinion, it is not a legal opinion. This is significant because without a lawyer's signature the abstract is simply a set of records with a lay opinion as to ownership. That's not to say that landmen don't have professional standards for their work-product. The American Association of Professional Landmen (AAPL) is a trade group for landmen that provides a set of practice standards and ethics that its members are requested to adhere too. 

A title attorney, on the other hand, is a licensed legal professional who has expertise and knowledge of real estate law in a given geographic area. Title attorneys typically take abstracts done by independent landmen or brokerage firms, and derive their own opinion as to the correct ownership reflected in them. Title attorneys carry large malpractice insurance policies because they are putting their signature on the certified title opinion and may be sought if an error is eventually found in their evaluation of ownership. 

If you're a landowner, you'd most likely be interacting with a landman and not a title attorney. Title attorneys charge much higher fees and have much more value to large-scale companies who have a high volume of title research to be done. While the higher confidence of hiring a title attorney may seem like a positive trade-off for the money spent, a landowner with only a few parcels might do well to look for a landman who is also a licensed attorney. That way you can be confident not only in their skills as a landman and knowledge as an attorney, but you can also work on keeping the costs down by separating out legal opinions from legal research.

So that's a basic introduction to the land title terminology and what to look for if you're engaging in any kind of research with a land professional. Next time I'm going to cover a few of the basic types of agreements that a person might find in a title abstract and discuss the differences. That will lead us into looking at the different types of mineral agreements that you're likely to see and how they all make sense.