The Ohio Supreme Court’s recent decision in Corban v. Chesapeake Exploration, L.L.C., 2016-Ohio-5796 that the Dormant Mineral Act of 1989 is not self-executing dealt a seeming death blow to claims that ancient oil and gas reservations had terminated automatically with the severed interest vesting in the surface owners with nothing being recorded in the chain of title. However, based upon current case law, there are still limited circumstances in which the surface owner might be able to prevail in a title dispute, even though the surface owner has not complied with the notice and recording provisions found in the Dormant Mineral Act of 2006.
Prior to 1925, Ohio law required the use of words of inheritance to create a fee simple estate. The words of inheritance or perpetuity were required to show that an owner’s interest was not limited to his life alone, but passed to his heirs or beneficiaries. The Ohio Supreme Court held in 1884 in the case of Ford v. Johnson, 41 Ohio St. 366, 367 (1884) that elementary property law required the use of the word “heirs” to create something other than life-estate in real property. This requirement was eliminated when the Ohio legislature passed General Code § 8510-1 in 1925, and is currently found in Ohio Revised Code § 5301.02, which states: “The use of terms of inheritance or succession are not necessary to create a fee simple estate.” Thus, a grantor will be assumed to have conveyed everything he owned with regard to the property, unless the document clearly indicates that the grantor intended to convey something else.
In Ewing v. McClanahan, 33 Ohio App. 3d 46 (1986), the Twelfth District Court of Appeals recognized that title documents must be evaluated by the state of the law at the time the document was signed. Thus, for documents signed after 1925, no words of inheritance would be required to convey everything the grantor owned. Prior to the revision of the law in 1925, however, words of inheritance would be needed to create something other than a life estate in the party receiving the interest.
How might this benefit surface owners who seek to claim ownership of the minerals underlying their property? After the Corban decision, such surface owners would seemingly have to comply with the onerous provisions of the Dormant Mineral Act of 2006. For instance, at least one court has held that notice on the severed mineral owner must at least be attempted by certified mail. Further, the Ohio Supreme Court has held that, after receiving such a notice, the severed mineral interest owner then has 60 days to file a preservation claim to avoid abandonment. Thus, surface owners could expend significant resources tracking down the current owner of the severed mineral interest who has done nothing with that interest for decades, only to then have that person file a preservation claim, leaving the surface owner with nothing to show for their efforts—and this assumes that it’s even possible to determine who currently owns the severed mineral interest, as transfers upon the death of one owner are often not recorded in the county where the property is located.
If the minerals were reserved prior to the enactment of General Code § 8510-1 in 1925, however, then the surface owner may have another option. If the reservation did not include words of inheritance, the Ford and Ewing cases suggest that the grantor reserved nothing more than a life estate, which would terminate upon the death of the grantor with the reserved minerals reverting to the owner of the surface. Any grantor who made such a reservation prior to 1925 would almost certainly have died in the ensuing 91 plus years. Thus, surface owners may be able to reclaim their mineral rights by bringing a quiet title action seeking a determination that the life estate has terminated and that the mineral rights reverted to the surface owner upon the death of the person who reserved those minerals almost a century or more ago.
Mr. Lycans is a member of Critchfield, Critchfield and Johnston, Ltd., a law firm with extensive experience in all aspects of the oil and gas industry which has been representing landowners, producers, drillers, service providers, and others in the industry for over 75 years.