CHAPTER 1 MINERAL TITLE EXAMINATIONS: THE WHOS, WHATS, WHENS, WHERES, AND WHYS OF MINERAL TITLE ASSURANCE
| Jurisdiction | United States |
(Sep 2007)
MINERAL TITLE EXAMINATIONS: THE WHOS, WHATS, WHENS, WHERES, AND WHYS OF MINERAL TITLE ASSURANCE
Attorney
Lear & Lear L.L.P.
Salt Lake City, Utah
Phillip Wm. Lear is a partner in the Salt Lake City law firm of Lear & Lear. His practice focus is natural resources and public lands law with emphasis on acquisition, exploration, permitting and production of oil, gas, and mining properties; oil and gas conservation matters; complex title examinations; administrative hearings and appeals; natural resources litigation and appeals; mergers and acquisitions; mineral financing; natural resources law on Indian reservations; and water rights.
He received a J.D., 1975; H.B.A., magna cum laude, 1969 from the University of Utah, where he was Phi Beta Kappa, Phi Alpha Theta, and Graduate Honors College. He is admitted to practice before the U.S. Supreme Court, the U.S. Court of Appeals, Tenth Circuit, the U.S. District Courts, Districts of Utah, Wyoming and Colorado, the Supreme Court of Utah, the Supreme Court of Wyoming, the Supreme Court of Colorado, and the Ute Indian Tribal Court, Uintah and Ouray Reservation (Utah).
His memberships include the American Bar Association; Utah, Wyoming, and Colorado State Bars; Salt Lake County Bar Association; Energy & Mineral Law Foundation; and Rocky Mountain Mineral Law Foundation. He served as President of RMMLF 2002-03; Vice President 2001-02); Secretary (1997-98), Member-at-Large, Executive Committee (1994-96), Trustee (1984-87, 1989-91, 1994-97, 1999-present), Chairman, Special Institutes Committee (1990-96), and Program Chairman, 35th Annual Rocky Mountain Mineral Law Institute, Snowmass, Colorado (1989).
He was formerly a Partner, Snell & Wilmer, Salt Lake City, Utah (1993-01); Shareholder, Van Cott, Bagley, Cornwall and McCarthy, Salt Lake City, Utah (1979-93); Associate, Pruitt & Gushee, Salt Lake City, Utah (1975-79), and Lieutenant in the United States Navy (1969-72).
§ 1.01 Introduction
§ 1.02 History of Title Assurance
[1] Evidence of Title
[2] Land Registration Systems and Title Repositories
[a] Torrens System (Title Registration)
[b] Recording System
§ 1.03. Proof of Title
[1] Title Repositories
[2] Notice: Actual, Constructive, Inquiry (Implied), and Judicial
[a] Constructive Notice
[b] Actual Notice
[c] Inquiry Notice
[d] Judicial Notice
§ 1.04 Title Assurance
[1] Types of Title Assurance
[a] Abstracts and Title Opinions
[b] Title Insurance
[2] Mineral Titles
[3] Marketability and Marketable Record Title Acts
§ 1.05 Mineral Title Opinions and Reports: An Overview
[1] Title Memoranda, Status Reports, and Mineral Certificates
[a] Take-Off Reports
[b] Title Memoranda
[c] Status Reports
[d] Mineral Certificates
[2] Oil and Gas Title Opinions
[a] Acquisition Opinions
[b] Drilling Title Opinions
[c] Division Order Title Opinions
[d] Security or Financing Opinions
[3] Mining Opinions
[a] Acquisition Opinions
[b] Exploration Opinions
[c] Production and Distribution Opinions
[d] Financing
[4] Tying Opinions Together
[5] Legal Opinions and Professional Responsibility
§ 1.05 Ordering the Opinion
§ 1.06 Conclusion
§ 1.01 Introduction.
Title examinations and opinions are all about title assurance. Secure titles let project managers sleep at night. Exploration departments must convince management that projects are geologically sound and economically feasible. They must also convince them that they are legally supportable. Legally supportable projects center on marketable titles. Upfront capital and human-resource investments are so huge, particularly with mining projects, that title miscues are inexcusable. Tragedies abound when adequate project title assurance is underutilized or fails outright. The more notorious are chronicled in the decisional law and authorities and provide grist for the Socratic sparing mill in the nation's law schools.
The experience levels of institute participants are extremely diverse. We have novices recently degreed in university land administration programs and law schools on the one hand and seasoned veterans on the other. Among you are technicians, division order analysts, regulatory agents, lease brokers, mineral and royalty owners, government regulators, and even earth scientists and engineers. For one reason or the other you seek a better understanding of what your land department counterparts do or the role mineral ownership plays in operational decision-makings. Of the seasoned, we ask your indulgence, particularly, when we address the legal and theoretical underpinnings of title assurance and opinion writing, as with this paper. Hopefully, we have woven-into the fabric of our presentations some morsel to hold your attention, justify your attendance, and even edify you. We cannot, and you should not, avoid some academic treatment of mineral and title assurance law in order to understand the whos, whats, whens, wheres, and whys of mineral title assurance.
§ 1.02 History of Title Assurance.
"Title" has many meanings. It denotes the type and nature of one's ownership and rights in relation to land. Title can be possessory (as with a lease) or non-possessory (as with a future interest such as a remainder following a life estate, a reversion, or right-of-reentry). It can take the form of fee estate; an estate for years; a leasehold estate; a future interest; or simply a right to use or cross-over land, as with an easement, right-of-way, license, profit à prendre, or other corporeal hereditament. The title is said to be "marketable," "good," "valid," "sufficient," "clouded," and even "perfect." Also, title is sometimes defined by its source, such as titles by purchase, descent, devise, adverse possession, prescription, or decree. Finally, titles may be legal or equitable, and vested or inchoate.
[Page 1-2]
Over time several methods of title assurance developed in respect of real property. In American jurisprudence, vendors or owners of land are not required to prove title--vendees, buyers, lenders, or users are.1 The exception appears when the vendor/owner contracts to do so. This practice stems from the courts' extension of the caveat emptor doctrine for chattels to real property.2 Purchasers needed a system from which they could obtain some assurance that the title they wished to purchase was reasonably clear of defects such that a reasonably prudent person would purchase it or act upon it in the course of commerce.
[1] Evidence of Title.
Evidence or the assurance of title, and reporting the title's nature, character, quality, and validity is the focus of this Special Institute. Initially, possession was the evidence of title.3 Transfer of title, ownership, or right of possession was represented symbolically by the passing of a clod of dirt or a twig from the owner seller (grantor) to a non-owner buyer (grantee). In English common law, this ceremonial act of transfer of title was called livery of seisen4 or feoffment.5 At some point, written instruments replaced the clod and twig. Evidence or proof of the transfer tenuously remained in the memories of attending witnesses to the ceremony.6 In time, the English Statute of Frauds and Perjuries of 16777 required all transfers or encumbrances of land to be in writing.
[2] Land Registration Systems and Title Repositories.
As titles proliferated and societies became more complex, the need for government-monitored registration of land titles developed. American jurisdictions utilize two, public records-based systems of title assurance: title registration and title recording. Both systems have as their objective the security of titles.
[a] Torrens System (Title Registration). One, the least well-known, is the Torrens system.8 Titles are registered with the state in the same manner as automobile and pleasure
[Page 1-3]
boat titles. The seller endorses his certificate of title over to the purchaser (or other more common instrument of transfer), who presents it to the registrar for "registration;" and the purchaser then receives a new certificate of title in return as the purchaser's evidence of title. The Torrens system is used in several former British Commonwealth jurisdictions and found some favor in the United States in the early Twentieth Century and was adopted in one form or the other by twenty states. The Torrens system has fallen out of favor in most American jurisdictions and is authorized by statute in only ten states,9 and of those only four actually use the system.10
[b] Recording System. From their inception recording systems have been creatures of statute. The American system stems from the English Statute of Enrollments of 1535.11 History teaches that recording became necessary when parties resorted to paper transfers in order to document exceptions, reservations, conditions, and limitations, to facilitate lenders perfecting their encumbrances, and to prevent secret transfers.12
This system came to America with the colonial migration and transplant of English culture, including its body of laws to the New World. Spanish, Dutch, and French systems ultimately gave way to the English recording model.13 The objective of recording statutes has three components: (1) the original one of establishing a priority of right between competing claimants by incentivizing prompt recording of conveyances and encumbrances; (2) an equitable one of protecting subsequent purchasers against unknown conveyances and encumbrances; and (3) a constructive one of preserving all links in the chain of title (the history) so that a determination might be made as to the current owner and the nature of encumbrances, limitations, and conditions on the title.14
Recording is not so much the registration of land titles--the Torrens...
To continue reading
Request your trial