CHAPTER 13 TITLE EXAMINATION OF MINERAL INTERESTS IN FEE LANDS
| Jurisdiction | United States |
(Nov 1977)
TITLE EXAMINATION OF MINERAL INTERESTS IN FEE LANDS
Larry D. Clark
Verity, Smith & Kearns, P.C.
Tucson, Arizona
I. INTRODUCTORY REMARKS — "FEE LANDS" and "MINERAL INTERESTS" AS USED HEREIN
A. "FEE LANDS" — in its broadest sense
B. "FEE LANDS" — as used herein shall mean those lands, record title to which has apparently vested in private ownership, and expressly excluding:
1. Public Domain Lands
2. Indian Lands
3. State Owned Lands
C. "MINERAL INTEREST" — as used herein shall mean a property interest in and to minerals in place
II. INDICIA OF TITLE TO FEE LANDS
A. Patents Issued by the United States
1. Public Land Laws Generally
2. Examination of Patent — title examiner's approach
(a) The underlying statute
(i) authority to issue patent
(ii) erroneous exceptions or erroneous reservations contained in the patent
(b) The legal description contained in the patent
B. Grants By or Through the United States
1. Private Grants
2. State Grants
3. Spanish and Mexican Grants
C. Patents Issued by the States
1. State Disposition Laws Generally
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2. Examination of Patent — title examiner's approach
(a) The underlying statute
(i) authority to issue patent
(ii) erroneous exceptions to erroneous reservations contained in the patent
(b) The description contained in the patent
III. THE SEVERANCE OF THE MINERAL ESTATE
A. Identification and Examination of the Mineral Interest
1. The Severance Instrument
(a) Means of creation of severed mineral interests
(i) Severance by deed granting mineral interests
(ii) Severance by deed reserving mineral interests
(iii) Leases and other severance instruments
(b) Consideration of the form of the severance instrument
2. The Interest Created by the Severance
(a) Distinguished mineral interests
(b) Defeasible and indefeasible mineral interests
3. Ascertaining the Extent of the Severed Mineral Interest
(a) The entire undivided mineral interest
(b) Lesser mineral interests
(i) Less than all of the minerals
(ii) Fractional mineral interests
4. Rights Accruing to and Obligations Imposed Upon the Severed Mineral Interest
(a) Consideration of the express and implied rights and obligations
(i) vis-a-vis the surface estate owner — access, surface use and support, etc.
(ii) vis-a-vis the owner of the minerals not included in the severance
(b) Restrictions created by non-parties to the severance instrument
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B. Resolution of Title Problem Identified
1. Application of Existing Case Law
(a) Resolution of apparent ambiguities
(b) Identification of implied rights and obligations
2. Ambiguities and Application of Rules of Construction
(a) Common rules of construction
(b) Their application in the resolution of title questions
3. Recommendations for Curative Action
(a) Curative instruments
(b) Acquisition of outstanding interests
(c) Litigation
IV. SELECTED TITLE EXAMINATION PROBLEMS
A. Rights Created and Limitations Imposed Prior to Severance and Their Consequences
1. Exceptions not Contained in the Indicium of Title
2. Mortgages and Other Security Transactions
3. Zoning Ordinances
4. Conditions, Covenants and Restrictions
5. Roads, Easements and Other Grants Prior to Severance
B. Rights and Limitations Arising Subsequent to Severance and Their Consequences
1. Tax Sales
2. Adverse Possession
3. Zoning and Other Governmental Actions
(a) The effect of subsequent zoning or land use ordinances
(b) Condemnation actions
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As indicated by the title of this paper, we are here concerned with title examinations in those instances where the ownership or right to extract the minerals within the parcel under examination are of paramount importance to the party to whom the opinion is being rendered. This paper is intended to address primarily those title examination matters which bear on the mineral estate, as contrasted to title matters in general. To this end, we have assumed a severance of the mineral estate.
The terms "fee," "fee lands" or "fee title" are generic and susceptible to more than one meaning. Absent modifiers, the terms may generally be understood to refer to an absolute estate of inheritance, clear of any condition or any restriction upon its alienation — that is, an estate in fee simple absolute. The term "fee" may be expanded to denote a particular characteristic of the title under consideration, as for example fee simple defeasible estates and fee simple determinable estates.
The use of the term "fee lands" in the title was not intended as reference to the precise nature of the fee estate, but rather as a reference to those lands, record title to which has apparently vested in private ownership. Accordingly, mineral interests or estates in public domain and other lands in federal ownership, state-owned lands and Indian lands are not treated.
"Mineral interests" as used herein means a property interest in and to the minerals in place. Although, as will be discussed further below, the title examiner must concern himself with making the proper distinction between mineral interests as so defined and other interests in the minerals (as for example, royalty interests), we shall not attempt to address title examination problems relating to such other interests, once the distinction has been made.
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INDICIA OF TITLE TO FEE LAND
Assuming as our starting point that title has vested in private ownership, the examiner then must know from whence the title originated. The effectiveness of the apparent vesting, depending as it does upon governmental grant or recognition, can only be assessed by an examination of the indicia of the grant. Accordingly, it may be helpful to review briefly the manner and authority under which vesting occurs.
Patents Issued by the United States
Titles to the lands within the 13 colonies and within four additional states created from territories initially claimed by the original 13 colonies, devolving as they did directly from the English sovereign, did not originate through the federal government. In general terms, and with the exception of the State of Texas, that portion of the continental United States west of the Mississippi River having been acquired by the United States through purchase or treaty, became initially a part of its public domain. In addition, various ones of the original 13 states ceded to the United States their territorial claims to significant portions of the midwestern states lying east of the Mississippi. The State of Florida was also acquired through treaty and cession.1 Dispositions by the United States of its public domain into private ownership took the form of patents or grants. Many of the areas granted to the various states were, in turn, deeded or patented by the states into private ownership.
Assuming that the tract of land being examined passed into private ownership by way of United States patent, the examiner will, of course, need to examine the patent itself, noting not only the description but also identifying the statutory authority under which the patent was issued. The statute may, for example, mandate the inclusion of specific reservations or exceptions in all patents issued thereunder. Thus, an examination of the statute is required to confirm that any such exceptions or reservations are indeed contained in the patent. Frequently patents will contain specific recitations which may make interesting reading but little substantive sense unless read in conjunction with the underlying statute. Inasmuch as the patent is the initial instrument in the chain of title by which the United States government confirms its grant of the parcel being examined
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into private ownership, it is well to remember that this instrument can pass no more than permitted by the statute under which it was granted.2
In examining the legal descriptions contained in the patent, it is frequently helpful and many times essential to examine the official plat of survey. A complex metes and bounds description contained in a mineral patent may be incomprehensible without the aid of the mineral survey plat. Similar and equally complex descriptions are not uncommon in other patents. Upon approval of the plat by the appropriate governmental office, the survey attains a degree of legal significance which may extend beyond the patent itself. Indeed, the very fact of return and approval of the survey is a prerequisite to the validity of the patent.3 For these and other reasons, it has been held that the official survey plat and the field notes are as much a part of the chain of title as patent and other conveyances in the chain.4
Grants By or Through the United States
Private Grants — Numerous federal statutes have provided for the entry upon and acquisition of portions of the public domain by way of private grants. In such cases the indicium of title may vary. For example, legal title to a townsite under one of the various Townsite Acts may pass directly to townsite lot purchasers or to a trustee, who subsequently conveys the lots.5
In examining titles to parcels obtained by way of grant, the initial vesting of which into private ownership is not evidenced by a governmental patent, the particular Act of Congress may become the operative indicium of its title. Confirmatory patents may, at the discretion of the Secretary of Interior, be issued as to lands, the granting statute to which contains no patenting provision.6 Generally such "patents" merely operate as a relinquishment of the sovereign title.7
State Grants — In its system of disposal of the public domain, the federal government has consistently granted lands to the states for their use in aid of education and a multiplicity of other state governmental functions. The classic grant involves the granting of...
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