CHAPTER 8 COMMON ISSUES IN PREPARATION OF A TITLE OPINION

• Jurisdiction: United States

Nuts & Bolts of Mineral Title Examination
(Apr 2015)
CHAPTER 8
COMMON ISSUES IN PREPARATION OF A TITLE OPINION
Brian R. Bjella
Partner
Crowley Fleck PLLP
Bismarck, North Dakota
Uriah J. Price
Associate
Crowley Fleck PLLP
Billings, Montana

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BRIAN R. BJELLA is a senior partner in the Bismarck, North Dakota, office of the law firm of Crowley Fleck PLLP. He received his law degree from the University of North Dakota in 1979. Prior to joining the firm, he served as an Assistant Attorney General for the State of North Dakota, representing the Board of University and School Lands in supervision of the state's mineral interests. Brian is admitted to practice in the States of North Dakota and Montana. Brian's primary areas of practice are mineral law and public utilities law. He has extensive experience in preparation of mineral title opinions and the siting of energy facilities before state regulatory agencies. Brian has been very active in the Rocky Mountain Mineral Law Foundation. He formerly served on the Board of Directors and several terms as a trustee. He is chair of the Long Range Planning Committee. He was on the program committee of the following special institutes: Mineral Title Examination III (1992); Oil & Natural Gas Pipelines (1995); The Electric Industry (1997); and Water Quality and Wetlands (2002). He served as co-chair of the landman's section for the 2006 annual institute and of the oil and gas section for the 2011 annual institute. Brian authored the following papers: "Removing the Operator Under the Joint Operating Agreement" (1999); "Management of Water and Water Quality in Coal Mining: A Legal Perspective" (2002); "Are Landmen Practicing Law? The Legal & Ethical Issues" (2003); "Advanced Mineral Conveyancing and Title Issues" (2007); and co-authored "Common Issues in Preparation of a Title Opinion" (2012).

URIAH J. PRICE is an attorney with Crowley Fleck PLLP. He is a member of the Energy, Environment and Natural Resources Department in the firm's Billings, Montana office. His practice encompasses multiple areas of energy and natural resources law, including oil and gas, regulatory and administrative affairs, Indian law, and title examination. Uriah practices in Montana, North Dakota, and Wyoming and currently serves on the Rocky Mountain Mineral Law Foundation's Young Professionals Committee. Uriah graduated from Washburn University School of Law. Prior to law school, he obtained his Bachelor of Science degree from the University of Kansas.

I. TITLE STANDARDS¹

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Title standards are standards and criteria, adopted by an organization of lawyers such as the real property section of the state bar association, upon which real estate title can be evaluated to determine whether it is marketable or defective. All real estate lawyers, including oil and gas lawyers, should be familiar with the title standards of any state where they practice.

It appears there are 32 states which have some form of title standards.² Of these 32, it appears about 21 have updated their title standards within the last 15 years. The following table shows a summary of states with title standards and the dates those title standards were last revised.³ ;

STATE	DATE LAST REVISED	COMMENTS
Arkansas	January 2013	No specific mineral title standards
Colorado	May 2013	No specific mineral title standards
Connecticut	January 2009
Florida	June 2012
Georgia	August 2005
Idaho	1946
Illinois	January 1977
Iowa	March 2014
Kansas	2005	Cover general issues related to real property, including mineral title; have been referred to and adopted by the KS Supreme Court
Louisiana	2001	No separate mineral title standards
Maine	October 2012
Massachusetts	May 2008
Michigan	December 2014 - 6th Edition Published	Have been relied upon by MI appellate courts and regarded as authoritative; described as comprehensive and useful; specifically address mineral interests
Minnesota	November 2013
Missouri	May 1980
Montana	1955
Nebraska	October 2013
New Hampshire	December 2013
New Mexico	1950
New York	January 1976
North Dakota	December 2011	Appears to be the only state with separate, specific, comprehensive mineral title standards (Mineral Title Standards last updated in 1989)
Ohio	May 2009	Apply to surface
Oklahoma	Revised by committee; approved at annual bar convention	No separate oil and gas title standards; many oil and gas issues not addressed
Pennsylvania	One or more counties have adopted standards (limited to assessing what majority of local bar considers marketable for real property transactions)
Rhode Island	April 2014
South Dakota	June 2003	Codified in South Dakota code
Texas	Committee meets quarterly; for additional information visit: www.reptl.org	Texas has 107+ up to date standards on real property issues, but none yet on mineral issues.
Utah	June 1964
Vermont	September 2010
Washington	September 1942
Wisconsin	February 1946
Wyoming	1970's to 1980	Not complete

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Title Standards generally represent the consensus of the lawyers drafting the standards and a majority of the lawyers who practice in the area of real property. They may be accepted as establishing a standard of care under which a title examiner should operate with a given fact situation. Although title standards generally do not have the force of law, courts have relied upon title standards when addressing matters involving title issues.⁴

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In the past, various states have enacted title standards into law.⁵ "In 1947, title standards in Nebraska were enacted into law by adoption of the Nebraska Marketable Title Act which made the existing standards the legal standard of marketable title."⁶ "Subsequently, the title standards were repealed and no longer have the force of law."⁷ "Reasons cited for the repeal of the legislation were that as legislation it was difficult to amend and keep the standards current; new standards proposed by the bar were given no recognition until enacted into law; and as legislation the standards lacked sufficient flexibility."⁸ To our knowledge, only one state, South Dakota, currently codifies its title standards in its state statutes.⁹ However, the introduction to the South Dakota title standards, codified in the South Dakota Codified Laws, Appendix to Chapter 43-30, provides:

The State Bar of South Dakota Title Standards are the work of the Real Property, Probate and Trust Section's Title Standards Committee. The Standards themselves are not the authority. Rather, they are in some sense a restatement of the law designed to aid the practitioner in determining the current status of practice in a particular area.

The Standards are based on existing South Dakota statutes and case law from South Dakota's courts and other relevant jurisdictions. The committee members' experience with the relevant authorities is crucial to drafting Standards.

The 2002 Standards are in part based on the Model Title Standards, existing South Dakota Title Standards and various Title Standards from other jurisdictions, predominantly North Dakota and Nebraska. The Title Standards Committee has discovered that to be most useful the Title Standards must keep pace with the ever-evolving landscape of the law. The ideal way to achieve this goal is through a standing Title Standards Committee charged with an on-going review of statutory and case law whose members are familiar with the dynamics of practice, enabling them to draft and revise Standards as necessary.

Most title standards relate to general real property issues without specific regard to mineral title issues. Although the title standards of some states may address mineral title issues, North

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Dakota appears to be the only state that has adopted separate and specific mineral title standards.¹⁰ North Dakota's regular title standards contain a mineral section.¹¹ However, North Dakota's separate mineral title standards deal exclusively and comprehensively with title issues relating specifically to mineral interests.¹² The introduction to the North Dakota Mineral Title Standards provides:

This volume of Mineral Title Standards of the State Bar Association of North Dakota has been prepared by the Mineral Title Standards Committee of the Section of Real Property, Probate and Trust Law. These standards are based on the relevant statutes of the State of North Dakota, decisions of the North Dakota Supreme Court (and courts of other jurisdictions deemed to be relevant to North Dakota) and the collective experience of the members of the Mineral Title Standards Committee. Mineral title standards continue to evolve as statutes change, cases are decided, and lawyers develop collective shared experience. These standards should be considered realistically; they should not be accepted as the final authority for a particular point. This volume should be used in conjunction with the North Dakota Title Standards. The work of the Mineral Title Standards Committee will continue over the years. ¹³

The North Dakota Mineral Title Standards are comprehensive and include but are not limited to, discussion of the following issues: the nature of minerals; sovereign and private creation of mineral estates; ownership of minerals beneath railroads and highways; the mineral versus royalty distinction; third party reservations and reservation conflicts; the duhig rule of construction; term interests; the execution right; royalty and non-executive mineral interests; mineral conveyances affected by rivers, streams, and lakes; successive ownership interests; allocation of royalty burdens; burdens on the mineral estate such as leases, mortgages, and judgments; multiple use of mineral estates; easements and rights of way; dominance of the mineral estate; pooling and unitization; and various statutes affecting the mineral...