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7th District Court of Appeals Continues to Clarify Ohio's Marketable Title Act

By Jay Carr

As oil and gas production increases in the Appalachian basin, the Seventh District Court of Appeals continues to clarify the contours of Ohio's Marketable Title Act (R.C. 5301.47, et seq.) ("MTA"). Under the MTA, ancient interests in land can be extinguished provided certain statutory elements are met. Namely among them, the claimant seeking to employ the MTA must have a "root of title." That is, the claimant must have a deed or other “title transaction” in his chain of title that has been filed of record for at least 40 years and purports to convey the interest in land being claimed. Additionally, the ancient interest sought to be extinguished must have been created before the recording of the "root of title" and cannot be specifically referenced or identified in the "root of title" or any instruments within the claimant’s chain of title recorded 40 years thereafter. Such interest also cannot be the subject of a "title transaction" recorded within the 40 years following the recording of the "root of title." 

In Pernick v. Dallas, 2021-Ohio-4635, the Court clarified two issues concerning the definition of "root of title" and "title transaction." First, the Court held that a deed still qualifies as a "root of title" even if it contains a reference to a prior recorded instrument where the parties thereto did not own the interest in land being claimed. In Pernick, the surface owner/appellee used the MTA to extinguish a severed fee oil and gas interest claimed by the appellant. The oil and gas was originally severed from the surface in a conveyance from Jasper Dallas to Fred Baumberger in 1932, and the appellant was one of several heirs of Jasper Dallas. The "root of title" deed said, at the conclusion of its legal description, that the demised premises were the "same premises that were conveyed to the Union Loan & Savings Co. by Fred Baumberger & wife by deed dated February 25th, 1932 and recorded in Vol. 157 page 107." Based on this prior deed reference and the fact that neither Fred Baumberger nor the Union Loan & Savings Co. owned the oil and gas estate, the appellant argued that the deed did not purport to convey the oil and gas now being claimed by the surface owner/appellee.  The Court, however, disagreed and found that the "root of title" deed does not contain any explicit reference to any prior oil, gas, or mineral reservation. Moreover, because the deed on its face purported to convey the entirety of the property, including oil and gas, subject only to specific coal reservations, the Court held that the deed qualified as the surface owner's/appellee's "root of title."

Second, the Court held that a recorded oil and gas lease that is not executed by the record holder of the mineral interest or the record holder’s heirs and assigns does not qualify as a "title transaction." On appeal, the appellant argued that her severed mineral interest was not extinguished under the MTA because it was the subject of a recently recorded oil and gas lease. The oil and gas lease at issue was entered into by the surface owner/appellee and a producer. Although recorded oil and gas leases generally qualify as "title transactions" under the MTA, this particular lease was not (at least as to the appellant), as it was not executed by any one in appellant's chain of title, including appellant. Thus, the recording of the oil and gas lease did not preserve appellant's severed mineral interest from being extinguished under the MTA. 

Tags: OMTA, Ohio Marketable Title Act, Marketable Title Act, MTA, Oil and Gas

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