Tag: mineral rights

Understanding the Title Commitment – Part 2

Towards the end of the Title Insurance Commitment, you will find a list of “Exceptions from Coverage”. This list appears in Schedule B – Section II. The Standard Exceptions are general and appear on every commitment. However, many of the Additional Exceptions are specific to your tract of real estate. Here are some common types of documents that show as Additional Exceptions:

  1. Plat

A plat is a picture of a subdivision. It is basically a drawing that shows the shape of the lots, and where the roads are. Many also show utility lines and easements originally planned by the developers.

  1. Restrictive Covenants

Restrictive Covenants list any restrictions on lots located in a subdivision. The purpose of these is to ensure that the owner of each lot can enjoy his real estate without causing annoyance to his neighbors. Many of these documents also contain rules concerning the upkeep and appearance of the subdivision. For example, these may include specific guidelines on what materials or color(s) are used for your house. They may also contain rules about fences, additional structures, or vehicle parking. These documents may include information about setting up a Homeowner’s Association (or HOA).

  1. Oil & Gas Leases

In certain parts of Kansas there is active exploration and production of oil, natural gas, and other natural resources. In the past, there were many oil and gas leases given, but a good number of them did not result in any actual activity. Additionally, many of them were for a certain number of years and the terms have already expired. Most of the leases we see on property searches today can be dropped off from the policy by a simple affidavit signed during closing. For more information on oil and gas leases, click here to view a blog we posted earlier this year.

  1. Ordinances

An ordinance is a public declaration made by the city. These may have some effect on your real estate, depending on what type of ordinance it is. For example, the document may provide for the installation of water lines or sidewalks.

  1. Easements

Easements give other persons the right to use your real estate for a specific purpose. A very common easement is an “ingress/egress easement”. This allows someone to travel across your real estate usually to access real estate they own adjacent to yours. Another very common easement is a utility easement. These agreements allow electric, natural gas, or other specified companies to construct or maintain utility lines. Most easements contain language saying that the easement will “run with the land”. This means that when you sell your property, the new owners will have to honor the easement. As mentioned above, an easement is for a particular purpose. As the owner of the real estate, you do have the right to make sure that the person using the easement isn’t trespassing on or causing damage to another part of your real estate.

As you review your title insurance commitment, please remember that you can ask for copies of the documents that are listed. At Tallgrass Title we are happy to answer any questions to help make your transaction as smooth as possible.

Basics of Oil and Gas Leases in Kansas

You have just received a commitment for title insurance and an exception appears:

“Oil and gas lease filed for record at book 300, page 242, on August 2, 1996.”

What is this? Why is it here? Do I need to do something about it? Are the “mineral rights intact?” “Will there be an oil well pump jack in my front yard?” The purpose of this post is to arm you with the basic knowledge to answer these questions and to take the confusion out of your transaction.

Oil and gas rights, also known as “mineral interests” are the right to the oil and gas potentially existing under the surface of real estate. A deed from one person to another automatically passes both the surface rights and the oil and gas rights to the new owners unless the deed specifically states otherwise.   If the oil and gas rights have been “severed” or are not “intact,” your commitment will clearly state this fact in the legal description and/or in the exceptions.  Simply put, one person can own the oil and gas rights below the surface and another can own the surface rights.  Both may be passed to different buyers by deed to the surface and deed to the mineral rights. Typically, in Kansas, surface rights and oil and gas rights are not severed.  Most commonly, oil and gas rights are “leased.”

An oil and gas lease is like a surface lease in that the owner gives the right to use real estate for a period of time in exchange for payment. Therefore, the owner is giving the right to another person (typically an oil and gas company) to explore and produce oil from the subsurface for a period of time.  Most oil and gas leases in Kansas range from five to ten years unless production or exploration is active.  If production or exploration is active, an oil and gas lease continues until such time as it is inactive for the term of the lease.  Interestingly, the vast majority of real estate subject to an oil and gas lease is never explored.  Companies purchase the lease and in the event oil and gas is found in the area, they can continue the exploration and production.

A title insurance company will list the oil and gas lease on a commitment to make the buyer aware of the fact that a lease exists on the real estate; that somebody potentially has the right to drill an oil well or place an oil well in your front yard. Quite often though, the lease period has expired and no oil has been produced.  If this is the case, and somebody familiar with the land will swear to this fact, the exception can be removed from the commitment.

Oil and gas rights can be a complicated subject for even the most seasoned buyer, seller, real estate agent or banker. If you have any questions about mineral rights in a transaction, Tallgrass Title has real estate attorneys that specialize in oil and gas law who are happy to discuss these questions with you.  It’s our job!