Texas Title Examination Standards: Introduction and ... · May 2013 Allen D. Cummings [email protected] Texas Title Examination Standards: Introduction and Practical Exercises

May 2013 Allen D. Cummingswww.acummings-law.com

Texas Title Examination Standards:

Introduction and Practical Exercises

Texas Title Examination Standards:

Introduction and Practical Exercises

Center for American and International Law

* * *Texas Mineral Title Course

May 2 and 3, 2013Houston, Texas

May 2013 Allen D. [email protected]

Texas Title Examination Standards:Introduction and Practical Exercises

� TTS No. 1.10: Why Title Examination?

� Advise client of status of title

� Comments and/or objections - identifyirregularities, defects & encumbrances

� may reasonably be expected to materiallyaffect value or use

� may expose owner to litigation or adverseclaims – even if successful defense likely

� Requirements what must be done tosecure “marketable title”



� TTS No. 1.20: Review What?

� Entire chain of title from sovereign topresent date

� Based on county records and/or prior titleopinions

� Unrecorded documents furnished by client

� If scope is limited carefully set forth limitedscope [and perhaps associated risks]

� Under “Materials Examined” describe in detailrecords and unrecorded documents reviewed




Materials Examined

1. Digital Abstract on CD titled “Runsheet, for Company,covering 640 acres described in State of Texas LeaseNo. 00, Webb Cty, Tx from sovereignty to 1/29/2011 at5:00 pm, consisting of 100 pages, with scanned imagesof documents.

2. Limited Leasehold Title Opinion dated 12/25/1966 byAllen Cummings for Texas Oil & Gas Corp. covering thesame lands as State of Texas Lse No. from sovereigntyas to depths from the surface to 4,000 feet subsurfacefrom sovereignty to December 1, 1966 at 8:00 a.m.




Materials Examined

3. Certified Copy of Probate Proceedings on the Estate ofJohn Brown, deceased, in Case No. 64-1001-PR,Atascosa County, Texas.

Patent Information

Survey No. 100, Block Palafox, S. F. 10116, was patentedby the State of Texas to Jose Lima by Patent No. 200,Vol. 26-B, Records of the General Land Office, dated9/30/1929, recorded Vol. 200, Page 400, Deed Records,Webb County, Texas, as containing 640 acres, describedby metes and bounds in the Patent, reserving allminerals to the State.



� TTS No. 2.10: MARKETABLE TITLE?

� Record title

� Free from reasonable doubt

� Prudent person with

� Knowledge of all salient facts,circumstances and their legalsignificance

� Would accept

� Not absolutely free from every suspicion

� Possible defect no probable basis ok



� TTS No. 2.10: Not Marketable title?

� Necessity to rely on facts outside records

� Title by limitations

� Subject to outstanding oil & gas lease

� Subject to outstanding royalty

� Subject to an outstanding covenant

� Subject to an outstanding deed of trust,judgment lien or tax lien

� Affidavits of heirship? – TTS 13.20



� TTS Nos. 3.10 – 3.60: Identity

� Comment 1. Record title is in WilliamConolly. Your oil and gas lease is executedby William Conley.

� Requirement 1. None. See TTS 3.10 –Idem Sonans – sound alike, misspelled

March 21, 2013 Allen D. [email protected]



� Comment 2. Record title is in Mary E.Kurtz. Your oil and gas lease is executed byMary E. Newlin nee Mary Kurtz.

� Requirement 2. None. See TTS 3.40 –Recital of Identity may be relied on absentevidence to the contrary




� Comment 3. Record title was conveyed toJohn Doe. Your oil and gas lease isexecuted by John Doe, Jr.

� Requirement 3. Secure and submit forexamination an affidavit of identity statingfacts showing that John Doe, Jr. is one andthe same person as John Doe




� Comment 4. Record was conveyed intoJoe Smith, et ux, Marie Smith. Your oiland gas lease is executed by Joe andLouise Marie Smith, husband and wife.

� Requirement 4. ?

� Cautions:

� Similarity merely rebuttable presumption

� Look for contrary evidence



� TTS Nos. 4.10 – 4.30: Execution, Acknowledgement & Recording

� Comment 1. Your oil and gas leaserecites is was executed on 7/1/2010, butit was acknowledged on 6/25/2010.

� Requirement 1. None. See TTS 4.10that provides that proper sequence offormalities may by presumed.




� Comment 2. Your lease is from Joe Doe,Trustee, but is acknowledged by Joe Doeindividually, not in his capacity as Trustee.

� Requirement 2. It depends when filed forrecord and how long it has been of record.See TTS 4.20 & Tex. Civ. Prac. & RemediesCode §16.033 statute of limitations –

4yrs/2yrs after 9/1/2007.




� Comment 3. The Deed into your Lessordated 8/21/1963 is from Joe Doe, et ux,Mary, but does not contain privily & apartacknowledgement.

� Requirement 3. The Deed is void as toMary. What should be required willdepend on other title facts. See TTS 4.




� Comment 4. The Deed into your Lessor

was executed on 8/21/1963, but was notrecorded until 1/15/1970, after the death ofthe grantor.

� Requirement 4. Delay in recording, evenafter the death of the grantor, is not fatal.Absent contrary facts, delivery presumed ondate of deed - consider investigation outsiderecord TTS 4.30




� Absence of proper acknowledgement does not affect validity of deed or other instrument. TTS 4.20

� Recorded deed without properacknowledgement is not constructivenotice to creditors or BFP without notice.

� Is examiners review of deed without properacknowledgement actual notice?



� TTS No. 5.10: LAND DESCRIPTIONS

� A defective land description one of most frequent instances of title failure

� Description must be sufficient to identify and locate land on the ground

� If extrinsic evidence to be relied on, descriptive words in deed are basis for admission

� Comments contain extensive advice for the title examiner about land descriptions



� TTS No. 5.20: Land Descriptions in Patents

� TTS No. 5.30: Water Boundaries

� TTS No. 5.40: Roads

� Examiner may need to consider “strip and gore” doctrine

� Each of TTS 5.30 and 5.40 containextensive comments for the examiner inaddressing issues about boundaries



� TTS Nos. 6.10-6:70: CORPORATECONVEYANCES

� Comment 1. Your lease is from XYZCorporation, recited to be a Delawarecorporation, that is not registered to dobusiness in Texas.

� Requirement 1. None. Whether or not aforeign corporation has qualified to dobusiness in Texas does not affect validityof its conveyance. TTS 6.30



� TTS Nos. 6.10-6:70: Corporate Conveyances

� Comment 2. You lease dated 8/26/1989is executed by the Secretary of XYZcorporation.

� Requirement 2. Prior to 8/28/1989 onlyPresident & VP had presumed authority toexecute corporate conveyance – now allofficers. Of record >4yrs its ok. TTS 6.50




� Comment 3. Your lease is executed by Joe

Doe, as attorney in fact for XYZ Corp. Therecords do not contain a power of attorneyfor Joe Doe.

� Requirement 3. Secure, submit for

examination and then record a power ofattorney authorizing Joe to act for XYZ Corp.Authority not presumed. See TTS 6.50




� Comment 4. Your lease is from XYZ Corp.,however, the signature block has only thesignature of Joe Does does not show it isexecuted by XYZ Corp.

� Requirement 4. None. If properlyacknowledged, the execution passeswhatever title agent had authority toconvey. TTS 6.60



� TTS Nos. 7.10-7:70: CONVEYANCES BY

PARTNERSHIPS, JVS, LLCS, ET AL.

� Comment 1. Title to the minerals is inJoe Doe and Jack Sprat. Your lease isexecuted by Jack Sprat, as general partnerof Doe and Sprat, a general partnership.

� Requirement 1. Joe Doe must ratify yourlease using present word of grant. TTS7.40





� Comment 2. Your lease is executed byTom Tune as general partner of Tunes, LP.

� Requirement 2. None. A general partnerof LP has same authority as generalpartner of a general partnership. TTS 7.10.





� Comment 3. Your lease is executed byJim Grin, as Manager of Frowns, LLC.

� Requirement 3. None. Act of officer,agent, manager or member binds LLC. TTS7.50, when that person is apparentlyconducting business in usual way unlessperson lacks authority & purchaser knows.



� TTS Nos. 8.10: POWERS OF ATTORNEY.

� Comment 1. Your lease dated 9/1/1992 isexecuted by AIF for record mineral owner.The records contain a PA authorizing AIFto sell the lands covered by your lease.

� Requirement 1. Naked power to sell does

not authorize AIF to execute lease. Obtain aratification of your lease by mineral ownercontaining present words of grant, unless you

can establish adverse possession. TTS 8.10



� TTS Nos. 8.10-8:20: Powers of Attorney.

� Comment 2. Your lease dated 8/1/1997is executed by AIF pursuant to recordeddurable PA in statutory form from therecord mineral owner.

� Requirement 2. Durable PA not cover oil& gas until 9/1/1997. Obtain Ratificationas set forth above or rely on adv. poss’n




� Comment 1. Your lease dated 9/1/2010 is

executed by AIF for the record mineralowner, but recorded PA is not a statutory

durable power of attorney.

� Requirement 1. Obtain an affidavit from the

AIF that on the date of your lease the PA hadnot been revoked, had not expired by its

terms or operation of law, principal was aliveand competent.




� Comment 2. Your lease dated 9/1/2010 isexecuted by AIF for the record mineralowner; recorded PA is a statutory durablepower of attorney.

� Requirement 2. Obtain an affidavit of AIFcontemporaneous with transaction thatAIF has no actual knowledge of anyterminating event.

� See extensive comments on POAs



� TTS Nos. 9.10-9:20: Conveyances involving Trustees.

� Comment 1. Your lease is executed byJoe Doe, as Trustee of the Mary Doe Trustdated January 1, 2003. The records donot contain a copy of the Mary Doe Trust.

� Requirement 1. Obtain a Certification ofTrust from the Trustee that complies withTex. Prop. Code §114.086 stating

authority of Trustee – TTS 9.10



� TTS Nos. 9.10-9:20: Conveyances involving Trustees.

� Comment 2. Your lease is executed byJim Smith. There is a Mineral Deed to JimSmith from John Smith, as Trustee.

� Requirement 2. None. This inconveyance by “blind trustee.” TTS 9.20



� TTS Nos. 10.10-10:30: CAPACITY TO

CONVEY.

� Comment 1. You lease is executed by JoeDoe, Guardian of the Estate of Jane Doe.

� Requirement 1. Obtain application forappointment of guardian, citation & return,order appointing guardian, guardian oath& bond, application to execute lease,citation & return, order of sale, notice ofsale, decree confirming sale. TTS 10.30



� TTS Nos. 11.10-11:100: Decendent’s Estates.

� Comment 1. You lease is executed by Joeand Jane Smith, recited as only heirs ofJim Doe, Deceased. Records contain anAffidavit by Joe and Jane Smith attachingthe Jim Smith’s will.

� Requirement 1. Obtain death certificate,plus affidavit of marital history, death &heirship. Property passes on death to heirs;unprobated will not pass title. TTS 11.10




� Comment 1. You lease dated 1/21/2011is executed by Joe Smith, Indep. Ex’r u/w/oJim Smith, Deceased, whose will wasadmitted to probate in 2004. The will doesnot expressly authorize Indep. Ex’r to sellassets of the Estate. The will devises all ofhis assets to his adult children, Jack andJane Smith.




� Requirement 1. Obtain an affidavit fromthe Indep. Ex’r about whether there aredebts and taxes owing by the Estate. Ifthere are outstanding unpaid debts, thenthe Indep. Ex’r may have authority to act,in the best interests of the estate.However, if there is any doubt, then Jackand Jane Smith should ratify your leasewith present word of grant. TTS 11.30




� Comment 1. You lease dated 1/21/2011is executed by Joe Smith, Indep. Ex’ru/w/o Jim Smith, Deceased, together withJack and Jane Smith, the devisees.

� Requirement 1. Obtain an affidavit fromthe Indep. Ex’r that all debts and taxesdue on the Estate of Joe Smith have beenpaid, or that none were owning. TTS 11.60




� Comment 1. You lease dated 1/21/2011is executed by Joe Smith, Ex’r u/w/o JimSmith, Deceased, together with Jack andJane Smith, the devisees. Joe’s will wasprobated in New Mexico and a certifiedcopy of the New Mexico probateproceedings are recorded in the countyrecords.




� Requirement 1. Obtain and file in thecounty records an authenticated copy (athree-way certificate) of the will and orderadmitting the will to probate as requiredby Tex. Probate Code §95(c) – attested by

and signature of the clerk of the court,signature of the judge that the attestationis in due form. TTS 11.100



� TTS Nos. 12.10-12:160: Bankruptcies

� .10 – Relevance of Bankruptcy Cases to Real Estate Transactions through

� .160 – Effect of Dismissal of Case.



� TTS Nos. 13.10-12:160: AFFIDAVITSAND RECITALS

� Comment 1. The records examined contain an Affidavit of Heirship dated 10/10/19 that contains a jurat but not acknowledgement.

� Requirement 1. None. After 9/1/1989 an affidavit does not need acknowledgement to be recorded. TTS 13.10



� TTS Nos. 13.10-12:160: AFFIDAVITSAND RECITALS

� Comment 2. The early chain of title is veryirregular. The records contain two affidavitsof heirship dated 2/25/1946 concerning theownership of the lands under examination.However, title based on affidavits may not

be marketable.



� TTS Nos. 13.10-12:160: Affidavits and Recitals

� Requirement 2. None. The affidavits arean ancient documents, i.e. in existenceand recorded for at least twenty years.While there is no statutory authority,acceptance of the facts stated in affidavitsin determining title is a long establishedcustom and practice. TTS 13.20 and13.40.



Title examination is an both a skill and an art based on facts, experience and judgment.


The End

May, 2013 Allen D. [email protected]

Texas Title Examination Standards: Introduction and ... · May 2013 Allen D. Cummings [email protected] Texas Title Examination Standards: Introduction and Practical Exercises

Documents