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1989 Dormant Mineral Act is NOT Self-Executing

1989 Dormant Mineral Act is NOT Self-Executing

Today is a big day for Ohio mineral owners.  The Ohio Supreme has decided that "The 1989 Dormant Mineral Act was not self-executing and did not automatically transfer ownership of dormant mineral rights by operation of law; rather, the surface holder was required to bring a quiet title action seeking a decree that the mineral rights had been abandoned in order to merge those rights into the surface estate."  Corban v. Chesapeake Exploration, 2016-Ohio-5796, at ¶40.  Thus, "the 2006 amendment to the Dormant Mineral Act applies to claims asserted after its effective date [June 30, 2006] and specifies the procedure that a surface holder is required to follow in order to have dormant mineral rights deemed abandoned and merged with the surface estate."  Corban at ¶41.

In order for a severed mineral interest to be deemed abandoned and vested in the surface owner under the 2006 DMA, "the owners of the surface rights must comply with Revised Code 5301.56(E), which requires the surface owner to serve the mineral-interest holder with notice of the owner's intent to declare the mineral interest abandoned and to file an affidavit of abandonment in the county recorder's office in the county in which the property is located."  Albanese v. Batman, 2016-Ohio-5814, at ¶27.   Upon receipt of the certified-mail notice of abandonment, and/or notice by publication in a local newspaper, the 2006 DMA affords mineral-interest holders 60 days to file a Claim to Preserve Mineral Interest with the county recorder's office.  The Ohio Supreme Court previously held in Dodd v. Croskey, 2015-Ohio-2362, that the recording of a Claim to Preserve "is sufficient to preclude the mineral interests from being deemed abandoned if filed within 60 days after notice of the surface owner’s intent to declare those interests abandoned."  Dodd at ¶37.

Many surface and mineral owners, and oil and gas companies, have been waiting for months for these decisions from the Ohio Supreme Court.  These decisions finally provide clarity as to the applicability of the 1989 DMA and 2006 DMA, and the relationship between the two.  In essence, a surface owner was required to file a quiet title action prior to 2006 in order to utilize the 1989 DMA to acquire a previously severed mineral interest.  Now, a surface owner must take the steps required by the 2006 DMA to acquire a severed mineral interest, unless the surface owner can otherwise extinguish the severed mineral interest under the Marketable Title Act.

In Corban, the Supreme Court also addressed the applicability of the Marketable Title Act:

"The General Assembly enacted the Marketable Title Act, R.C. 5301.47 et seq., in 1961, to extinguish interests and claims in land that existed prior to the root of title with 'the legislative purpose of simplifying and facilitating land title transactions by allowing persons to rely on a record chain of title.'  This legislation provides that marketable record title — an unbroken chain of title to an interest in land for 40 years or more — 'shall be held by its owner and shall be taken by any person dealing with the land free and clear of all interests, claims, or charges whatsoever, the existence of which depends upon any act, transaction, event, or omission that occurred prior to the effective date of the root of title.' Marketable record title therefore 'operates to extinguish' all other prior interests which 'are hereby declared to be null and void.'

When initially enacted, the Marketable Title Act did not 'bar or extinguish any right, title, estate, or interest in and to minerals, and any mining or other rights appurtenant thereto or exercisable in connection therewith.' Former R.C. 5301.53(E). However, the General Assembly amended former R.C. 5301.53 and former R.C. 5301.56 in 1973 'to enable property owners to clear their titles of disused mineral interests.'  Thus, the Marketable Title Act extinguished oil and gas rights by operation of law after 40 years from the effective date of the root of title unless a saving event preserving the interest appeared in the record chain of title — i.e., the interest was specifically identified in the muniments of title in a subsequent title transaction, the holder recorded a notice claiming the interest, or the interest '[arose] out of a title transaction which has been recorded subsequent to the effective date of the root of title.'"  Corban, at ¶17-18 (internal citations omitted).

For additional summary of these landmark decisions, see Court News Ohio.  If you have any questions regarding oil, gas, and mineral rights, please contact Kyle WituckyMark Stubbins, or Grant Stubbins.

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