Ohio s Marketable Title Act and Dormant Mineral Act: Siblings or Distant Cousins? James ( Jay ) A. Carr II Vorys, Sater, Seymour and Pease LLP Craig Sweeney Bricker & Eckler LLP
History & Purpose of the OMTA Background InformaCon: - Land reform legislacon - Based on the Model Marketable Title Act - Simplifies and facilitates land Ctle transaccons - Codified at R.C. 5301.47, et seq. Summary of OMTA: - [A]ny person who has an unbroken chain of Ctle of record to an interest in land for forty years or more has marketable record Ctle to such interest regardless of defects in the chain of Ctle prior to the root of Ctle unless certain statutory excepcons apply. Morgenstern v. NaAonal City Bank of Cleveland, 1987 Ohio App. LEXIS 5677, *7 (Ohio Ct. App. 1987).
How to Apply the OMTA (1) Ensure that you have accurate Ctle work. (2) Verify the claimant has the legal capacity to own land. (3) Determine what interest in land is being claimed. (4) Select the date when marketability will be determined. (5) IdenCfy your root of Ctle. (6) Determine whether the claimant has an unbroken chain of Ctle of record to his root of Ctle. (7) Confirm that none of the statutory excepcons apply.
IdenCfying the Root of Title What is the Root of Title? [T]hat conveyance or other ;tle transac;on in the chain of Ctle of a person, purporcng to create the interest claimed by such person, upon which he relies as a basis for the marketability of his Ctle, and which was the most recent to be recorded as of a date forty years prior to the Cme when marketability is being determined. R.C. 5301.47(E) (emphasis added).
IdenCfying the Root of Title What is a Title TransacCon? Any transac;on affec;ng ;tle to any interest in land, including Ctle by will or descent, Ctle by tax deed, or by trustee s, assignee s, guardian s, executor s, administrator s, or sheriff s deed, or decree of any court, as well as warranty deed, quit claim deed, or mortgage. R.C. 5301.47(F) (emphasis added).
IdenCfying the Root of Title Keys to IdenCfying the Root of Title : - Instrument must create the interest in land being claimed. - Remember the definicon of Ctle transaccon. - The instrument must be in the claimant s record chain of Ctle. - The instrument must be the most recent to be recorded as of a date forty years prior to the Cme marketability is being determined.
IdenCfying the Root of Title Example One: - In 1965, A conveys Blackacre to B. - In 1968, B conveys Blackacre to C. - In 1970, C grants an easement over Blackacre to X. - In 1980, C conveys Blackacre to X. QuesCon Presented: Marketability is being determined on January 1, 2016. What is X s root of Ctle?
IdenCfying the Root of Title Example Two: - In 1968, A conveys Blackacre to B. - In 1970, B grants an easement over Blackacre to X. - In 1974, C conveys Blackacre to X. QuesCon Presented: Marketability is being determined on January 1, 2016. What is X s root of Ctle?
Determine if an Unbroken Chain of Title Exists Example Three: - In 1960, A conveys Blackacre to B. - In 1972, B conveys Blackacre to C. - In 1980, D conveys Blackacre to E. - In 1985, E conveys Blackacre to X. QuesCons Presented: Marketability is being determined on January 1, 2016. What is X s root of Ctle? Does X have an unbroken chain of record Ctle to his root of Ctle?
Determine if an Unbroken Chain of Title Exists Example Four: - In 1960, A conveys Blackacre to B. - In 1965, B conveys Blackacre to C. - In 1968, D conveys Blackacre to E. - In 1972, E conveys Blackacre to X. QuesCons Presented: Marketability is being determined on January 1, 2016. What is X s root of Ctle? Does X have an unbroken chain of record Ctle to his root of Ctle?
Determine if an Unbroken Chain of Title Exists Example Five: - A conveys Blackacre to ABC CorporaAon in 1970. - ABC CorporaAon merges with XYZ CorporaAon in 1980. The surviving corporacon is XYZ CorporaAon. - No evidence of the merger is of record in the county. - XYZ CorporaAon conveys Blackacre to X in 1990. QuesCons Presented: Marketability is being determined on January 1, 2016. What is X s root of Ctle? Does X have an unbroken chain of record Ctle to his root of Ctle?
Benefits of Marketable Record Title - Marketable record Ctle 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, transaccon, event, or omission that occurred prior to the effeccve date of the root of Ctle. All such interests, claims, or charges, however denominated,... are hereby declared to be null and void. R.C. 5301.50 (emphasis added). - Ex;nguishes interests and claims exiscng prior to the effeccve date of the root of Ctle. R.C. 5301.47(A).
Certain Interests Cannot be ExCnguished under the OMTA Rights of persons under a lease An easement created or held by a railroad or public uclity Easement the existence of which is clearly observable by physical evidence of its use Easement evidenced by a pipe, valve, road, wire, etc. whether or not observable Coal or any right percnent to coal Certain mortgages Governmental interests
ExcepCons to Marketable Record Title ExcepCon One: Interests and defects inherent in the muniments of the claimant s chain of record Ctle. Text of Statute: All interests and defects which are inherent in the muniments of which such chain of record Ctle is formed; provided that a general reference in such muniments, or any of them, to easements, use restric;ons, or other interests created prior to the root of ;tle shall not be sufficient to preserve them, unless specific iden;fica;on be made therein of a recorded ;tle transac;on which creates such easement, use restric;on, or other interest... R.C. 5301.49(A) (emphasis added).
Specific Reference to Prior Interest? Example Six: - In 1950, A conveys Blackacre (132 acres of land) to B excepcng and reserving one- half of the oil and gas. - In 1955, B conveys 49 acres of Blackacre to X subject to all coal, and oil and gas reservacons heretofore made. - In 1960, B conveys the remaining 83 acres of Blackacre to Y [e]xcepcng the coal and oil and gas rights as reserved by A in a deed to B dated January 1, 1950 in Book 81, Page 2. QuesCon Presented: Marketability is being determined on January 1, 2016. Does X and Y take subject to A s oil and gas interest?
Specific Reference to Interest? Example Seven: - In 1960, A conveys Blackacre to B excepcng and reserving one- half of the oil and gas under the premises and one- half of the royalty in the oil already in tanks on the premises. - In 1970, B conveys Blackacre to X subject to A s interest in the premises. QuesCon Presented: Marketability is being determined on January 1, 2016. Does X take subject to A s oil and gas interest?
ExcepCons to Marketable Record Title ExcepCon Two: PossibiliCes of reverter, rights of entry, and powers of terminacon for breach of a condicon subsequent which are inherent in the muniments of the claimant s chain of record Ctle. Text of Statute: and provided that possibilices of reverter, and rights of entry or powers of terminacon for breach of condicon subsequent, which interests are inherent in the muniments of which such chain of record ;tle is formed and which have existed for forty years or more, shall be preserved and kept effec;ve only in the manner provided in sec;on 5301.51 of the Revised Code. R.C. 5301.49(A) (emphasis added).
Future Interest ExCnguished? Example Eight: - In 1900, A conveys Blackacre to the trustees of the local protestant church so long as Blackacre is used as a place of divine worship and for church purposes. - In 1970, the limitacon is broken. - No other Ctle transaccons appear of record and now the heirs of A seek to retake Blackacre. QuesCon Presented: Marketability is being determined on January 1, 2016. Is A s possibility of reverter excnguished?
ExcepCons to Marketable Record Title ExcepCon Three: Interests preserved by the filing of proper nocce in accordance with the R.C. 5301.51 Text of Statute: All interests preserved by the filing of proper nocce... in accordance with sec;on 5301.51 of the Revised Code. R.C. 5301.49(B) (emphasis added).
Contents of Claim to Preserve (1) Be in the form of an affidavit. (2) State nature of the claim to be preserved and names and addresses of the persons for whose benefit the nocce is being filed. (3) Contain a descripcon of the land affected by the nocce. (4) State the name of each record owner of the land affected by the nocce, together with the recording informacon of the instrument by which each acquired Ctle to the land. (5) Made by a person who has knowledge of the facts.
ExcepCons to Marketable Record Title ExcepCon Four: ConCnuous possession by the same record owner of a possessory interest in land for forty years or more. Text of Statute: All interests preserved... by possession by the same owner concnuously for a period of forty years or more, in accordance with seccon 5301.51 of the Revised Code. R.C. 5301.49(B).
ConCnuous Possession ExcepCon Example Nine: - In 1965, A conveys Blackacre to B. - B has been in concnuous possession to present day. - In 1970, A conveys Blackacre to X. QuesCon Presented: Marketability is being determined on January 1, 2016. Does X take subject to B s interest?
ExcepCons to Marketable Record Title ExcepCon Five: Rights acquired from adverse possession. Text of Statute: The rights of any person arising from a period of adverse possession or user, which was [acquired] in whole or in part subsequent to the effeccve date of the root of Ctle. R.C. 5301.49(C).
Adverse Possession ExcepCon Example Ten: - In 1955, A conveys Blackacre to B. - In 1960, M begins to adversely possess Blackacre. M s adverse possession concnues uninterrupted for 21 years. - In 1975, A conveys Blackacre to X. QuesCon Presented: Marketability is being determined on January 1, 2016. Does X take subject to M s interest?
ExcepCons to Marketable Record Title ExcepCon Six: Title transaccon recorded subsequent to the effeccve date of the root of Ctle. Text of Statute: Any interest arising out of a Ctle transaccon which has been recorded subsequent to the effeccve date of the root of Ctle from which the unbroken chain of Ctle or record is started; provided that such recording shall not revive or give validity to any interest which has been excnguished prior to the Cme of the recording by operacon of seccon 5301.50 of the Revised Code. R.C. 5301.49(D).
Title TransacCon ExcepCon Example Eleven: - In 1916, A conveys Blackacre, which is located in Muskingum County, to B reserving the oil and gas estate. - In 1931, A dies testate. His will is probated in Tuscarawas County. - A s will devises the reserved oil and gas estate to A- 1 and A- 2. - In 1936, B conveys Blackacre to C (no mencon of the reservacon). - In 1957, A s will and a C.O.T. are recorded in Muskingum County. - In 1980, C conveys Blackacre to X. QuesCons Presented: Marketability is being determined in 1980. Does D take subject to A- 1 s and A- 2 s interest? Who is the lawful owner of the oil and gas estate?
Open Issues Concerning the OMTA Issue One - Is the MTA self- execucng? - Text of OMTA Marketable record Ctle... operates to ex;nguish such interests and claims. R.C. 5301.47 (A) (emphasis added). All such interests, claims, or charges are hereby declared to be null and void. R.C. 5301.50 (emphasis added). - Court s analysis in Corban - PracCce of the bar, due process concerns, etc.
Open Issues Concerning the OMTA Issue Two - What is the date marketability is being determined? Can such date be pushed back in Cme? - Case law has not been consistent in this regard. - Supreme Court of Ohio has not directly addressed the issue.
Can You Push Back the Date Marketability is being Determined? Example Twelve: - In 1910, A conveys an easement over Blackacre to B. - In 1930, A conveys Blackacre to C with no reference to B s easement. - In 1975, C conveys Blackacre to D with no reference to B s easement. - In 2014, D conveys Blackacre to X with specific reference to B s easement. QuesCon Presented: Marketability is being determined on January 1, 2016. Does X take subject to B s easement?
Open Issues Concerning the OMTA Issue Three - Does the MTA apply to severed mineral interests? LegislaCve history of OMTA - 1961 enactment: All minerals are exempt from the OMTA. - 1973 amendment: All minerals are subject to the OMTA. - 1974 amendment: All minerals but coal are subject to OMTA. - 1989 amendment: ODMA enacted as part of OMTA, which specifically applies to all mineral interests but coal
Open Issues Concerning the OMTA - Does R.C. 1.51 apply? If a general provision conflicts with a special or local provision, they shall be construed, if possible, so that effect is given to both. If a conflict between provisions is irreconcilable, the special or local provision controls as an excepcon to the general provision, unless the general provision is the later adopcon and the manifest intent is that the general provision prevail. R.C. 1.51. - What does the legislacve history / case law say?
Open Issues Concerning the OMTA Issue Four - Does the OMTA apply to severed royalty interests? - Arguments against applicacon to severed royalty interests Oil and gas royalty is personal property under Ohio law OMTA applies concerns interests in land - Arguments for applicacon to severed royalty interests Marketable record Ctle shall be held by its owner... free and clear of all interests, claims, or charges whatsoever... All such interests, claims, or charges, however denominated,... are hereby declared null and void. R.C. 5301.50 (emphasis added).
Open Issues Concerning the OMTA Issue Five - Can a deed that repeats a prior mineral / royalty reservacon serve as a landowner s root of Ctle if the landowner is claiming marketable record Ctle to that severed interest?
RepeaCng ReservaCon in Root of Title Example Thirteen: In 1940, A conveys Blackacre to B excepcng the oil and gas. In 1970, B conveys Blackacre to C repeacng the above excepcon. In 1982, C conveys Blackacre to X with no reference to the oil and gas excepcon by A. QuesCon Presented: Marketability is being determined on January 1, 2016, and X is claiming marketable record Ctle to all of Blackacre, including the oil and gas estate. Does X possess marketable record Ctle to all of Blackacre?
Open Issues Concerning the OMTA Issue Six - - Must a Ctle transaccon be recorded within the immediate forty years following the root of Ctle to preserve the interest conveyed thereby or can a Ctle transaccon be recorded at any Cme prior to the date marketability is being determined?
When Must a Title TransacCon Occur to Preserve the Interest Conveyed? Example Fourteen: - In 1940, A conveys Blackacre to B. - In 1970, B conveys an easement over Blackacre to C. - In 1972, B conveys Blackacre to X. - In 2014, C conveys his easement to E. QuesCon Presented: Marketability is being determined on January 1, 2016. Does X take subject to E s easement?
Open Issues Concerning the OMTA Issue Seven - Can a will serve as a Ctle transaccon when the will does not specifically devise the subject land and the estate s inventory does not idencfy the subject land? - Argument against such wills qualifying as Ctle transaccons AddiConal searching is necessary to determine what interests passed at the decedent s death. - Argument for such wills qualifying as Ctle transaccons Title to the subject land vests in the beneficiaries upon the admission of will to probate with relacon back to the date of decedent s death.