On September 18, 2017, Ohio’s Seventh District Court of Appeals granted a Motion to Certify a Conflict to the Ohio Supreme Court stemming from its decision in Blackstone v. Moore, 2017-Ohio-7751. The Seventh District recognizes that its decision directly conflicted with the Fifth District’s decision in Duvall vs. Hibbs regarding specific versus general references to mineral reservations contained in a given landowner’s chain of record title.
The Ohio Supreme Court’s decision on this issue will affect the extent to which property owners can use the Ohio Marketable Title Act (the “Act”) to claim minerals they did not previously own.
The Ohio Marketable Title Act was effective on September 29, 1961. The express purpose of the Act was to “facilitate land title transactions by improving marketability,” (James A. Carr II, A Practitioner’s Guide to the Ohio Marketable Title Act, 7 Appalachian Nat. Resources L. J. 25, 26 [2012-2013]). That is, the legislature sought to ease the burden on buyers and sellers of real property by creating a uniform standard of title marketability.
Chiefly, the Act sought to remove clouds that did not appear in the chain of record title for 40 years (with some exceptions). By quieting reservations that had not been made a part of the title record for 40 years, the legislature eased the concern that so-called “ancient” reservations could be resurrected without notice to a landowner who did not have the benefit of notice of such reservation.
A number of exceptions to the Act allow for a reserved interest in a property to survive a Marketable Title Act challenge. One such exception is the case where instruments in the chain of title, subsequent to the reserving instrument, repeat or make reference to the reservation. However, “a general reference in such muniments, or any of them, to easements, use restrictions, or other interests created prior to the root of title shall not be sufficient to preserve them, unless specific identification be made therein of a recorded title transaction which creates such,” (R.C. § 5301.49).
Now, the Fifth and Seventh Districts conflict in their analyses of a “general” versus a “specific” reference to a reservation. In 1983, the Fifth District held, in Duvall v. Hibbs, 5th Dist. No. CA-709, 1983 WL 6483, that in order for a reservation to be sufficiently specific as to withstand a Marketable Title Act challenge, the reference must be so specific that a title researcher can locate the document creating the interest without needing to search the indexes. Presumably, every reference to a prior reservation needed to include the book and page reference to the instrument creating the reserved interest.
On June 29, 2017, the Seventh District released its opinion in Blackstone v. Moore, 7th Dist. No. 14 MO 0001, 2017-Ohio-5704, wherein the court specifically rejected the strict Duvall test in favor a four-factor analysis. Those factors are:
- The type of mineral right created,
- The nature of the encumbrance (an estate, profit, lease, or easement),
- The original owner of the interest, and
- Whether it referenced the instrument creating the interest.
The court noted that the Fifth District is the only Appeals District to follow a strict test such as Duvall and that such a rule “holds drafters to a much higher standard than does the plain language of the statute.” The four-factor test allows a court to consider each reservation with its individual attendant facts and circumstances.
In the year since the Ohio Supreme Court’s decision in Corban v. Chesapeake struck down the concept of automatic divestiture of property interests pursuant to the 1989 Ohio Dormant Mineral Act, landowners and their lawyers have sought new means of cancelling property interests encumbering title to mineral interests.
Although the Dormant Mineral Act was meant to supplement the Act and was enacted for the express purpose of clearing up issues like the one present in Blackstone, the 2006 DMA presents a high bar and likely results in much lower rates of mineral abandonment. As a result, practitioners are reexamining the potential to use the Act to reunite surface and mineral interests. Note that the Duvall test, relied upon by the Fifth District, was authored six years before the Dormant Mineral Act was enacted and almost ten years before it became effective.
The Supreme Court has to establish a briefing schedule, but a ruling on the matter is expected by the summer of 2018. The decision is expected to confirm how to interpret and apply the Act alongside Ohio’s Dormant Mineral Act.