by Brian Fisher
It is not uncommon for ownership of the oil, gas and mineral (together, the “Minerals”) interests located on, in and under a tract of land (known as the mineral estate) to be held by an owner (or several owners) who are different from the owner of the surface rights (known as the surface estate) of such tract of land. In such a situation, the mineral estate and the surface estate have been “severed” from the other and, barring a properly crafted waiver of the mineral estate’s right to use the surface estate, the owner of the mineral estate has the right to access and use the surface estate for the extraction and development of the Minerals.
To protect improvements located on the surface estate from damage caused by an owner of the mineral estate using the surface estate for the exploration of the Minerals, a purchaser of only the surface estate (or the surface estate and only part of the mineral estate) may request that the title company issue a T19.1 Endorsement to the Owner’s Policy of Title Insurance (T19 Endorsement as to Loan Title Policies). Provided that the Title Company’s underwriting guidelines are satisfied, the T19.1 Endorsement is available when the Title Commitment issued by the Title Company excepts to (i.e., will not insure against) specific oil, gas and mineral interests held other than by the insured.
The T19.1 Endorsement requires an additional title premium (based upon a % of the basic title premium). The T19.1 covers damages to buildings, structures, roads, walkways, driveways, or curbs, affixed to either the land being insured or adjoining land and that by law constitute real property (crops, landscaping, lawn, shrubbery and trees are expressly excluded from coverage) to the extent occurring on or after the date the Owner’s Policy of Title Insurance is issued and resulting from the future exercise of a right to use the surface estate for the extraction or development of Minerals or any other subsurface substances excepted by the Owner’s Policy of Title Insurance.
The purchaser should also ascertain whether the jurisdiction in which the real estate is located has a so-called “no drilling” ordinance.
The Title Commitment may generally except to all oil, gas and mineral interests. In such a case, the purchaser should request the T19.2 Endorsement or T19.3 Endorsement, as applicable. These endorsements cost only $50 and must be issued upon request.