Mineral Rights: The Underlying Legacy - Part I
Do the terms “abandoned mineral rights” mean anything to you? Do you currently own land that you don’t have the mineral rights to? Do you own mineral rights, but haven’t really done anything to make sure your rights are still protected?
Mineral rights are valuable asset in our personal portfolios that can allow us to build our legacy and provide for future generations. However, sometimes what we once thought as part of our legacy, is in fact now the legacy of another. The Ohio Supreme Court recently decided two cases dealing with abandoned mineral rights and the procedure in which a surface landowner can reunify the mineral rights with the surface rights.
This two-part blog series will first analyze the Ohio Supreme Court’s opinion regarding the notice requirements under Ohio’s Dormant Mineral Act and the second part will analyze how the Dormant Mineral Act and Ohio's Marketable Title Act work together.
Gerrity v. Chervenak
The Ohio Supreme Court addressed and clarified the notice requirements under the Ohio Dormant Mineral Act, Ohio Revised Code §5301.56.
John Chervenak is a trustee of the Chervenak Family Trust (“Chervenak”) which owns approximately 108 acres in Guernsey County. The rights to the minerals under the Chervenak property were retained by T.D. Farwell, the individual who transferred the 108 acres to the Chervenak family.
In 2012, a title search for the Chervenak property identified Jane Richards, daughter of T.D. Farwell, as the owner of the mineral rights under the property. The records listed a Cleveland address for Ms. Richards. Unfortunately, Ms. Richards passed away in 1997. At the time of her passing, Ms. Richards was a resident of Florida and had one son, Timothy Gerrity.
In 2012, Chervenak sought to reunite the severed mineral interest with the surface estate interest pursuant to Ohio’s Dormant Mineral Act. Chervenak recorded with the Guernsey County Recorder an affidavit of abandonment of the severed mineral interest. The affidavit stated that Chervenak sent notice by certified mail to Ms. Richards at her last known address – the Cleveland address – but the notice had been returned and marked undeliverable. The affidavit also stated that Ms. Richards’ heirs, devisees, executors, administrators, next of kin, and assigns had been served notice of the abandonment by publication in a Guernsey County newspaper.
In 2017, Gerrity filed an action in the Guernsey County Court of Common Pleas seeking to quiet title to the mineral rights under the Chervenak property and for a declaratory judgment that Gerrity was the exclusive owner of the mineral rights. Gerrity claimed that he was the rightful owner to the mineral rights under the Chervenak property as a result of the probate of his mother’s estate in Florida. The Guernsey county records, however, revealed no evidence of Ms. Richard’s death or of Gerrity’s inheritance of the mineral interest.
Further, Gerrity claimed that Chervenak did not comply with Ohio’s Dormant Mineral Act in two ways: (1) Gerrity argued that under the Dormant Mineral Act Chervenak must identify all holders of the mineral interest and notify them by certified mail; and (2) Chervenak did not employ reasonable search methods to locate all holders of the mineral interest before serving notice by publication.
Both the Guernsey County Court of Common Pleas and the Fifth District Court of Appeals declared Chervenak the owner of the mineral rights under the Dormant Mineral Act. Gerrity then sought the Ohio Supreme Court’s review.
The Dormant Mineral Act
Under current Ohio law, unless a severed mineral interest is in coal or is coal related, held by a political body, or a savings event has occurred within the 20 preceding years, a mineral interest will be considered abandoned and vested in the owner of the surface lands, so long as the surface landowner complies with Ohio Revised Code §5301.56(E).
R.C. §5301.56(E) states:
Before a mineral interest becomes vested in the surface landowner, the landowner shall do both of the following:
- Serve notice by certified mail to each holder or each holder’s successors or assignees, at the last known address of each, of the landowner’s intent to declare the mineral interest abandoned. If service of the notice cannot be completed, then the landowner shall publish notice of the landowner’s intent to declare the mineral interest abandoned in a newspaper of general circulation in each county in which the land is located.
- 30 days after serving notice, the landowner must file an affidavit of abandonment in the County Recorder’s office in each county that the land is located in.
Gerrity claimed that under the Dormant Mineral Act, his mineral interest cannot be deemed abandoned and vested in Chervenak because under R.C. §5301.56(E)(1) Chervenak is required to identify Gerrity and serve him Chervenak’s notice of intent to declare the mineral rights abandoned. The Ohio Supreme Court disagreed. While the Ohio Supreme Court agreed that Gerrity was considered a “holder” under the Dormant Mineral Act, Chervenak was not required to identify every possible holder and serve them notice, especially holders that do not appear on public record.
The Ohio Supreme Court found that such a stringent requirement would undo the intent behind the Dormant Mineral Act. The Court analyzed the text of the Dormant Mineral Act and found that because the Ohio General Assembly allows for a surface landowner to publish its notice of intent to declare the mineral rights abandoned in §5301.56(E)(1), the surface landowner is not required to identify and serve notice to each and every potential mineral interest holder.
The Court reasoned that no surface owner, no matter how much effort put forth, will ever really be certain that he or she has identified every successor or assignee of every mineral interest owner who appears on public record. This is why, the Court articulated, that the General Assembly allows for publication of a landowner’s intent to declare the mineral rights abandoned, because there will be instances when a holder may be unidentifiable or unlocatable.
Second, Gerrity argued that Chervenak must employ reasonable search methods to identify and locate all mineral interest holders – which include not only searching public records but also internet searches and searches of genealogy databases before publishing the notice in a newspaper. The Court agreed that a surface landowner must use reasonable diligence to try and identify mineral interest holders but disagreed with Gerrity to the extent in which a surface owner must go in order to have exercised reasonable diligence. The Ohio Supreme Court found that determining whether or not a surface landowner has exercised reasonable diligence to identify mineral interest holders will have to be determined on a case-by-case basis.
In this case, the Ohio Supreme Court found that Chervenak did exercise due diligence in trying to locate all holders. The Court determined that by searching through Guernsey County records and Cuyahoga County records (the county in which Cleveland is located), Chervenak fulfilled their due diligence requirement. The Court declined to impose a requirement that every surface landowner search the internet, especially due to the inconsistent reliability of such searches, or consult with any subscription-based service to identify a potential mineral interest holder. The Court held that a search of county property records and county court records will usually establish a baseline of due diligence by the surface landowner.