Pipeline Boring

Can a pipeline be installed on my land without disturbing the surface?

Sometimes a pipeline company runs into something that they can’t excavate above-ground, such as a wetland, a driveway, a public road, or an area known to contain endangered species (the EPA and the ODNR take wetlands very seriously in the State of Ohio). In such a situation, the pipeline company won’t be able to dig a trench, so instead they will bore underneath the area.

What's the difference between above-ground installation (trenching) and below-ground installation (boring)?

Trenching is referred to as ‘open cutting’ the property. I love this term because it sounds exactly like what it is: an open cut running across your land. The opposite of open cutting is ‘boring,’ which doesn’t sound anything like what it means. Boring sounds fairly mild. The pipeline representative will likely downplay it, also making it seem mild. In reality, boring can be one of the messiest parts to any pipeline installation. The equipment utilized is huge, loud and makes a mess, particularly on wet areas. That being said, if your paperwork is properly handled, you can expect your property to be put back to the way it was when the pipeline installation is complete. Even with proper paperwork, you should expect a temporary mess.Boring involves digging out an underground cavern to push pipe through without having to disturb the surface. The first part of the process is digging two pits on either side of the obstruction: a sending pit and a receiving pit. The sending pit will be home to a small, drilling rig. The receiving pit is merely an access point for the removal of dirt. The pits are designed in one of two ways: either the company digs the pits down level with where the bottom of the trench will be, or they set up a rig that can drill directionally. Typically for short bores (a driveway or two lane road) they will dig down to grade. For longer bores (a highway or large wetland) they will drill directionally.

What affect will boring have on my land?

The below picture shows the set up for a wetland bore. The machine on the left is the drilling rig. Essentially it is a small conveyor belt that is utilized to place pieces of pipe. Those pieces of pipe attach to the drill bit and push the drill bit underground. The drill bit in turn, pushes out the dirt, making the underground cavern where the pipeline will eventually go.A pipeline installation requiring boring.  The orange fence in the distance is the bore's destination.The truck to the right is supplying the drilling rig with Bentonite (“drilling mud”). Bentonite is utilized to lubricate and cool the cutting tools, to remove cuttings, and to help prevent blowouts. Bentonite is the preferred substance to use in this process. This truck acts as a mixer mixing the bags of Bentonite (on top of the platform to the left) with water, creating the drilling mud.A truck providing Bentonite, or drilling mud, which boring requires.This next picture shows the actual bore hole in front of the rig. You can see the tube (blue part) where the lengths of pipe will eventually be inserted to push the drill bit. It is typical for the bore hole itself to fill with water. This is a combination of Bentonite and naturally occurring ground water. The bore pit is the entire area fenced in by the black plastic fence. In this instance the pit is not square, but circular. The diameter is approximately twenty-five feet. In the distance you can see the receiving pit. The small blue and white sign to the right (in front of the trees) says, ‘Wetland.’ In the distance you can see the receiving pit and a Track Hoe.An open bore pit, with its destination in the distanceHere is another view of the receiving pit. The Track Hoe is scooping out the dirt and mud as it comes through. The receiving pit is slightly larger than the sending pit. In this example it was about forty feet in diameter. Eventually the rig in the sending pit will be reversed, pulling the pipe back out in the direction it came. On the far side of the receiving pit the company will go back to open cutting and will continue on their way with a more typical open cut pipeline installation.

Conclusions

As you can see, boring is quite labor intensive and messy. It is therefore incredibly important to address the procedure utilized for bore pits in your pipeline paperwork. The company itself may not set the bar particularly high for themselves. You need an experienced pipeline attorney to raise the bar for them. Your attorney should address:

• Protection of your topsoil and subsoil.
• Emergency protocol.
• Length of time until reclamation is complete.
• Permissible hours for boring operations.
• Installation of boardwalks if necessary.
• Protection of groundwater.
• Liability limitation.

Frequently Asked Questions - Asset Protection

What is Asset-Protection Planning?

Asset-protection planning is about organizing your affairs so that the risks of possible future claims by third parties are properly managed and minimized. By organizing one’s affairs thoughtfully, a client can significantly reduce exposure to catastrophic claims.

Who is a typical asset protection client?

The typical asset protection client is a relatively high net-worth individual—oftentimes a business owner or physician—the nature of whose business or profession exposes them to significant, if rare, claims.

Will Asset Protection Planning protect me from claims of existing creditors?

Generally speaking, no.   You cannot shelter assets from the claims of existing creditors and, indeed, transfers to thwart creditor claims can be undone by the courts. (In the context of a bankruptcy filing, however, the Ohio exemptions do protect a certain amount property—such as equity in your residence up $132,900 and equity in a car up to $3,675.) Asset protection planning is, thus, about sheltering that portion of your assets which present claims and obligations would not reach.

What will asset protection planning accomplish?

By correctly organizing your affairs and using proper asset protection tools, you can protect a meaningful portion of your family’s assets.

What are some simple steps that I can take to protect my assets?

• Maintaining adequate insurance. The first line of asset defense is to carry adequate insurance.  At a minimum, insure against catastrophic losses. Consider carrying large polices with high deductibles to keep the costs down. For your house, make sure you have signed up for “replacement cost” homeowners insurance, as opposed to a policy that pays you the fair market value. Again, a high deductible might be wise. Clients might also consider carrying a large “personal umbrella” of liability insurance through the home owner’s policy. Think of umbrella coverage as an extension to whatever other insurances you carry.

• Segregating assets. Married clients should not maintain assets in joint names. When property is titled jointly, a claim against either spouse may reach the entire assets of the couple. Each spouse should have his or her own individually-titled, financial accounts and vehicle. Where several parcels of real estate are owned, put the first parcel in the name of the husband and the second in the name of the wife. The assets of husband and wife should be roughly balanced. In this way a creditor of the husband cannot reach the separate property of the wife. (To avoid the Probate process on the death of a spouse, assets can be titled so that the surviving spouse receives the property by means of a “transfer-on-death” designation. Or, separate living trusts for each spouse can be set up to hold assets. On death assets remaining in trust will pass to beneficiaries outside of Probate.)

• Using appropriate business entities. To achieve limited liability, business owners should operate using the limited liability company format. Ohio laws have recently been changed to make it more difficult for a creditor to reach assets within an LLC. For instance, if the owner of an LLC were successfully sued, the creditor would only be able to obtain a “charging order” against the client-Member’s Interest in the LLC. This would entitle the creditor to reach the client’s share of any distributions from the LLC, but not the assets within the LLC. Again, the ownership interest in an LLC cannot be attached by a creditor, as can be the shares of stock in a corporation. Because of the greater protection afforded limited liability companies, owners of corporations should consider converting to LLC’s. (A new Ohio statute facilitates such a conversion.) Additionally, business owners might consider using multiple LLC’s within a single business structure. For instance, an owner of a number of rental properties might consider using more than one LLC so that a claim against the first LLC would not reach property in the second LLC. Similarly, the owner of a manufacturing company may have the company building in one LLC, with the machinery in another LLC.

• Maximally funding qualified retirement plans. One must understand the difference between creditor claims in the context of bankruptcy and creditor claims outside of bankruptcy. ERISA-qualified retirement plans, such as a profit-sharing plans, 401(k’s) or 403(b’s), are protected from creditors in both contexts. In Ohio traditional IRA’s are similarly protected, as are Roth IRA’s and Education IRA’s. [However, according to a 2014 U.S. Supreme Court case, an “inherited” IRA is not protected.] SIMPLE IRA’s, owner-established IRA’s and Simplified Employee Pension Plans (SEP’s) are protected only in the context of a bankruptcy filing and then up to a limit of $1 million, as adjusted for inflation. Where you have not filed bankruptcy, a creditor with a judgment against you can attach a SEP account. In sum, as a general matter, fully funding qualified retirement or profit-sharing plans every year places the funds contributed beyond the claims of creditors.

What is the new Ohio asset protection trust statute?

Recently, Ohio passed legislation authorizing a sophisticated asset protection vehicle, called an “Ohio Legacy Trust” (OLT). The act allows a person to set up and fund an irrevocable trust, the assets of which are exempt from the claims of creditors. The person setting up the trust can be a beneficiary of the trust, as can be his or her spouse and family members.

How do I create a Legacy Trust?

Setting up the trust and funding it with the appropriate amount of assets is a bit complicated, but the result is that, once properly established and funded, the trust can hold an important “nest egg” for you and your family. Here are the steps:

• Solvency analysis. Because an OLT is funded with “excess” assets, (those that are not needed to take care of existing obligations and those that are not “already-protected”) a solvency analysis must be made. First, present assets are listed, then several years worth of probable net earnings are calculated and added. Finally, debts and actual and contingent liabilities are subtracted. Next, are subtracted assets that are already protected from creditor claims (such as money in qualified retirement plans). What remains is the amount with the Legacy Trust can be properly funded.
• Solvency affidavit. Having done a careful financial analysis, the second step is to prepare a “solvency affidavit,” which must attest:

o   (1) The property being transferred to the trust was not derived from unlawful activities.o   (2) The transferor is the rightful owner of the property.o   (3) The transferor will not be rendered insolvent by the transfer.o   (4) The transferor does not intend to defraud any creditor by the transfer.o   (5) There are no pending or threatened court actions against the transferor, except as disclosed.o   (6) The transferor is not involved in any administrative proceeding, except as disclosed.o   (7) The transferor does not contemplate filing for Bankruptcy relief.The affidavit is then recorded in the courthouse.

Can creditors reach assets in the OLT?

Generally speaking, no.Eighteen months after a particular asset is transferred to the OLT (where creditors are placed on notice of the transfer by the solvency affidavit) the trust becomes essentially “bullet-proof” with respect to the transferred asset.

Who can be the Trustee of an OLT?

Under the statute a “qualified trustee” cannot be the Client who sets up the trust. The Trustee must be a resident of Ohio, or a financial institution, such as a bank. It is highly desirable that the Trustee not be a person under the control of the Settlor.

What rights can I retain over the trust?

Here are some of the rights you may retain:

• The right to receive trust income
• The right to annually receive up to 5% of the principal of the trust
• The ability in your Last Will and Testament to say who will receive trust assets when you are gone (except that you may not leave assets to your estate or your creditors).
• Where there are multiple beneficiaries of the trust, the right to veto distributions to a particular beneficiary
• The right to remove the existing Trustee and appoint a new one

Example of how a Legacy Trust might work:

Assume Client is a businessman/woman that owns a small manufacturing company. His/her assets are these:Cash                                                               $600,000Acme Manufacturing, LLC                           $1,000,000401(k)                                                            $250,000Cash value of life insurance                           $50,000Stocks and bonds                                             $300,000Residence                                                        $250,000Miscellaneous personal property                   $50,000Total:            $2,500,000 Assume Client can reasonably expect to save $200,000 over the next four years from earnings.Assume Client has the following debts and obligations: Mortgage on residence                                  $100,000Business debt                                                  $300,000Guarantee as co-signer on son’s loan                        $50,000Total: $450,000 Assume also Client has been sued for $250,000, although he/she believes the lawsuit is without merit.To calculate the amount that might be transferred to a Legacy Trust: Present assets ………………………………………….   $2,500,0004 years anticipated savings ………..…………….  + $200,000$2,700,000Less debts and obligations ………………………    ($450,000)$2,250,000Less 401(k) ………………………………………………       ($250,000)$2,000,000Less amount of lawsuit ……………………………       ($250,000)“Excess”/”unprotected” assets ………….…….   $1,750,000 Thus, the client would have the ability in this example to safely transfer $1,750,000 to the OLT.

In the example just given, what specific assets would be appropriate to move into the OLT?

The client might consider moving to trust the business ($1,000,000), half the cash ($300,000), half the stocks and bonds ($150,000), the residence ($250,000) and the life insurance policy ($50,000).

In the example just given would the business owner necessarily want to transfer the business to the OLT?

In the example the only remedy to a creditor of Acme would be a charging order. Thus, the LLC form of business operation in and of itself would provide some protection for the client without placing Acme into the OLT. Because the Trustee of a Legacy Trust cannot be either the Settlor or those under his or her control, a business owner would understandably be reluctant to transfer a functioning company to an OLT. In fact, the Client can maintain operational control over the business and still transfer Acme to the OLT. Prior to transferring the ownership interest to the OLT, the Client can become sole Manager of Acme. A long-term employment agreement can be put in place. With the Membership Interest in Acme held by the Trustee of the OLT, the Client can nonetheless continue to manage Acme.

Fracking Bans and Eminent Domain

As shale drilling increases across the country, fracking bans do, too.  In New York, for example, more than 50 municipalities have issued moratoriums or even outright bans on fracking.  Many Ohio municipalities have followed suit.  A lawsuit addressing this issue is currently pending before the Ohio Supreme Court: Munroe Falls vs. Beck Energy.

Are municipal fracking bans legal?

This question is still being settled by Ohio courts.  We all know that municipalities are empowered to issue and enforce zoning laws that restrict the use of one's property.  But does the power to zone also permit them to ban an industrial process like fracking?  This exact issue is before New York's top court.  The issue is also present in Ohio: one state law says that the Ohio Department of Natural Resources has the exclusive authority to regulate oil and gas drilling, while another Ohio law plainly grants municipalities authority to issue zoning regulations.

What effects do fracking bans have on surface owners?

Probably none, but the answer depends on the type of property interest affected by the fracking ban.  It is well settled law that zoning restrictions denying a property owner of all economically beneficial use of their land violates the takings clause of the 5th and 14th amendments.  So wouldn't a zoning restriction that bans fracking deny mineral owners all economically beneficial use of their minerals?  Wouldn't that be a "taking" in violation of the U.S. Constitution?  Remember that a taking will be found when the zoning restriction denies all economically beneficial use of the land.  A fracking ban would therefore not provide a surface owner a valid takings claim: the surface owner still has many options to put his land to economic use, such as building a house, or planting crops.  But what about a mineral owner?

What effects do a fracking bans have on mineral owners?

Without surface rights, it would seem that the mineral owner's only economically viable use of his property is to extract them.  Of course, not all minerals require fracking to be economically produced.  Coal and silver, for example, are mined.  But what if a person's only property interest was a mineral formation that required fracking to be economically produced, like the utica or marcellus shale?  Actually, the vast majority of all wells drilled in Ohio in the past 50 years have been hydraulically fracked.  Wouldn't a zoning ordinance banning fracking deny this owner all economically viable use for his land?  What possible economic uses remain for the utica owner living in a jurisdiction where fracking has been banned?

What can a mineral owner do to protect their rights if a fracking ban seems likely or has already occurred?

If an individual already owns their mineral rights (as opposed to just the surface), they may be well served to sever only the oil and gas rights, and transfer them to a separate entity, such as an LLC or a trust.  This way, the LLC owner or Trustee could reasonably claim that they have been denied all viable economic use of their property interest: the oil and gas rights underlying the land the fracking ban affects.  The property owner could then file a lawsuit claiming that an unconstitutional taking has occurred.  The outcome of the suit would depend on the exact nature and extent of the fracking ban.  If a court were to find that the ordinance has denied the property owner of all viable economic use, that property owner would conceivably be entitled to compensation for those interests.

Where can I go for help if I want to protect my mineral interests from a fracking ban?

Contact us at our office in Canfield, Ohio.  Our firm presented a similar case to the Supreme Court of Ohio in Newbury Township Board of Trustees v. Lomak Petroleum.  In that case, Newbury Township issued an outright ban on all oil and gas drilling.  The Supreme Court found that this zoning ordinance exceeded the township's authority to issue zoning laws, and ultimately held in favor of Lomak Petroleum.

Free Gas Issues

Many oil and gas leases provide the lessor with free gas.  This provision was fairly common in older leases, but has disappeared to a large extent for newer leases tailored to shale gas wells.  Here is a list of frequently asked questions and concerns about landowners exercising their right to free gas under an oil and gas lease:

Who is entitled to free gas?

You may be entitled to free gas if the oil and gas lease affecting your land contains a free gas clause, and if no other houses already use it.  Read your lease carefully, and look for free gas language.  Before you call your gas company about free gas, check to be sure that neighboring houses aren't already taking advantage of it.  Most leases only provide that one building is entitled to free gas. However, some leases contain unusual language that do not limit the number of buildings that can use free gas.Generally speaking, only the landowner on whose property the wellhead is located is entitled to free gas.  There are exceptions, however.

What types of structures/equipment can I hook the gas line to?

Most leases provide that free gas can only be used by "one dwelling house," or "one residence."  Language like this pretty clearly suggests a house, though it could conceivably mean a barn, or outbuilding.  Language like this pretty clearly prohibits the gas line to fuel farm or industrial equipment.  Other lease language might say "for domestic use."  This language also suggests a house, but could also conceivably mean an apartment or office.  It is best to err on the side of caution and to use the free gas in the spirit of the lease's language.

How much free gas am I entitled to?

The average gas lease provides for free gas sufficient to heat an average sized home for about a year.  Historically, that amount was 200 MCF, or 200,000 cubic feet of gas per year.  However, some leases will provide for more than that amount, as well as less than that amount.  There is some case-law that suggests that a landowner's wasteful use of free gas may terminate their right to it.  This typically arises in situations where the gas is being used to fuel an incredibly inefficient machine, or if it is used to heat/cool an completely uninsulated building. Read your lease carefully to determine how much free gas you may be entitled to.

How do I hook up the well to my building?

A professional with experience in domestic gas line installation should install the gas line from the well to your home.  Please understand that natural gas is extremely flammable and must be treated with extreme caution.  In the greater scheme of things, the cost to have the line properly installed will be far less than the amount of money you save by heating your home with free gas.  It is worth the investment.

Who pays to install the line?

Most leases say that the lessor (the landowner) is to install the gas line at their sole cost and expense.  It would be very rare for a lease to lay that responsibility with the lessee (the producer).

Who pays to install the gas meter?

The majority of leases do not specify who will pay to install the gas meter.  If the lease is silent on the issue, it may be wise for the landowner to not draw attention to it: it would be difficult indeed to measure the amount of gas the landowner is taking if there is no meter.  Prudent well operators will quickly catch on to the house gas line being un-metered, however.

What happens if I use more gas than the lease permits?

The average lease will state that when a landowner uses more gas than their allotted amount, that they will be billed for the additional used gas at a market price.  A more favorable lease would say that the landowner would be billed at the wholesale price.  Sometimes a lease will not indicate what happens in the event a landowner uses more than their allotment.  This does not mean that the landowner is free to use as much gas as they want.  Again, it is always good practice to adhere to the terms of the lease.

What if my free gas use prevents commercial production?

This is a very interesting issue that frequently arises with old wells.  Imagine an old well that produces enough gas to heat a home, but produces no extra gas that the producer can sell commercially.  Does this mean the house must stop using the free gas so that the well can be commercially productive?  Surprisingly, there is not much case-law that speaks to this topic.  A solution usually involves the producer paying a utility company to supply free gas to the landowner.  This way, the landowner continues to enjoy free gas (now paid for by the producer), and the producer now enjoys a well that produces commercially.

No other houses utilize the free gas my lease provides...can I use it?

Maybe.  Let's imagine there's a 100 acre empty field subject to a lease that provides for free gas.  Some years later, the field was divided in half: the eastern 1/2 and the western 1/2.  A well was later drilled on the eastern 1/2 of the field.  Some years later, a family buys the western 1/2 of the field and builds a house.  Even though the wellhead is on another parcel of land (the eastern 1/2), the family on the western 1/2 would be entitled to free gas from that well.Let's look at another scenario.  Let's imagine there's a 100 acre empty field subject to a lease that provides for free gas.  Some years later, the field was divided in half: the eastern 1/2 and the western 1/2.  A house then gets built on the eastern 1/2.  Let's then assume that a well gets drilled on the eastern 1/2, the same parcel the house sits on.  If a house later gets built on the western 1/2, and the house on the eastern 1/2 has not utilized the free gas provided for in the lease, the house on the western 1/2 would be entitled to free gas.  However, in such a circumstance, the producer may ask that the western landowner obtain the eastern landowner's permission.

Who has the right to receive free gas, the mineral owner or the surface owner?

Ohio law is quite clear that the surface owner of a parcel of land is entitled to free gas.

Regional Chamber Honors Johnson & Johnson with Award

The Youngstown-Warren Regional Chamber of Commerce has awarded our law firm with the ninth Canfield Area Council Business Pride Award.  This award recognizes our high ethical, moral and professional standards, as well as our commitment to economic development here in Canfield.  Our friends over at the Business Journal wrote a nice article about it.It's wonderful to be recognized for our hard work.  We feel very blessed doing business in Canfield, and are pleased to contribute to its growth. 

Forced Pooling - Trends, Benefits and Detriments

Recently I wrote about Ohio's mechanisms for forcing unleased mineral owners into a drilling unit.  Oil and gas producers have increasingly started to rely on these mechanisms to drill  horizontal wells to the Utica / Point Pleasant shale formation in eastern Ohio.  These same laws require transparency for these procedures, and as part of a public records request, I obtained several recent orders approving the forced unitization of unleased mineral owners in various parts of Ohio.   I was hoping that I could gain some insight on the issue of whether a landowner is better off signing a proposed lease or being forced into a drilling unit under the applicable statute.  Having reviewed these unitization orders, I offer the following observations:Producers do not appear to be abusing this processProducers are relying on an Ohio law that requires that they only lease 65% of a proposed drilling unit before they can force unleased mineral owners into the unit.  However, each of the orders I reviewed showed that producers had leased nearly 90%  of the proposed drilling unit, and frequently that number was much higher.  To me, this indicates two things: 1) that producers much prefer to negotiate with landowners than resort to this process, and 2) that the Ohio Department of Natural Resources prefers leasing efforts that go well beyond the statute's minimum requirements.The royalties awarded to an unleased mineral owner forced into a unit were generousIn each of the approved unitization orders I reviewed, unleased mineral owners were to receive a "monthly cash payment equal to a one-eighth (1/8) landowner royalty interest calculated on gross proceeds."   Of course, this 1/8 royalty is allocated according to how much land the unleased mineral owner was contributing to the drilling unit.  This 12.5% royalty is significantly lower that what Utica producers are offering under a new lease.  However, in addition to the 1/8 royalty, the unleased mineral owner will receive a "monthly cash payment equal to a seven-eighths (7/8) share of the net proceeds," again, based on how much land the unleased mineral owner was contributing to the drilling unit.  This 7/8 royalty does not become due, however, until the producer has recovered between 100% and 200% of the cost of drilling, testing, completing, and producing the initial well.  The chief of the ODNR reviews each of these matters on a case by case basis and the orders issued vary somewhat.   Landowners affected by the orders, unlike landowners who signed leases, did not receive any sort of cash bonus or signing payment.Consequences to landownersTo me, there are a few benefits to being forced into a drilling unit.  The unleased mineral owners receives a more favorable total royalty than a lease would typically provide (an initial 1/8th plus a 7/8ths working interest after pay-back).  Moreover, the chief's orders reviewed speak to royalties based on "gross proceeds" and no provision is made for deductions therefrom - this is different than the typical lease offered by a Utica producer.   Finally, the unleased mineral owner forced into a drill unit has his surface rights protected: producers are prohibited from utilizing any of the unleased mineral owner's surface.The downside of being forced into a drilling unit has a significant psychological component.  More concretely, the landowner receives no up-front cash bonus that is typical with the signing of an oil and gas lease.  Similarly, the terms of the deal are set by the ODNR chief's order, and not by the negotiations between the producer and the landowner.  Even though orders authorizing forced unitization contain many protections for the landowner, they are not as complete as an oil and gas lease.  As a result, several circumstances common with well ownership and operation are simply unaddressed.  Provisions present in oil and gas lease that are not present in unitization orders include: shut-in clauses, audit clauses, as well as market enhancement protections on the 7/8 royalty.  Another matter the landowner needs to worry about is whether the well will exceed the pay-back percentage set by the chief.  If a 200% pay-back is required before the 7/8ths 'bonus' kicks in, and if the well never hits that level, the landowner will definitely fare worse than one who signed a lease.ConclusionIn sum, I was encouraged by what I saw in the orders to the extent that it seems like producers and ODNR are making good-faith efforts  to make sure that landowners were given an opportunity to sign a lease before they are forced into a unit.  As for the impact on the landowner, it is hard to recite a hardline rule.  Certain landowners would benefit more from negotiating a lease, while others may find a bigger benefit to being forced into a unit - much will depend upon how prolific the wells are in the area of concern.  The variables influencing that determination should be discussed with an informed attorney.  If you have been ignoring multiple offers to lease you received via certified mail, and if there is active drilling in your area, it is possible that you are about to be force-pooled and it may make sense to give us a call to determine your best options. 

Joint and Survivorship rights

Joint and survivorship property is property owned by two or more people, with a special feature: at the death of one of the co-owners, that interest passes to the surviving co-owner or co-owners.  For example, let's say three people, X, Y and Z are joint owners of a piece of property with survivorship rights.  In this situation, X, Y and Z each own a 1/3 interest in the property.  If X were to die, her interest would pass to Y and Z:  Y and Z would then each own 1/2 of the property as joint tenants with rights of survivorship.  Ohio law requires that this special right in property be created in a specific way.A useful feature of joint and survivorship property is that it does not need to pass through probate in order for it to transfer.  However, Ohio law requires certain steps to be taken in order for joint and survivor property to transfer to the surviving owners. This can be as simple as presenting a death certificate to the county auditor along with an affidavit drafted by an attorney.Another useful feature of joint and survivorship property is that it not only applies to deeds and real estate.  Joint and survivorship rights can be applied to vehicle titles, as well as bank and investment accounts.  Mineral rights can also take joint and survivor form.Please be aware that joint and survivorship rights are not always as beneficial as they may seem.  Conveyances made via joint and survivorship language can frequently trigger unfavorable tax consequences in the beneficiary.

Certificate of Transfer

When a real estate owner dies without a will, the Probate Court must determine to whom that real estate passes according to the laws of intestate succession.  Once the court determines the appropriate person to take the real estate, it will issue a certificate of transfer.  This document basically operates as a deed to the property, transferring the interests of the decedent to the appropriate heir or heirs.  But this does not happen automatically, and the administrator of the estate must apply specifically to the court to distribute the real estate in an Application for Certificate of Transfer for Real Property.  This application must be submitted to the court after submitting the inventory of the deceased person's assets, but before the estate's final accounting.