Some of the issues discussed below have been clarified by Ohio courts. Read more here.
Over the past few years, Ohio’s courts, at all levels, have dealt with a number of issues pertaining to O.R.C. 5301.56, often referred to as Ohio’s dormant mineral statute. At this point in time, several such issues are about to be ruled upon by Ohio’s Supreme Court. One issue of importance, however, has received little mention in court rulings to date. That issue concerns the notice requirements by a landowner seeking to recapture dormant minerals. More particularly, what are those requirements?
(E) Before a mineral interest becomes vested under division (B) of this section in the owner of the surface of the lands subject to the interest, the owner of the surface of the lands subject to the interest shall do both of the following:
(1) Serve notice by certified mail, return receipt requested, to each holder or each holder’s successors or assignees, at the last known address of each, of the owner’s intent to declare the mineral interest abandoned. If service of notice cannot be completed to any holder, the owner shall publish notice of the owner’s intent to declare the mineral interest abandoned at least once in a newspaper of general circulation in each county in which the land that is subject to the interest is located. The notice shall contain all of the information specified in division (F) of this section.
So, who must be notified?
To date, it does not appear that any Ohio cases have really fleshed out what the language above means. A literal reading of the statute is that the holder OR the holder’s successors OR assignees can be served by certified mail at the last known address — that is, not ALL of those parties need to be served. If all needed to be served “and” would be used in place of “or.” It is noted that mineral reservations are frequently made in a deed and never assigned, so there are no successors or assigns to serve – only holders.
Some of the terms used in section (E) are defined by the statute; others are not. The “holder’s successors” is not defined. Successors, when used in a legal context, seems to typically apply to entities other than regular persons, such as corporations or trustees. It is notable that the statute uses this term and fails to include the term “heirs.”
The “holder’s … assignees” is also not defined. This term seems more straightforward, and almost certainly includes a party holding a record assignment from the original holder. It would likely also include a subsequent assignee who took record title, not directly from the holder, but from the holder’s assignee. Whether the “holder’s … assignees” would include a party holding an unrecorded assignment is unclear, however.
The statute does define “holder” at part (A)(1):
(1) “Holder” means the record holder of a mineral interest, and any person who derives the person’s rights from, or has a common source with, the record holder and whose claim does not indicate, expressly or by clear implication, that it is adverse to the interest of the record holder.
The above definition is certainly broad, and would seem to include successors and assigns. That being the case, one wonders why part (E) of the statute requires certified mail to “each holder or each holder’s successors or assignees.” Why not just say “each holder?”
Do heirs need to be notified?
The above definition could also include a holder’s heirs. The Seventh District Court of Appeals, in Dodd v. Croskey, took this position in dicta. However, the Court further held: “We understand the difficulty in determining, in instances such as these, who are the heirs and assigns. That said, we do not need to determine whether the actions taken by appellants would be enough to show an attempt at certified mail.” The court went on to explain that, because an heir did see the published notice in the paper and did file a response, it was not necessary for the court to set out what efforts were required by a landowner concerning notification of heirs.
If heirs are included within the definition of “holder,” questions continue to linger — Does any heir of the original holder have derived “rights,” notwithstanding the existence of a contrary will? Does an heir of an heir named in the will have derived “rights” when the estate was closed decades ago, without any transfer of the reserved minerals?
How far must the landowner go to locate heirs?
Perhaps the biggest question in this regard is – If heirs are included within the definition of “holder,” what efforts must a landowner go to as far as locating them and notifying them of their intent to recapture dormant minerals?
Many have argued that the purpose of the dormant mineral statute was to encourage and streamline mineral development on lands where severed minerals have become dormant. In states which have no dormant mineral statutes, such a situation requires an oil and gas developer to track down all heirs and secure leases therefrom (or force pool those who refuse to sign leases).
If Ohio’s dormant mineral statute requires that “each holder” be notified by certified mail “at the last known address of each,” and if “holder” includes heirs, then the process in Ohio is not going to be any more streamlined than in states which have no dormant mineral statute. Landowners will be compelled to do thorough research to establish a complete family tree and the locations of all living heirs. Further, probate records will need to be researched to determine situations where a particular will varied from the statutory line of inheritance. If all such persons are notified via mail, it seems likely that at least one would respond to same, and per the holding of Dodd v. Croskey such a response secures the mineral interest for all holders for another 20 years.
Conclusions, and best practices:
So what is a landowner, who desires to recapture dormant minerals, to do in light of the above issues? Certainly title needs to be searched from the date of the mineral severance to the present to see if any transfers were made. Any such transfer would be a savings event that would prohibit a landowner from proceeding with a claim for dormant minerals. Where no transfers can be found, the landowner does not have an option to send mail to the holder’s successors or assigns. In such event, a landowner could use a less stringent interpretation of the statute by sending the original holder certified mail at the last known address and then publish in the paper if service is not made by mail. Such a process will be valid only where the courts determine that “holder” does not include heirs.
Alternatively, a landowner could assume that “holder” includes heirs and complete a full determination of the names and addresses of all living heirs, factoring in any probated wills, and notify all such persons via certified mail.
It does not appear that any middle ground can logically be applied when interpreting the statute. If a “holder” is an heir, and if “each holder” need be notified by certified mail, a full determination of living heirs is needed with mail going out to all. If a “holder” does not include heirs, or if the particular language of part (E) of the statute is interpreted not to include heirs, but only record holders and their successors and assigns, no determination of heirs is necessary.