It is always in the best interest of a future landowner to understand their ownership status over their holdings. One of the best ways to determine the status of your land or holdings is to receive a professional opinion about the title or deed. A title opinion can come from a lawyer or title company.
A professional opinion about the title will always come from a lawyer or title company. The opinion will describe if the title is clear and marketable or if it has any encumbrances. The opinion will also advise of the legal owner of the property and reveal any mortgages, lien judgments, or unpaid taxes on the property. The opinion of the title should include any existing restrictions on the property from easements or leases.
Depending on the needs of the future owner or business, opinions can be long, short, detailed, or brief. The requirements of the opinion can be given to the lawyer ahead of time, so they know specifically what the new owner is hoping to find to form the opinion. This tactic gives the new owner peace of mind as they move forward with their purchase.
There are many variations of opinions new owners can receive. The oil and gas industry has a few common opinions that are beneficial. Here are some types to review before having an oil or gas title transferred.
1. Drilling Opinions
An oil company should have a law firm prepare a drilling title opinion before drilling a well. This opinion gives all the parties involved an idea of who has an interest in the oil, gas, or other minerals in the lands where they will drill the well. This opinion helps to identify any potential problems with the drilling and avoid the risk of title failure.
2. Division Order Opinions
A division of order opinion is needed after a drilling company drills a well and finds producible oil or gas. This opinion will help determine which parties will be profitable from the production of the well. This information is usually determined by the drilling opinion made before drilling.
3. Lending Opinions
A lending opinion is made for the bank or institution who is lending money to the oil properties. The reason for this opinion is to determine the nature of the oil and gas interest the lender is acquiring.
4. Acquisition Opinions
An acquisition opinion is needed for any companies who are planning to purchase an oil or gas property. This opinion is detailed and helps the purchaser to understand what they are purchasing. It can confirm the seller’s ownership interest in the property. The process of obtaining an acquisition opinion is considered doing your diligence as a potential buyer, ensuring you are investing in the right oil or gas property.
5. Lease Purchase Title Opinions
A lease purchase title opinion is given before any payment associated with a drilling lease. This opinion is created to ensure the lessee will fulfill the obligations of the lease and that the chain of title will remain unbroken in the future. Multiple lease opinions may be collected and confirmed depending on the length of the lease and how many parcels or successive property owners are involved.
These title opinions allow you to have a better idea of what you are getting yourself into when you are purchasing an oil or gas property. All successful mineral lessors will pay attention to the title opinions and use them to make informed decisions about the business. These opinions are important if you are planning to exploit the resources underneath your land or purchase land with resources.