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Ohio Supreme Court Issues Marketable Title Act Decision
On Thursday, December 13, 2018, the Ohio Supreme Court issued a slip opinion that discusses the Ohio Marketable Title Act1 in the context of a prior oil and gas reservation. The Marketable Title Act generally allows a landowner who has an unbroken chain of title to land for a 40-year period to transfer title free of any interests that existed prior to that 40-year period. However, the Marketable Title Act also provides that an interest created before the 40-year unbroken chain of title may be preserved if subsequent conveyances contain a specific reference to the instrument creating the interest, or alternatively, a general reference is made, which includes a specific reference to a recorded title transaction identifying the interest. To date, the Supreme Court had not applied the Marketable Title Act to oil and gas reservations.
The appeal rose to the Ohio Supreme Court amid a conflict between Ohio’s Fifth Circuit Court of Appeals and the Seventh Circuit Court of Appeals as to what constitutes a sufficient reference to preserve a reservation of oil and gas from extinguishment under the Marketable Title Act. In Blackstone v. Moore, the Court examined a 1969 deed containing the following language: “Except Nick Kuhn and Flora Kuhn, their heirs and assigns reserve one half interest in oil and gas royalty in the above described Sixty (60) acres” and held that this language was sufficient to withstand extinguishment under the Marketable Title Act and that specific recording information was not required.
In reaching its conclusion, the Court applied a three-step inquiry: 1) is there an interest described within the chain of title?; 2) if so, is the reference to that interest a “general reference?;” and 3) if the answers to the first two questions are yes, does the general reference contain a specific identification of the recorded title transaction? The Court noted that the exception in the 1969 deed includes information about the type of interest created, being a one-half interest in oil and gas royalty, and specifies for whom the interest was created, namely Nick Kuhn and Flora Kuhn, their heirs and assigns.
Operators should note, however, that Justice DeGenaro, who concurred with the majority but issued his own opinion, pointed out that the ruling is narrow in scope and does not address the applicability of the Marketable Title Act to previously excepted and reserved oil and gas interests. Specifically, he calls into question whether “the general Marketable Title Act continues to apply to mineral interest following the enactment of the Dormant Mineral Act, R.C. 5301.53 – a more specific statute providing for the termination of those interest.” However, that issue was not raised, and therefore, not addressed by the Court in this case.