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Friday, July 1, 2016

Attorney Answers FAQs About Oil and Gas Leases

From Gas & Oil:
As oil and gas rights have become more valuable in Ohio we are often asked several questions. Are there oil and gas leases encumbering my land? Can these leases be cancelled? If so, how do I cancel them? The answer to these questions is not simple and begins by conducting an examination of the records of the County Recorder and of the Ohio Department of Natural Resources, Division of Oil and Gas Resources Management (“ODNR”). The search of the County Recorder’s records will reveal oil and gas leases encumbering your land. The search of the ODNR records will reveal oil and gas drilling activity on or near your land and whether any wells are currently producing oil and gas. 
You should not rely on an owner’s title insurance policy insuring your land to determine whether oil and gas leases encumber your land. All owner’s title insurance policies issued in Ohio now include the following exclusion from coverage: “Coal, oil, natural gas, or other mineral interests and all rights incident thereto now or previously conveyed, transferred, leased, excepted or reserved.” What this means is that the title insurance company does not insure that your land is free and clear of oil and gas leases. Because of this broad general exclusion from coverage, the title company may not search for or include oil and gas leases on your owner’s title insurance policy. 
A title examination answers the first question and reveal whether oil and gas leases encumber your land. Now what, if anything, do you do about the oil and gas leases revealed by the title examination? There are basically three options: (1) do nothing; (2) file a lawsuit to have the oil and gas leases removed; or (3) attempt to remove the oil and gas leases using what is known as an affidavit of forfeiture.
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