CMM Title Research & Due Diligence 5 ā Questions and Answers
Question 1: Which of the following title defects is generally considered 'incurable' without litigation?
- A missing notary seal on an otherwise valid deed
- An outstanding interest held by an adverse claimant who refuses to quitclaim (Correct answer)
- An incorrect legal description that can be corrected by a scrivener's affidavit
- A missing recitation of consideration in an older deed
Correct answer: An outstanding interest held by an adverse claimant who refuses to quitclaim
An outstanding adverse claim held by a party who will not voluntarily execute a curative instrument typically requires a quiet title action to resolve, making it incurable without litigation.
Question 2: A 'division order' is best described as:
- A court order dividing jointly owned mineral interests among co-owners
- An administrative document directing a purchaser how to distribute proceeds among interest owners (Correct answer)
- A regulatory permit authorizing the drilling of a new well
- A contractual agreement between a lessor and lessee on royalty calculation methods
Correct answer: An administrative document directing a purchaser how to distribute proceeds among interest owners
A division order is a statement of ownership signed by all interest owners directing the purchaser of production to distribute revenues according to each owner's decimal interest.
Question 3: Under the 'after-acquired title' (estoppel by deed) doctrine, if a grantor conveys land they don't yet own and later acquires it, the title:
- Remains with the grantor because the original conveyance was void
- Automatically passes to the grantee under the original deed (Correct answer)
- Requires a new deed from the grantor to transfer to the grantee
- Must be adjudicated by a court before it can pass to the grantee
Correct answer: Automatically passes to the grantee under the original deed
Under after-acquired title (estoppel by deed), when a grantor who conveyed land they didn't own later acquires it, that title automatically inures to the benefit of the grantee without any additional conveyance.
Question 4: When evaluating heirship in a title chain, which document has the highest evidentiary value for establishing the identity of heirs to a deceased mineral owner?
- An affidavit of heirship signed by a knowledgeable neighbor
- A probate court order determining heirship or distributing the estate (Correct answer)
- A family bible record submitted with the county clerk
- A death certificate listing surviving family members
Correct answer: A probate court order determining heirship or distributing the estate
A court orderāsuch as a judgment determining heirship or an order of distribution in a probate proceedingāprovides the strongest legal evidence of heirship because it is a judicial determination binding on all parties.
Question 5: In a unitization agreement, a 'tract participation factor' is used to:
- Calculate the royalty owed to the federal government on federal lands
- Allocate unit production and costs among participating tracts based on acreage or other agreed metrics (Correct answer)
- Determine the working interest owner's proportionate share of drilling costs
- Set the primary term for the unitized leases
Correct answer: Allocate unit production and costs among participating tracts based on acreage or other agreed metrics
A tract participation factor (or allocation factor) determines each tract's proportionate share of unit production revenues and costs, typically based on acreage, recoverable reserves, or a negotiated formula.
Question 6: Which of the following best explains why a title examiner should review probate records even when a subsequent deed in the chain appears to convey full title?
- Probate records establish the ad valorem tax basis for the inherited minerals
- A deed from an administrator may be voidable if the probate proceeding was defective or jurisdiction was lacking (Correct answer)
- Probate courts always require mineral interests to be appraised separately from surface rights
- Probate records are required by lenders to approve mineral-secured financing
Correct answer: A deed from an administrator may be voidable if the probate proceeding was defective or jurisdiction was lacking
An administrator's or executor's deed derives its authority from the probate proceeding; if the proceeding lacked proper jurisdiction or was procedurally defective, the deed may be voidable, leaving the title cloud.
Question 7: A 'ratification' of an oil and gas lease by a previously omitted mineral interest owner has the primary effect of:
- Creating a new lease with a fresh primary term for all mineral owners
- Binding the ratifying owner to the existing lease terms and curing the defect caused by their omission (Correct answer)
- Voiding the original lease and requiring execution of a new instrument
- Entitling the ratifying owner to a separate, higher royalty rate than other lessors
Correct answer: Binding the ratifying owner to the existing lease terms and curing the defect caused by their omission
Ratification binds the ratifying mineral owner to the existing lease terms and validates the lease as to their interest, curing the title defect caused by their failure to execute the original instrument.
CMM Title Research & Due Diligence 5
Which of the following title defects is generally considered 'incurable' without litigation?