Blogging Tulsa Real Estate

This Obeo Tour has a style designer that let's you select colors for your walls, floors, trim, etc. Play around with it and let me know how you like this feature.

This property includes upgraded appliances, including a stacking Bosch Axxis washer and dryer, a GE Triton XL dishwasher, a GE Spectra range with a self-cleaning oven, an Allure vent hood, and a GE refrigerator with an electronic ice maker.

"The lease is available; you can buy the lease."

A REALTOR®-Associate in my company said this today in one of our land and ranch meetings while touting a lovely 269-acre parcel of land which I will be previewing later today.

I thought to myself, "That's pretty cool.  Owning the oil & gas lease is the next best thing to owning the minerals." 

Then I wondered if she really meant what she said.

Did she understand what she said?  Did she mean what she said?  Did she even know what she said?

[I kept my mouth shut in the meeting rather than interrupting and going off on a tangent -- since nobody really cared anyway except me (I am one of those about whom it is said, "There's always one in every group.....")  However, I couldn't sleep.  The distinction is important and I just cannot keep it to myself.  I felt a blog coming on, so I got out of bed to write.  So here it goes........ ]

When we own land, we don't actually own the land.  We own a bundle of rights which includes the use of that land with restrictions.

When a landowner owns land in fee simple, that means he owns the full bundle of rights.  Fee simple absolute or simply "fee simple" means that you own everything from the center of the earth up to where the government allows planes to fly.

As an owner, you can lease the entire bundle of rights to another person or you can lease a particular right.  Thus you can lease the oil, gas and other minerals, you can lease the grazing rights, you can lease a cottage on the land (or just a room in that cottage), or you can lease hunting rights, etc.

If the mineral rights have been severed from the surface rights (meaning that a previous owner somewhere in the chain of title has retained the oil, gas, and other minerals in a recorded deed), then it is the owner of the mineral estate who has the right to lease the right to drill and produce the oil, gas and other minerals in and under the land.  The landowner who only owns the surface cannot lease the minerals as the lessor.

However, the landowner who does not own the minerals can lease the minerals as a lessee.  Usually it is someone other than the surface owner who leases the minerals (much to the dismay and sometimes anquish of the surface landowner).  This is a pretty cool option.

Now, as someone purchasing a lease, it needs to be understood that a lease can and will expire.  You can have a lease for 2 days or even 99 years -- but no more.  You cannot own a lease in perpetuity.

Having said that, an oil & gas lease is valid as long as it is in it's primary term, be it 2 days, 3 years, 10 years, etc.  This primary term is negotiated by a landman or an oil & gas attorney who is qualified to navigate the ins and out of such leases at the time that the lease is signed and purchased.  A lease is a legal document that should be filed at the courthouse to have actual notice announcing to the world that such a lease exists.  This is hugely important.

The lease is valid as long as it is in it's primary term or is held by continuous production.  Oh, there is the kicker, continuous production.  In other words, if you are the leaseholder (the lessee or the assignee), then you had best be drilling or producing oil & gas that makes it clear that you are actually doing something.  This is technical and many leaseholders lose their lease after pumping milions of dollars into wells in the hopes of making them profitable, only to lose their investments of time, expense, and effort to someone else who picks up the lease at a later time.  Boo hoo, so sorry, good bye..... 

Now if the leasholder does not have an operator's license, then he must hire an operator to operate the lease.  Only an operator can operate oil & gas wells.  Anybody can own the lease, but they have to hire an operator if they themselves are not licensed to operate oil & gas wells.  An operator is the only person authorized by the State of Oklahoma to do anything on an oil & gas lease.  He must participate in every activity. 

An operator can be a company or a person.  An operator has a license number.  In the eyes of the Oklahoma Corporation Commission Joe Operator is exactly the same as ExxonMobil and are under the same laws, rules, regulations, and restrictions. One operator is a single person and the other operator is a multi-national corporation.  When either one comes on your land, they are exactly the same in the eyes of the State of Oklahoma.  There is virtually no difference -- they are both operators.

An oil & gas lease can be sold or assigned to another person by means of an assignment or a bill of sale.  Both of these should be filed at the courthouse as soon as possible to effect actual notice of assignment of the oil & gas lease.  Again, this is hugely important.  Race notice literally means that the first person to the courthouse wins.  No kidding, I heard of one situation in Rogers County where a lessee was dying and needed cash to pay medical bills.  He assigned the same oil & gas lease to six or eight assignees.  The first one to file the assignment at the court house got the lease. 

Of course, you can own a lease that isn't registered, but I recommend being safe.  Toodle on down to the court house and get the documents filed.

Important note to self:  Don't leave legal documents in the kitchen drawer.  File them at the court house!  Then put original documents in a safe place, such as a safe deposit box.

"The lease is available; you can buy the lease."  I think she means that you can purchase an assignment.  Or maybe she meant you can purchase the minerals from the owner of the mineral rights.  I'll have to ask her.

This article addresses a problem that I have seen in empty homes when doing inspections.

The faucet caps on the laundry faucets are a great idea.

I suggest adding a tiny ball valve to the refrigerator's ice maker tubing.  Why it's not done when refrigerators are installed just baffles my mind. 

It's a simple step for someone who knows what they are doing (i.e., a licensed plumber) to add a valve later.  When the refrigerator is disconnected, it will stlll be there for the next family to use when hooking up their refrigertor's ice maker.

The gap check revealed a demolition notice on the day of closing.

It wasn't there when the abstract was updated in September.  It showed up yesterday morning.  We were closing at 3:00 pm.  

We found out about it at the closing table.  

A demolition notice had been filed by the City of Tulsa that very morning.

Who knew that a Demolition Department even existed!

Did you ever wonder what a gap check does?

The gap check is one of those items on a HUD Settlement Statement that I have always regarded as just another way for the closing companies and lawyers to make money.  The typical cost of a gap check is $75.

I never paid a whole lot of attention to the gap check, but I will from now on.

The closer asked the buyer whether or not he wanted to proceed with closing.  

Of course it was a Friday afternoon and no one seemed to be answering his phone.  We kept trying to reach someone who could tell us what was going on.

The home was an REO and, of course, being sold "AS IS WHERE IS."

I was concerned that the buyer would be saddled with a bill for demolition, whether or not he wanted the home to be demolished.  Fortunately, we were able to contact someone at the City of Tulsa.  

It turns out that a citizen had called The Mayor's Action Line in September about a porch on the front of the house that was falling off.  The code inspector had gone out to the home and had recommended the house be demolished.

Meanwhile, the listing agent listed the house and recommended the bank remove the offending porch, which was already removed by the time my buyer saw the property.

Neither the owner nor the real estate agent were aware of the code inspector's recommendation to demolish the house.

The bank that owned the property was paying three years of back taxes, but I thought they should pay for the demolition rather than my buyer.  However, if my buyer delayed by choosing not to sign the paperwork, he would have to pay a $100 per diem charge.

In the end the buyer decided that he would go ahead and close and probably will be tearing the house down himself.  That would probably be a lot cheaper than letting the City of Tulsa schedule the demolition and have a contractor do the demolition.  A professional demolition crew would probably charge the owner more than my buyer was paying for the property -- which was not a lot.

The City of Tulsa stopped it's process of demolition and will be giving my buyer a chance to assess what he has purchased.  

We closed.  Yeah!!

Twenty years ago after the Oil Bust in Tulsa, Oklahoma, when a homeowner could not sell his home for enough money to pay the bank off and pay all the expenses from the proceeds of the sale, the homeowner took his checkbook to the bank and wrote a check at closing in order to get rid of his house.  Often the seller wrote a bigger check at closing than the buyer.

Things have changed.  Many homeowners lack the ability to cover the equity shortfall in their home.  They cannot write a check at closing to get the bank paid off and get on down the road.

To help homeowners in hardship situations, many homeowners are resorting to listing their homes with REALTORS® who understand how to do short sales. 

It is a complicated process and it is not fast, nor are there any guarantees.

I have successfully represented both Buyers and Sellers through the short sale process.

The following is a description of how a homeowner qualifies for a HAFA Short Sale -- a particular subset of the short sale family of transactions.

If you have questions, please call me at 918-712-4473 or send me an email at dsolano@cbtulsa.com

Christmas Gift Traditions Remind Us of How Much We Are Loved

Yesterday was a special day for me.  I came home to two packages on the front porch.  I knew immediately what they were because of the familiar shape of the boxes.

One contained Mother's Macaroons from my sister Kathy.  Yum yum.  I was restrained.  I only ate two last night.  She's been sending them for at least 10 years.

The other package contained Pittman & Davis grapefruit from my sister-in-law Anita.  She's been sending the box of grapefruit for the past couple of years now because my brother used to send it before he died of cancer three years ago. Actulally, in 2007 I received two boxes of grapefruit -- because my brother David didn't know Anita was sending it and David figured he was the next son in line to carry on the tradition that my parents had started years ago.  Anita won out.  She has the highly privileged job of sending the family grapefruit.

Pittman & Davis grapefruit reminds me of the love of my parents.

Both of my parents are dead now.  Every year they used to send a huge box of grapefruit and we could never find enough refrigerator space to keep it.  My ex-husband whined for whatever reasons.  I loved the delicious ruby red grapefruit from South Texas. 

I took the boxes of grapefruit for granted -- until after my Daddy died.

Mom had died in March 2004 and Daddy died at Thanksgiving time in 2006.  We spent two weeks clearing out his apartment at the Hampton in Houston.

I was working in the living room when I heard my sister exclaim from Dad's office, "The receipt for the onions! You found the receipt for the onions!  I can't believe you found the receipt for the onions."  I went in to see what all the commotion was about and Kathy was holding an old paper receipt from Pittman & Davis dated sometime in 1937.  Daddy had saved it for all those years and had neatly placed it in his desk drawer with other important mementos.

I had never heard the story of how my parents met. ( I was the last of five kids and I never paid any attention.  Now I wish I had been more "present.")

I guess it was the year 1937 and my mother was the college roomate of my father's sister Gerrie at Mary Hardin Baylor College in Belton, Texas.  Daddy had seen my mother's photograph and wanted to meet my mother.  So he drove up from the Valley to visit his sister.

Evidently the girls were washing their hair in the river -- no kidding, that's what I heard.  Daddy drove to the river and met my mother.

He was driving a truckload of Pittman & Davis sweet onions. He had saved that receipt for that truckload of onions for 67 years!

My parents, Cleo and Burt Matteson, were married for more than 65 years when Mommy died.  I never had a clue how much they loved each other until we went through their stuff.

I just put an entire ruby red grapefuit in my Vita-Mix and am drinking my grapefruit juice as I write this blog. Yum!

Does Visualization Really Help You Get What You Want? 

Today I took a different route home to pick up the mail after attending the Mike Lyon seminar on Social Networking at Tulsa's Little Theater.

It's not like I was depressed or anxious.  I just didn't feel like going back to work quite yet.

So I stopped off at the Fairgrounds to see if I could find my old horse trainer at the year-end schooling show.

I really haven't been there in years since I don't ride any more.  It was really quiet because today they were doing the low jumps and the green horses were doing their rounds. 

I sat in the stands and watched the rounds and listened to the music.  It was so rhythmic.  Just watching the horses and breathing.  For me it was meditative like yoga.

I remembered how I used to just stand at the window and watch my horses run through the front pasture. 

But I am not being nostalgic.  There is something primal about watching horses -- even under saddle. 

I wandered off and found my friend who sells tack -- she owns The Horse of Course in Claremore.  We talked until a customer came up and we were introduced.

Wouldn't you know it  -- the lady I met has a little mare for sale by a wonderful Oldenburg stallion whom I have always admired.  The mare is just getting going and so she is affordable -- well, sort of -- let's say she is within reach if I sell a few nice houses.

So I went and looked at the mare and then I waited until I could watch her in the ring.

Suddenly I started realizing that I could own that mare and be riding again.  I just have to want it and make it happen. 

I just came out of Landmark Education's Self Expression and Leadership Program where I was a coach.  In the Curriculum for Living we learn that we can have whatever we want in life.

There is nothing stopping me. 

I want another horse.

It may be that mare.  It may be another animal.  It doesn't matter.

I can visualize what I want.  I can feel the mane in my fingers.  It's going to happen.

I will be buying another horse and boarding it by April 2011.  Pictures will be posted on Active Rain by June 1, 2011.

You cannot get title insurance on mineral rights.

How do I know this?  In 2006 I took the introductory course for new landmen at the University of Oklahoma.  The course was an intensive two-day course offered by a CPL (a Certified Professional Landman -- the highest and most prestigious designation for landmen).  

Most of the attendees were from Texas and Oklahoma.  About half of the attendees were middle aged women working for title and abstract companies -- the very people that go to the court house to build abstracts for the attorneys who read the abstracts and write title opinions.

I asked this specific question:  Can you get title insurance on mineral rights?  The response from the presenter was a flat out, "No."  You can only get title insurance on surface rights.

Just because attorneys rendering title opinions cannot offer title insurance does not mean that they cannot render an opinion regarding whether or not the minerals are included with the land. 

Asuming that the abstract is up to date and complete, the attorney looking at the abstract is looking at every piece of paper that has ben filed at the court since Oklahoma statehood -- 1907.  In many cases the documents will predate statehood when the Oklahoma Territory and Indian Territory became collectively known as the State of Oklahoma.

In Oklahoma's Indian Territory it all starts with allotment -- when an Indian (a/k/a native American) was given a quarter section for his homestead and three-quarters of a section for his allotment.  He therefore has two pieces of property comprising approximately 640 acres in fee simple absolute.  He owns everything from the center of the earth to the heavens..... well, let me rephrase that.  He doesn't own the land per se, he owns the rights to everything --  he owns the whole bundle of rights, from the center of the earth to where the US government lets the planes fly.  We say that he owns that whole bushel basket full of rights in fee simple absolute.

The allotment documents do not specifically say that he owns the mineral rights, a/k/a "oil, gas and other minerals."  It just is that way.

So let's say Joe Citizen happens to get hold of his abstract and wants to see if he owns his minerals.  He cannot find any place on his abstract where the deeds says that the Grantor "retains" or "reserves" a certain percentage of the minerals when granting the land to the Grantee.  That means that the minerals were conveyed along with the surface.  The Grantor conveys the whole bushel basket full of rights in fee simple.

Now let's say that the Grantor reserves the minerals.  He then creates a separate basket of mineral rights for himself.  The deed for the conveyance of the surface rights shows that a certain percentage of the minerals were reserved or retained.  Now there are two estates:  the surface estate and the mineral estate.  (The mineral estate is dominant, by the way.)  An  attorney will only be able to get title insurance for the surface rights. 

The mineral estate takes on a life of its own once it is severed from the surface estate. There will not be a Mineral Deed created until the mineral estate is conveyed.  This is where it gets tricky and heirs often do not even know they own the minerals.  Eighty years later it becomes like looking for grandmas' jewelry after it has been divided up.  It's the job of a professional landman to track down all those little pieces of mineral rights that have been divided up.

In short, that's why you cannot get title insurance on mineral rights in Oklahoma.  It just gets too complicated otherwise.

Intangible Personal Property Tax Has Been Expanded to Locally Assessed Businesses by Oklahoma Supreme Court

Mike Means of the Oklahoma State Homebuilders Association sent out a legislative update this morning, saying:

In September of 2009, the Oklahoma Supreme Court ruled that with the exception of items listed in Article 10, Section 6A of the Oklahoma Constitution, locally assessed businesses should be paying ad valorem taxes on their intangible personal property.  This means that such things as trademarks, software, patents, contracts, customer lists, company names, etc., are now taxable as intangible personal property.  Talk about full employment for the local assessor!  Currently locally assessed companies do not pay ad valorem taxes on their intangible personal property.  The Supreme Court ruling changes that.

The solution is to look at an in lieu tax.  Our state constitution allows for taxpayers to pay certain taxes in lieu of other taxes.  Presently, Oklahoma businesses are liable for a state franchise tax.  By creating a small business activity tax that would be paid in lieu of ad valorem tax on intangible personal property, we can eliminate the current franchise tax and save Oklahoma businesses from a large tax increase that will inevitably result from the Supreme Court's ruling.  The ultimate details of this solution is being worked out by the legislature but the ultimate goal is that it be revenue neutral.

Without this solution, one tax expert says this will be the biggest tax increase in state history.  We cannot do nothing.

This issue of ad valorem taxation affects all Oklahoma businesses.  It could potentially hurt our economy by scaring business away from Oklahoma.

This is the same Oklahoma Supreme Court that recently ruled that REALTORS® can be sued for fraud if they give inaccurate court house information to buyers regarding residential square footage.

By the way, does anybody know how someone gets on the Oklahoma Supreme Court?  How can we get some new blood on the bench?  We shouldn't have to spend so much time trying to clean up their mess.

Can the Federal Government Tell Us What We Can and Cannot Do with Our Personal Property?  -- That's Exactly  What The Obama Administration is Doing by Imposing a Moratorium on Drilling in the Allegheny National Forest Has Implications for Oklahoma and Other States.

There is a very quiet battle going on about which most real estate professionals are unaware.  However, its outcome has far reaching consequences underpinning everything we sell, no matter where we sell real estate in these United States, be it Pennsylvania or Oklahoma.  I’m talking about the struggle for the acquisition and control of the severed mineral estate which underlies the surface estate -- the chocolate cake under the icing -- personal property underneath the real estate.  The issues at stake are the erosion of private property rights and the freedom to do what we want with our own personal property.

Keep in mind that oil, gas, and minerals are considered to be real estate until they are severed from the surface estate.  Once the oil, gas and other minerals are severed from the surface estate, they have become personal property.

Far from the stimulating the economy, the Obama administration has chosen instead to eliminate jobs and stifle economic productivity in one of the more economically depressed areas of the country at a time when jobs are scarce.

In a blog which I posted back in October, I described the gradual erosion of property rights and the federal government’s attempt to seize power from the Commonwealth of Pennsylvania.  Today’s blog is an update to that previous blog. 

The Obama administration has admitted defeat, settled the lawsuit over the exploration of minerals in the Allegheny National Forest (the ANF), and has imposed a moratorium on energy exploration in the ANF.  The article entitled,  “Feds Settle ‘Sweetheart Suit’ – Kill Search for Energy,” was written by William Perry Pendley of the Mountain States Legal Foundation and is found on pages 17-18 of the November 2009 issue of Landman 2 (Vol. 7, no. 6).  With the permission of the American Association of Professional Landmen (AAPL), I have reprinted the entire article.  What follows are the words of Mr. Perry: 

"August 27 marked 150 years since the first successful commercial oil well was drilled in Titusville, Pa. --  thus beginning an oil and gas industry that has thrived across the country as well as within 40 miles of Titusville in the Allegheny National Forest (ANF).  Not long ago, The Wall Street Journal reported renewed interest in the region’s Marcellus Shale given massive gas discoveries in the Barnett Shale in Texas, Fayetteville Shale in Arkansas and Haynesville Shale in Louisiana. 

“The search in the ANF will have to wait, however, thanks to a “sweetheart lawsuit” by environmental groups and a decision by the Obama Administration to admit defeat, settle that lawsuit and impose a moratorium on energy exploration in the ANF.

“In June 2009, the Pennsylvania Oil and Gas Association (POGAM), Minard Run Oil Co. – the nation’s oldest family-owned and operated independent oil producer – and others sued Attorney General Eric Holder, the U.S. Forest Service and its officials, and three environmental organizations. At stake in the case are private property rights, high-paying jobs in one of the most depressed regions of the country and the search for energy in one of the hottest gas prospects nationwide. 

“The ANF covers 500,000 acres in Elk, Forest, McKean and Warren counties in northwestern Pennsylvania.  Because the lands within the ANF were once privately owned and were purchased during the 1920s and because the United States bought only the surface, most oil, gas and mineral (OGM) rights in the ANF (93 percent) are privately owned.  Thus, there is no basis for any federal government regulatory authority over those rights.  In fact, federal law, Forest Service regulations and federal and state court rulings say the agency has no such authority!

“Under Pennsylvania law, owners of OGM rights may go on the surface to access their property and may occupy so much of the surface as necessary to do so; however, the law provides for accommodation.  OGM rights must be exercised with “due regard” for surface owners’ interests.  That the United States owns the surface does not change the law:  Like every other surface owner, the United States can do nothing – short of a lawsuit – to deny OGM owners access to their property.  This was affirmed, as to a state agency, in a 2009 Supreme Court of Pennsylvania ruling.  Therefore, the Forest Service has few options in dealing with OGM rights in the ANF, which is in accordance with the agency’s longstanding practice set forth in the Forest Service Manual.  OGM rights must be exercised with “due regard” for surface owners’ interests.  That the United States owns the surface does not change the law:  Like every other surface owner, the United States can do nothing – short of a lawsuit – to deny OGM owners access to their property.  This was affirmed, as to a state agency, in a 2009 Supreme Court of Pennsylvania ruling.  Therefore, the Forest Service has few options in dealing with OGM rights in the ANF, which is in accordance with the agency’s longstanding practice set forth in the Forest Service Manual.  This was recognized by a 1980 Pennsylvania federal district court ruling, which Congress adopted in the Energy Policy Act of 1992.   

“For decades, the Forest Service adhered to the law and responded to an operator’s 60-day notice of its plans with consultations and a “notice to proceed,” which is not a decision by the Forest Service to allow OGM activity because, again, the Forest Service has no power over OGM rights.  Nonetheless, in March 2007 the Forest Service announced its decision to conduct National Environmental Policy Act (NEPA) studies on any plans to develop OGM rights in the ANF.  NEPA only applies to “major federal actions,” which means issues as to which the agency has discretion; the Forest Service has no such discretion regarding OGM rights.  The Forest Service’s decision is now the subject of litigation.

 “Meanwhile, in November 2008 environmental groups – recognizing that the Forest Service would lose its attempt to impose NEPA on its own – sued the Forest Service and asserted that a “notice to proceed” is subject to NEPA.  After OGM owners intervened, federal lawyers signed a hastily executed “Settlement Agreement,” and the lawsuit was dismissed.

"The resultant lawsuit by POGAM and Minard Run is just beginning; however, it may well reach the U.S. Supreme Court where a favorable ruling is essential to the preservation of freedom, not to mention the search for energy in the United States!"

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