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...Paving the path to unclaimed mineral royalties

For some years now, an effort has been building to pave the path for direct descendants of the Spanish, Mexican, Republic of Texas and State of Texas Land Grantees in Texas to participate in the receipt of hundreds of millions of dollars in unclaimed mineral royalties held by the Texas Comptroller's Office. The final piece of this puzzle is the passage of legislation that has been introduced in the current session of the Texas Legislature.



HISTORY

In the 18th and 19th centuries, the Spanish and Mexican governments issued grants to various of their citizens concerning land then a part of Spain or Mexico that now is a part of Texas, basically south Texas. These "Land Grants," as they became known, oftentimes consisted of thousands upon thousands of acres. When those lands became a part of Texas, various treaties and U.S. statutes recognized the ownership of the Land Grants by the Land Grantees and their heirs -- Tejanos or original Texans. These treaties and laws (and later court decisions) made it clear that all the rights in the Land Grants always would belong to the Land Grantees and their heirs unless they sepcifically conveyed away their interests in these lands.

Normally, under Texas law, when a person sells a piece of Texas land where the conveyance documents are silent on the subject of mineral rights, the mineral rights pass to the purchaser along with the surface rights; however, as concerns the Land Grants, this is not the case. Importantly, in the case of the Land Grants, for the mineral rights to pass along with the surface rights, the conveyance documents must specifically and expressly state that the mineral rights, as well as the surface rights, are being conveyed.

Over the years since the late 18th and early 19th centuries, all of the surface rights in each Land Grant have been conveyed by the original Land Grantee to third parties or passed along to their heirs. Some of these lands were obtained by third parties in what may have been less than straightforward ways, but that, even if true, has nothing to do with TLGJA or its mission and goals. Surface rights have nothing to do with TLGJA's efforts; mineral rights have everything to do with TLGJA's efforts.

That the mineral rights of these lands must be expressly conveyed, combined with what can best be described, historically, as a culture of intestacy (meaning that the Land Grantees and their descendants very often have not left wills upon their deaths that indicate the property contained in their estates, such as mineral rights, and to whom they are leaving such property), means that, for about 200 of the 364 Land Grants, some of the mineral rights still belong to the direct descendants of the original Land Grantees. So while the identities of the persons owning the surface rights who also own the mineral rights is known, the identities, generally, of the persons owning only the mineral rights is not known because of the lack of formality observed (i.e., wills) upon the deaths of the original Land Grantees and their descendants for all of the eight to ten generations that have followed.

Therefore, when oil and gas began to be extracted from below these grounds, the exploration and production companies (the "Oil Companies"), in many instances had no way of paying the mineral royalties to the descendants of the original Land Grantees because they simply did not know who they were and had no good way of determining how to find them.

In 1960, the Texas Legislature passed the Unclaimed Property Act ("UPA") to deal with such situations by requiring the holder of monies, such as banks holding money where depositors had moved away leaving a balance, but no forwarding address or utility companies holding utility deposits after a customer had moved away without leaving a forwarding address, to send the monies to the Texas Comptroller after holding it for a "dormancy period" of several years. The Oil Companies effectively became subject to the UPA in 1985, and since that time the Oil Companies have sent millions of dollars to the Texas Comptroller's Offices.

Under the UPA, the Comptroller must hold the money "in perpetuity" for its rightful owners, but here is the disconnect. To this day, when the Oil Companies send the money to the Comptroller, they generally do not send accompanying information concerning the identity of the person entitled to the money because they do not know that identity. The Comptroller accepts the money but has no way of paying the money to its rightful owners because of the tremendous difficulty such a claimant would have in proving that a portion of the money -- and which portion -- belongs to the claimant. As a result of this problem, the money simply accumulates. Legislation introduced in the Texas Legislature titled the "Unclaimed Mineral Proceeds Act" will fix this problem through defining how valid claims may be made by descendants of the original Land Grantees and then by facilitating the process. The bill numbers are House Bill 2611, and Senate Bill 1657.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



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