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Nebraska Supreme Court Holds Probate Recording Preserves Mineral Rights

on Friday, 14 June 2013 in Dirt Alert: David C. Levy, Editor

With the expansion of oil, gas, and mineral exploration, understanding mineral rights and claims is ever more important. A “severed” mineral interest occurs where the owner of the surface of the land is different from the owner of the minerals within the land. In such instances, Nebraska’s Dormant Mineral Statutes seek to maximize the use of land and to incentivize the exercise of mineral rights for the betterment of communities and the economy. Neb. Rev. Stat. sections 57-228 to 57-231.

Nebraska’s Dormant Mineral Statutes require owners of severed mineral interests to publicly exercise their rights within a period of twenty-three years.  If they fail to do so, the surface owner may sue to regain the mineral estate.

Mineral owners may exercise their rights by: 1) acquiring, selling, leasing, encumbering, or transferring a mineral interest or any part thereof by an instrument which is properly recorded; 2) extracting the minerals or otherwise using the belowground space in a manner consistent with ownership in the mineral interest; or 3) recording a verified claim of ownership in the county where the land is located.

The Nebraska Supreme Court recently held that mineral owners may exercise their ownership by recording their interest in public records other than the register of deeds. Gibbs Cattle Co. v. Bixler, 285 Neb. 971 (2013). In Gibbs, the owner of a severed mineral estate died in 1996, leaving the interest to his wife by will. The wife recorded the will in probate but did not record the estate transfer in the register of deeds. In 2010, the surface owner of the land sued to reclaim the mineral estate. The surface owner argued that the deceased husband, still listed as the interest holder in the register of deeds, failed to exercise his mineral rights within twenty three years.

The Supreme Court disagreed, holding that the decedent’s wife publicly exercised the mineral rights when she recorded the will in probate. The Supreme Court reasoned that, because the Dormant Mineral Statutes broadly define “record owner,” a recording in probate satisfies the Statutes’ purpose, to protect interest owners while providing surface owners and the public with sufficient notice of transfers. As such, recording the will in probate reset the twenty-three year clock and secured the wife’s interest.

The Supreme Court’s decision provides two useful lessons for protecting and challenging mineral interests. First, mineral owners should frequently provide public notice to preserve their mineral interests. Second, prior to seeking to regain a mineral interest, it is important to check all public records, including the register of deeds and probate records, to verify if the mineral owner publically exercised their rights.

Amy L. Lawrenson

Read the Full Newsletter: Dirt Alert June 14, 2013

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