In Texas title law, “it is well settled that a purchaser is bound by every recital, reference and reservation contained in or fairly disclosed by any instrument which forms an essential link in the chain of title under which he claims.” But does this rule apply to mineral reservations in deed restrictions? No, says Farm & Ranch Investors, Ltd. v. Titan Operating, L.L.C., et al.
Caldwell’s Creek, Ltd. owned 60 acres in Colleyville known as Caldwell’s Creek Addition. In 1994, Caldwell recorded a dedication and deed restrictions which stated, among other things, that “all mineral rights shall belong and shall continue to belong to . . . Caldwell’s Creek, Ltd.”
Between 1994 and 1999, Caldwell conveyed nine lots in the subdivision to various parties. None of the nine warranty deeds contained a mineral reservation. The deeds did contain a “subject to” clause, which stated the conveyance was “subject to any and all easements, restrictions, and mineral reservations affecting said property that are filed for record in the office of the County Clerk … .” In 2005, Caldwell conveyed all of the oil, gas and minerals in the Addition to Farm & Ranch Investors, Ltd., which believed it acquired the same.
In 2008, Titan Operating began oil and gas lease negotiations with Farm & Ranch, but eventually acquired leases from the nine lot owners. Titan then filed suit to confirm it owned the mineral rights, and Farm & Ranch counterclaimed for breach of contract. The trial court declared that Titan owned fee simple determinable title to the lots(lawyerspeak for Titan owned the leasehold rights).
On appeal, Farm & Ranch argued that the recorded deed restrictions were effective to reserve the minerals, and the “subject to” provision placed the grantees on notice. The court of appeals disagreed, and said that an “owner cannot reserve to himself an interest in property that he already owns”, and the restrictions were neither a conveyance nor a reservation. Farm & Ranch also claimed the phrase “shall continue to belong” is a future looking statement, and subsequent references to the restrictions should be effective to reserve the minerals. The court again disagreed and held the phrase “shall continue to belong” should not be interpreted as a future reservation.
Intermission, and an interlude about justice that makes a fellow thirsty.
The result: Caldwell failed to effectively reserve the minerals.
The takeaway: Check your deed restrictions to determine how high the flag can fly, whether you can have a Blue Heeler in the yard, and the color and location of your mailbox, but don’t look there to reserve minerals.