United States: Ohio Supreme Court Issues Second Key Decision Interpreting Dormant Mineral Act

On November 5, 2015, in Chesapeake Exploration, L.L.C., et al. v. Kenneth Buell, et al., 2015-Ohio-4551, the Ohio Supreme Court issued its second decision interpreting Ohio's Dormant Mineral Act (the "ODMA"). The ODMA is a statute that allows a surface owner of a severed estate to have subsurface oil and gas rights deemed abandoned and vested in the surface owner if there has not been any specified savings activities, including any recorded title transactions, within a 20-year period. The case addresses two questions of state law certified from the U.S. District Court for the Southern District of Ohio. By a five-justice majority, with four justices concurring in the reasoning, the court ruled that a recorded oil and gas lease is a "title transaction" sufficient to prevent the subject mineral rights from being deemed abandoned under the statute. The court also held unanimously that the unrecorded expiration of an oil and gas lease does not qualify as a "title transaction."

A Recorded Oil and Gas Lease Is a "Title Transaction" Under the ODMA The first certified question was whether the recorded lease of a severed subsurface mineral estate is a "title transaction" under R.C. 5301.56(5)(3)(a). As an initial matter, the court considered the scope of the definition of "title transaction" as used in the ODMA. The Marketable Title Act, the broader statutory scheme that encompasses the ODMA, defines a "title transaction" as "any transaction affecting title to any interest in land, including title by will or descent, title by tax deed ... warranty deed, quit claim deed, or mortgage." The respondents argued that because an oil and gas lease is not listed among the expressly enumerated transactions in the statute, it does not qualify as a "title transaction." The court rejected this view, and instead accepted the petitioners' position that a "title transaction" under the statute is not limited to the transactions listed. The court reasoned that the word "any," by definition, is not a word of limitation. The court additionally held that a title transaction was not limited to transactions that transfer an ownership interest in property, but that it also encompassed an interest in using the land.

Having determined that the definition of "title transaction" was not limited to the expressly enumerated events in the statute, the court turned to the question of whether an oil and gas lease was a "transaction affecting title to any interest in land." The court pointed out that the Ohio General Assembly recently clarified that both licenses and leases of oil and gas rights create an interest in real estate. See R.C. 5301.09. In determining whether the creation of that interest in real estate causes the mineral interest to be the "subject of a transaction affecting title to any interest in land," the court examined the "unique nature" of oil and gas leases, and reviewed the rights commonly granted under such leases. The court stated that the subject lease, as well as oil and gas leases cited in prior Ohio cases, granted to the lessee the exclusive right to use the mineral estate to develop and produce the oil and gas. The subject lease also provided the lessee the right to conduct geophysical tests, install roads, construct pipelines, and restrict the lessor's use of the surface estate within a certain buffer around a well or pipeline. Accordingly, the court determined that "the rights and privileges granted under an oil and gas lease, although limited to the purposes of the lease, are sufficiently vast to affect the possession and custody of the mineral estate, even if not its ownership." Because "[t]he lessee also enjoys reasonable use of the surface estate to accomplish the purpose of the lease ... the lease affects the possession and custody of both the mineral and surface estates," and a lessor effectively relinquishes all but an interest in the bonus, delay rental, and royalty payments provided for in the lease. Furthermore, an oil and gas lease is generally binding on successors and therefore is an encumbrance that remains with realty.

Finally, the court noted that a recorded lease in the chain of title notifies all others with a potential interest, and in that way is more of an encumbrance than a mortgage – one of the specifically enumerated title transactions in the statute. Ultimately the court held that because the "effect on ownership, possession, and custody is an inherent attribute of an oil and gas lease," a recorded lease constitutes a title transaction because "it affects title to the surface and mineral owners' interest in land." It is therefore a saving event under R.C. 5301.56(B)(3)(a) because "the mineral interest has been the subject of a title transaction that has been filed or recorded in the appropriate county recorder's office."

The Unrecorded Expiration of an Oil and Gas Lease Is Not a "Title Transaction" Under the ODMA The court next turned to the second question certified, "whether the expiration of a recorded lease and the reversion of the rights granted under that lease is a title transaction that restarts the 20 year forfeiture clock under the DMA at the time of the reversion."

The court initially noted that there is no authority in Ohio on the issue, and declined to follow a Michigan case that had determined that the expiration of a mineral lease prevented abandonment of the mineral interest under a similar statute, based on differences in the language of the two statutory schemes. Finding no persuasive authority, the court focused on whether the expiration of a recorded oil and gas lease provided sufficient notice to third parties, emphasizing that the ODMA's requirement that a title transaction be filed or recorded "furthers the legislative purpose of 'simplifying and facilitating land title transactions,' R.C. 5301.55, by providing record notice of title activity involving the mineral rights."
The court declined to accept the petitioners' argument that the notice requirement was satisfied by the recorded lease itself because it provides notice of both the lease term and expiration. The court found that "although the terms of the lease might describe the events by which expiration could occur, the lease itself does not provide notice of the actual occurrence of the lease expiration and the reversion of rights in the lessor. A title searcher looking at the lease will not be able to tell that the parties' inaction has triggered the expiration." As a result, the court found that the terms of a recorded oil and gas lease could not provide sufficient notice of activity under the lease, nor could the expiration of such a lease be considered a "title transaction that has been recorded or filed ... when the expiration is unrecorded." The court emphasized that this holding did not apply to the recorded expiration or release of a lease.

The majority opinion was written by Justice O'Connor, and joined by Justices Lanzinger, French, and O'Neill. Justice Kennedy concurred with the majority's decision, but would have found that a recorded oil and gas lease is a title transaction based upon different reasoning. Justices Pfeifer and O'Donnell dissented in part, and would have found that a recorded lease is not a title transaction under the Ohio Dormant Mineral Act.

Upcoming Cases This case marks the second major Ohio Supreme Court decision interpreting the ODMA, following Dodd v. Croskey, 37 N.E.3d 147 (Ohio 2015), issued by the court in June 2015. The cases of Walker v. Shondrick-Nau, Case No. 2014-0803, and Corban v. Chesapeake Exploration, L.L.C., Case No. 2014-0804, have been briefed and oral argument has been heard by the court. At issue in those cases is whether the ODMA as originally passed in 1989, or as amended in 2006, applies to claims asserted after 2006 alleging that the rights to oil, gas, and other minerals automatically vested in the surface landholder prior to the 2006 amendments as a result of abandonment. Corban also addresses whether payment of a delay rental during the primary term of an oil and gas lease is a title transaction and "savings event" under the ODMA. The court will hear oral argument in the case of Eisenbarth v. Reusser, Case No. 2014-1767, on November 17, 2015, in which it will consider, among other issues, whether the "look-back" period under the 1989 ODMA is fixed or rolling.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions