Bulletin: PA2010010

Date:
November 22, 2010
To:
All Pennsylvania Issuing Offices
RE:
Oil and Gas Leases
Dear Associates:

Oil and gas interests in Pennsylvania present special risks due to the disparity between the length of customary title searches and the length of searches performed by oil and gas companies.

A common length of title search in Pennsylvania is 60 years. However, oil and gas companies are searching for old oil and gas rights back to 1850. When we insure an owner or lender under a title policy, we insure that they have all the property rights, including the right to all the oil and gas underneath the surface, unless an exception is added to the policy. We would not know that they do not own these rights unless we search back at least to 1850.

To reduce the potential for this type of claim, please add the following exception to all policies for property located in counties within the Marcellus Shale Formation area on the attached map (see list of counties on the attached list):

"Any lease, grant, exception or reservation of oil or gas rights, storage rights, or minerals or mineral rights appearing in the Public Records."

If requested to remove this exception for an Owner's policy, search of the land records back to 1850 is required.
Pay particular attention to following issues found in the search:

  1. "Surface only" deeds;

  2. Reservation or exception of minerals, oil and gas;

  3. Transfer of the rights under an oil and gas lease by either landowner or gas company.

  4. The lease may be devised by will upon the death of the landowner.

A written oil and gas lease cannot be abandoned by mere non-use; it must be terminated by its own terms or by a written termination. Most oil and gas leases are for a fixed or definite term with provisions that the primary term shall continue so long thereafter as oil or gas is held for production. The drilling may be anywhere in the pool and may not appear on this property but the lease would still be effective.

DO NOT REMOVE THIS EXCEPTION WITHOUT WRITTEN APPROVAL FROM THE UNDERWRITING DEPARTMENT.

If you have questions relating to this or other bulletins, please contact your local underwriting personnel or Stewart Legal Services.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.  

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
PA2008003 This bulletin has been replaced.
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None