(Part 2) Does the Texas Form Title Opinion Work in Oklahoma? - The Rest of the Story

The presence of words such as . . . “Landowner’s,” modifying “royalty” . . .? cannot be considered constructionally clarifying and should be omitted by the draftsman or, if used, ignored.” – Richard W. Hemingway (Eugene O. Kuntz, Professor of Oil and Gas Law, University of Oklahoma)

In our earlier article, Does the Texas Form Title Opinion Work in Oklahoma? - The Good, the Bad and the Ugly, we noted a curious trend over the years: the widespread use of a Texas-style title opinion in places like Oklahoma and the Rocky Mountain states driven by the significant influence of Texas-based or affiliated law firms branching out into other states. There we examined the foundational differences between Texas and Oklahoma’s approaches to oil and gas title opinions. We discovered that while the Texas Form [1] title opinion offers a valuable structure, its straightforward application in Oklahoma frequently results in a mismatch, particularly in aspects like ownership table structures, force pooling, managing multi-tract units and regulatory details. These differences highlight why a Texas-style approach may not fully align with Oklahoma’s needs. Building on that foundation, this second installment aims to further explore these differences, focusing on key elements that define land and mineral rights in Oklahoma.

Here, we will examine five distinctions that highlight the divergence between Texas and Oklahoma’s legal frameworks: [2]

?1. Landowner’s Royalty (LOR) vs. Royalty: We will clarify the differences between these royalty concepts, focusing on how the term “Landowner’s Royalty” as traditionally understood in Texas-style title opinions may not convey the same meaning in Oklahoma.

?2. Working Interest (WI) vs. Leasehold: We will explore how Oklahoma’s approach to pooling and well spacing does not strictly differentiate between these interests as in Texas, questioning the practical significance of this distinction within Oklahoma’s operational context.

?3. Surface Ownership: Accommodation Doctrine vs. Surface Damage Act: We will contrast how Texas’s Accommodation Doctrine versus Oklahoma’s Surface Damages Act impacts the necessity of including surface ownership in title opinions.

?4.? Deed of Trust vs. Mortgage: We will explore the conceptual differences between a Deed of Trust, prevalent in “title theory” states like Texas, and a Mortgage, which is the norm in “lien theory” states like Oklahoma. We will examine how these security instruments operate and affect the securing of interests in oil and gas properties.

?5. “Husband and Wife” (Community Property) vs. Co-Tenancy (Common Law): Here, we analyze how marital property laws in Texas contrast with Oklahoma’s common law principles, which significantly affects the conveyance and ownership of interests.

By understanding these distinctions, we aim to provide a clearer picture of why Oklahoma’s title practices necessitate a customized approach rather than a complete adoption of the Texas model.

?1. “Landowner’s Royalty” (LOR) vs. Royalty?

?In Texas-style title opinions, the term “Landowner’s Royalty” (LOR) is commonly seen in ownership tables, which might describe either the mineral owner’s lease royalty interest or the proportionately reduced royalty interest, typically represented by an eight-digit “Decimal” interest. However, this terminology could seem unusual or even a bit odd to an Oklahoma practitioner due to the fundamental differences in how mineral rights are viewed between these states.

You see, Texas operates under an “ownership in place” doctrine, where landowners inherently own the minerals beneath their land unless specifically severed. In contrast, Oklahoma follows a “non-ownership in place” approach, where no one inherently owns the minerals in place; ownership is established only through the right to search for and reduce minerals to possession.[3]

As such, in Oklahoma, the concepts of “landowner” and “mineral owner” represent two distinctly separate viewpoints. If you ask an Oklahoman, “Are you a landowner or a mineral owner?”, you are likely to hear, “I own minerals” or “I’m a mineral owner.” However, pose the same question to a farmer or rancher, and you will probably get a response like, “I own the surface, but not the minerals.” This distinction is critical because in Oklahoma, it is exceedingly rare to purchase land where the mineral rights are included. The vast majority of mineral rights have long been severed from the surface rights, illustrating the unique separation of these ownership types in the state.

Thus, when Oklahoma partitioners see terms like “landowner’s interest,” “landowner’s royalty rights,” or “landowner’s mineral interest” in an Oklahoma conveyance, it might raise questions. For instance, if O conveys to A an undivided 1/16 “landowner’s royalty interest,” the terminology can confuse: Is this a conveyance of mineral rights or royalty? Here, “landowner” might not adequately describe the interest, especially post-lease, where the term would be irrelevant in Oklahoma’s context since the mineral estate is not automatically tied to land or surface ownership. [4] For example, the term “Land” in Oklahoma’s property code (through amendments) has been defined (and interpreted) to specifically exclude oil and gas. [5]

With respect to deed interpretation and drafting (and not title opinions) the late Professor Emeritus Richard W. Hemingway (Eugene O. Kuntz, Professor of Oil and Gas Law, University of Oklahoma), observed:

?The presence of words such as . . . “Landowner’s,” modifying “royalty” . . .? cannot be considered constructionally clarifying and should be omitted by the draftsman or, if used, ignored. [6] ?

Therefore, while “Landowner’s Royalty” might be a familiar term in Texas, its use in Oklahoma could lead to confusion due to the state’s often highly fractionalized and severed mineral estate interests. ?Here, the term does not necessarily reflect the traditional understanding from Texas where mineral rights are inherently tied to land ownership. In Oklahoma, where mineral rights are more often than not distinct and severed from surface rights, using “Landowner's Royalty” in a title opinion without clarification may not accurately convey the intended meaning. To avoid this ambiguity, it would be more appropriate to adopt terms like “Mineral Owner Royalty” or simply omit the modifier—and just use “Royalty”—as is the norm in Oklahoma title opinions.

?2. Working Interest (WI) vs. Leasehold

The Texas Form title opinion in the Yale article distinguishes between working interest ownership and individual leasehold ownership. For example, the Form has ownership tables for the working interest—that is an aggregate of all the oil and gas leases for a particular tract of land.? Additionally, the Form has a separate ownership table for each individual oil and gas lease—which always adds to 100% for each lease notwithstanding that the associated working interest in the tract for such lease may be less the 100%.

The question and answer presented in the Yale piece was:

Why would leasehold information be of interest to a client since costs and revenues are allocated on a working interest, and not [on an individual] lease basis? The reason is that unit boundaries change all the time. Having [individual] leasehold [ownership] as well as [tract] working interest information allows a client to quickly deal with unit changes and determine who the new working interest owners are. [7]

Admittedly, this is not a very satisfying answer.? For starters, it is very rare indeed (maybe approaching unicorn status) that I have ever seen an Oklahoma practitioner set out double-ownership (i.e., a tract working interest ownership and separate individual lease-by-lease ownership) in a title opinion.? This does not mean it never happens—it just means that anytime I have seen this in an Oklahoma title opinion it was written by a Texas trained lawyer.

The Yale article describes working interest and leasehold interest as follows:

Working interest is the operating interest under an oil and gas lease. ?A leasehold interest, in contrast, is the oil and gas leaseholder’s possessory estate in land, and may be either operating or non-operating. Leasehold interests may ripen, therefore, into working interests but they do not necessarily start out that way. Citing, 8 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers, Oil and Gas Law 155 (LexisNexis 2014) and 22 Black’s Law Dictionary 416 (3rd pocket ed. 2006). [8]

However, it is submitted that the Yale definition is in real-world practice a distinction without any practical difference—the terms are synonymous. [9]

In fact, Oklahoma’s spacing and pooling statute for unit development is written in terms of “any person having the right to drill into and produce from such common source of supply” [10] and “any person owning an interest in the minerals in lands embraced within such common source of supply, or the right to drill a well for oil or gas on the lands embraced within such common source of supply.”[11]?Furthermore, with respect to force pooling on a unit basis, an unleased mineral owner is regarded as a royalty owner to the extent of a 1/8 interest and a working interest owner as to the remaining interest. [12] Finally, the terms “working interest owner” and “nonparticipating working interest” appear in a couple of places; [13] and, the word “leasehold” only appears in the wording for the statutory Pugh clause [14] and as relates to an Operator’s lien. [15] ?

Consequently, in Oklahoma, the oil and gas regulatory framework is tailored for unit development (rather than development on an individual lease basis) often encompassing dozens of oil and gas leases spread across multiple divided tracts and combined into a single drilling and spacing unit. Detailing ownership on an individual lease-by-lease level would significantly increase the time and cost of preparing a title opinion. In my experience, clients usually do not request this level of detail, and the additional expense might not justify the benefits. Therefore, it is crucial to discuss this option with clients beforehand, as opting for a lease-by-lease ownership detail will undoubtedly raise the costs.

?3. Surface Ownership: Accommodation Doctrine vs. Surface Damages Act

In my experience, Oklahoma title examiners will typically include surface ownership when drafting an oil and gas title opinion—at least for Drilling Title Opinions. ?However, as noted in the Yale article, this has not always been the case for Texas practitioners. [16] In fact the Texas Form opinion presented in the Yale piece includes a surface ownership disclaimer:

This Opinion expressly excludes from coverage the ownership of the surface estate in the Subject Lands. Surface information may be included in this Opinion for convenience purposes, only. If a definitive Opinion on the Surface is needed, contact the Examiner for a supplement to this Opinion. [17]

The Yale article explains that Texas practitioners are hesitant to include surface ownership in an oil and gas title opinion because that can expose lawyers to significant legal, financial, and professional risks. By offering an opinion on surface rights, attorneys inadvertently position themselves or their malpractice insurers as de facto title insurers for the surface estate. While oil and gas lawyers might anticipate legal action for mistakes concerning the oil and gas estate, they often do not consider the potential lawsuits that could arise if a surface-related real estate deal goes awry due to errors in their title opinion. For these reasons, the Yale article explains that many Texas practitioners believe it is prudent to exclude surface ownership details to mitigate these risks. [18]

“Accommodation Doctrine”: I am not convinced, however, that the primary motivation for omitting surface ownership from oil and gas title opinions in Texas is solely about mitigating legal, financial, and professional risks. Instead, I believe the real driving force is the unique relationship between surface owners and oil and gas Operators, shaped significantly by the Accommodation Doctrine. In Texas, this doctrine often negates the need for Operators to negotiate directly with surface owners for damages or surface access, reducing the necessity for detailed surface ownership information in title opinions. If the relationship between the surface and mineral estate is already streamlined by legal precedents like the Accommodation Doctrine, why include surface ownership details? Excluding them might only serve as an additional safeguard against liability, but it seems more like a side benefit rather than the primary reason. The argument that it is all about risk mitigation might be overstated when the practical interaction between the surface and mineral estate is already minimized by established legal norms. [19]

?“Surface Damages Act”: Unlike the Texas approach, including surface owner details in Oklahoma title opinions is not just beneficial; it is a necessity, primarily due to the distinct relationship between surface owners and oil and gas well Operators governed by the Oklahoma Surface Damages Act. Since July 1, 1982, under 52 Okla. Stat. §§ 318.2-318.9, Operators have been mandated to engage directly with surface owners in a highly regulated manner before any drilling can commence. The law requires operators to notify surface owners via certified mail of their intent to drill and to enter into good faith negotiations within five days to determine any surface damages. This interaction is not just a formality but a legal obligation, backed by the requirement to post a $25,000 corporate surety bond or bank letter of credit with the Secretary of State to guarantee payment of such damages. [20]

Furthermore, if no written settlement on surface damages is achieved, the legislation sets out a detailed legal pathway through district court proceedings in the county where the land is located, involving appraisals and specific procedures for damage assessment. The importance of these statutes cannot be overstated; failure to adhere to them can expose operators to significant liabilities, including treble damages. [21]

Given this framework, title opinions in Oklahoma should include surface ownership details to ensure compliance with these legal mandates. Unlike in Texas, where the Accommodation Doctrine offers a different framework for interactions between surface owners and well Operators, Oklahoma’s laws require a thorough understanding and documentation of surface ownership to effectively manage legal requirements, avoid litigation, and protect all parties from potential financial penalties. This necessity underscores why Oklahoma title examiners should include surface ownership in their opinions, not just for completeness but for legal and operational prudence.

Surface Possession: One last consideration for including surface ownership details in title opinions is that this information can significantly aid clients in their due diligence. Clients are legally charged with notice, whether through inquiry or actual knowledge, of all claims by individuals in actual possession and occupancy of the land. Understanding who the record surface owners are enables Operators to thoroughly investigate the nature and extent of surface occupancy, as well as potential claims related to adverse possession or homestead rights. This knowledge is important for ensuring comprehensive due diligence and for mitigating associated risks.

Conclusion: The relationship between surface owners and mineral estate holders varies significantly between Oklahoma and Texas, influencing the relative importance of including surface ownership in title opinions. In Texas, the Accommodation Doctrine establishes a framework where surface use by mineral lessees must accommodate reasonable surface use by the landowner, reducing the frequency of direct negotiation over surface damages. This doctrine minimizes the operational need for detailed surface ownership in title opinions, with Texas practitioners often citing risk mitigation as a reason for exclusion. However, the primary motivator seems to be the streamlined interaction facilitated by legal precedent rather than solely the avoidance of liability.

Conversely, in Oklahoma, the Surface Damages Act mandates a more interactive and legally prescriptive relationship between surface owners and Operators. Since 1982, this Act has required Operators to formally notify and negotiate with surface owners regarding potential damages before drilling can begin, backed by financial guarantees. The legal consequences for non-compliance, including the possibility of treble damages, make understanding surface ownership not just beneficial but essential for operational compliance and risk management. Therefore, incorporating surface ownership details in Oklahoma title opinions is an additional aid to clients to help ensure compliance with the law, thereby safeguarding all parties from potential legal and financial consequences. This significant difference in legal approach to the surface/mineral owner relationship between the two states underscores why Oklahoma practitioners must consider surface ownership with greater detail and significance than their Texas counterparts.

4. Deed of Trust vs. Mortgage

?“Lien Theory” and “Title Theory”: [22] It has become common place in Oklahoma for Deeds of Trust to be recorded in the land records. The primary difference between a Mortgage and a Deed of Trust lies in how they secure a loan. In a Mortgage (i.e., Oklahoma), the borrower grants the lender a lien against the property as security for the loan, while retaining legal title to the property (“lien theory”). [23] In contrast, a Deed of Trust (i.e., Texas) involves three parties: the borrower, the lender, and a trustee. The borrower transfers legal title to the property to the trustee, who holds it until the loan is paid off (“title theory”). If the borrower defaults, the trustee has the power to initiate foreclosure proceedings and sell the property to satisfy the debt, typically without court involvement.

As such, in a lien theory state, the borrower under the Mortgage holds legal title to the property, while the lender places a lien on it as security for the loan. This means the lender’s interest is a lien right, not ownership. In contrast, the Deed of Trust, in a title theory state, gives legal title to a trustee appointed by the lender until the loan is paid off. This trustee holds the title on behalf of the lender, providing more security in the event of default—by allowing for a non-judicial foreclosure process. The key distinction lies in who holds legal title during the loan term: the borrower in lien theory, and a trustee in title theory.

However, for title examiners this is a distinction without much difference. Typically, title examiners in Oklahoma will treat the Deed of Trust the same way as they treat a Mortgage—that is, an examiner will list them both as an “encumbrance” or lien upon title; rather than a straight-up transfer of title. In fact, I know of no instance where an examining attorney showed ownership of an oil and gas property in the name of the trustee-bank/lender under a Deed of Trust instead of the oil company-equitable title holder/borrow. It just does not happen! [insert lawyer weasel word here (“usually”).]?

In conclusion, the differences between a Deed of Trust and a Mortgage may be significant in theory, but in practice, they often blur in the realm of title examination. While historically distinct, the evolution of non-judicial foreclosure laws across states has minimized their practical disparity, streamlining processes for lenders and title examiners alike. [24]?To be clear, however, where a Deed of Trust appears in the Oklahoma land records it is a tell-tail sign that it was drafted by someone trained in a “title theory” state.

5. “Husband and Wife” (Community Property) vs. Co-Tenancy (Common Law Property)

Occasionally, I will come across an Oklahoma title opinion with a mineral ownership table that looks something like this:

and that is when I know the title examiner was probably trained in a community property state. [25] ??

Take for example a Mineral Deed that reads from Owner, as grantor, to Paula M. Love and Hal G. Love, husband and wife, as grantees.? In Texas, when property is conveyed to a “husband and wife” without additional specification, it falls under the jurisdiction of Texas’s community property laws. [26] Here, both spouses together hold the property as “joint management community property,” which inherently means that neither spouse can unilaterally convey, sell, or encumber the property; both must consent. This dual requirement for consent is why in Texas title opinions, the ownership is typically shown as one combined interest, such as “Hale G. Love and Paula M. Love, husband and wife.” This ownership representation illustrates that under community property law, the interest of each spouse is intertwined, requiring mutual agreement for any action involving the property.?

In contrast, in Oklahoma which operates under common law property principles, when property is conveyed to a “husband and wife” without further specification, the law presumes a co-tenancy where each spouse holds an equal undivided interest as tenants in common. [27] This means there are no inherent restrictions on alienation (i.e., transfer of title) by either spouse; each can freely convey or encumber their half of the interest without the consent of the other. [28] Consequently, in Oklahoma title opinions, this interest would be reflected as separate, with each spouse’s ownership explicitly stated, such as “Paula Love, 1/2 interest” and “Hal Love, 1/2 interest.” This approach reflects the absence of community property laws that would require mutual consent for property transfers, as illustrated below.

?

Conclusion?

In conclusion, the significant legal and operational differences between Texas and Oklahoma’s approaches to land and mineral rights make it clear that a Texas-style title opinion requires substantial modification to be effectively utilized within Oklahoma’s oil and gas industry.? From the different interpretations of terms like “landowner’s royalty” or simply “royalty” to the distinct treatment of working interest versus leasehold, from the implications of the Surface Damages Act to the practical handling of Deeds of Trust versus Mortgages, each aspect of property law in Oklahoma presents unique challenges not accounted for in the Texas model.? Furthermore, the treatment of marital property under Oklahoma’s common law system versus Texas’s community property laws further underscores the need for a tailored approach. These differences not only affect how property interests are conveyed but also dictate how title opinions must be structured to align with local legal frameworks and operational needs. Therefore, for those working within Oklahoma’s oil and gas sector, adapting the Texas Form title opinion involves more than mere translation; it demands a fundamental rethinking and customization to ensure it serves the specific requirements and protections of Oklahoma law.

Lance Walker, Copyright ? 2025

?Bio: Lance Walker is an Oklahoma City-based oil and gas attorney with 25 years of experience, focused primarily on rendering title opinions. His practice spans both Texas and Oklahoma, where he has developed an understanding of the challenges of oil and gas law across state lines. Lance co-founded Walker Law, PLLC, with his wife Tina, focusing on oil & gas title examination and transactional work. He began his legal career in oil and gas title law while working with Cotton, Bledsoe, Tighe, and Dawson, P.C. in Midland, Texas, learning the art of crafting title opinions in the Permian Basin of west Texas and southeast New Mexico. Lance holds a Bachelor’s Degree with high honors in Political Science from the University of Florida and a Law Degree from the University of Oklahoma. He is admitted to practice law (at one time or another) in Oklahoma, Texas, New Mexico, North Dakota, and Arkansas. His article, “(Part 2) Does the Texas Form Title Opinion Work in Oklahoma? - The Rest of the Story,” reflects his commitment to clarifying legal practices across state lines for professionals in the oil and gas sector.? Lance may be reached at: [email protected]

[1] In our first installment we examined the Texas Form title opinion as presented by Houston lawyer Paul Yale, where he dissected the specifics of how these title opinions are structured.? See, Paul Yale, Oil and Gas Title Opinions: Structuring and Format, in State Bar of Texas: OIL, GAS & MINERAL TITLE EXAMINATION COURSE (June 25-26, 2015, Houston, Texas), Chapter 17.? (sometimes referred to herein as: “Yale” or the “Yale article”).

?[2] Note: These distinctions are not a big deal; but rather, they just offer a peek at how Texas and Oklahoma folks see things differently.

[3] See, Richard W. Hemingway, The Law of Oil and Gas § 1.3 (3d ed.).

[4] See, Hemmingway at § 2.7(F)(2).

[5] 16 Okla. Stat § 6 and see Oklahoma Attorney General Opinion 2024 OK AG 2.

[6] Id. Professor Hemmingway seems to be reinforcing the old saying “omit needles words”; as made famous from William Strunk, Jr. & E.B. White, The Elements of Style p. 23 (4th ed. 1999) (1935) (“Omit needless words. Vigorous writing is concise. A sentence should contain no unnecessary words, a paragraph no unnecessary sentences, for the same reason that a drawing should have no unnecessary lines and a machine no unnecessary parts. This requires not that the writer make all sentences short, or avoid all detail and treat subjects only in outline, but that every word tell.”)

[7] Yale at p. 14.

[8] Yale at p. 14.

[9] See, Patrick H. Martin & Bruce M. Kramer, Williams & Meyers, Manual of Oil & Gas Terms 550 (2006) (citing Miller v. Schwartz, 354 N.W. 2d 685 (N.D. 1984), citing this Manual for the proposition that “it appears that the term ‘working interest,’ as commonly used in the oil industry, is generally synonymous with the term ‘leasehold interest.’”)

[10] 52 Okla. Stat. § 87.1

[11] 52 Okla. Stat. § 87.1 (a)

[12] 52 Okla. Stat. § 87.1 (e)

[13] 52 Okla. Stat. § 87.1 (g), (h)(1)(2)?

[14] “In case of a spacing unit of one hundred sixty (160) acres or more, no oil and/or gas leasehold interest outside the spacing unit involved may be held by production from the spacing unit more than ninety (90) days beyond expiration of the primary term of the lease.” 52 O.S. § 87.1 (e).

[15] 52 Okla. Stat. § 87.1 (b).

[16] Yale at p. 3.

[17] Yale, at p. 49.

[18] Yale at p. 3.

[19] For a detailed discussion of the “Accommodation Doctrine” as articulated by the Texas Supreme Court see, Getty Oil. v. Jones, 470 S.W. 2d 618, 622-623 (Tex. 1971) (This case involved a situation where Getty Oil’s pumpjacks were obstructing the operation of an irrigation system installed by the surface owner. The court found that Getty Oil was required to either lower the pumpjacks or use a different type of pumping system that would not interfere with the surface owner’s irrigation, since these alternatives were reasonable and available under industry practices. This decision balanced the rights of the mineral and surface owners, establishing a precedent where the mineral lessee must accommodate the reasonable surface use if possible.)

[20] See generally, 52 Okla. Stat. §§ 318.2-318.9.

[21] Id.

[22] As to “Lien Theory” and “Title Theory” in mortgage law, see e.g., Teachers Ins. and Annuity Ass'n of America v. Oklahoma Tower Associates Ltd. Partnership, 1990 OK 97, 798 P.2d 618.

[23] Id. at ?4 and ?7.

[24] For Texas non-judicial foreclosure procedures, see Tex. Prop. Code § 51.002. Sale of Real Property Under Contract Lien. For Oklahoma Power of Sale Mortgage Foreclosure Act, see, 46 Okla. Stat. § 40 et. seq.

[25] Community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington. Patrick H. Martin & Bruce M. Kramer, Williams & Meyers, Manual of Oil & Gas Terms 170 (2006). Alternatively, in Texas this interest could also be shown as “Hal G. Love and Paula M. Love, husband and wife, as their community property.”

[26] See e.g., Kyles v. Kyles, 832 S.W.2d 194, 196 (Tex. App.—Beaumont 1992, no writ) (“As a general rule, property conveyed to one spouse during a marriage is presumed to be?community property.” Also, see, Texas Family Code § 3.001 “Community property consists of the property, other than separate property, acquired by either spouse during marriage.”

[27] 16 Okla. Stat. § 1- Persons Who May Convey - Married Persons “Any person at least eighteen (18) years of age . . . may own and transfer real property. . . [A]ny persons . . . who have been legally married . . . may own and transfer real property acquired after marriage.”

[28] This statement presumes that no homestead issues are involved, which would otherwise require spousal joinder. For example, since there can be no homestead right in severed minerals, spousal joinder is not required in a mineral conveyance.? 16 Okla. Stat. App. Title Examination Standards § 7.1. See also, Okla. Const. art. 12, § 1.