Recently we learned that the City of Adrian filed a quiet title claiming the...

Asked October 16, 2013, 8:58 PM EDT

Recently we learned that the City of Adrian filed a quiet title claiming the entire Lake Adrian and the bottom of the Lake back in February, they have signed a lease with Savoy Energy. We currently have 220 feet of Lake frontage. I do not understand how they can do this? What about our riparian rights. They did not notify us. Also we have not signed a lease with Savoy, however many of our neighbors have and they say they will be receiving royalties from the Gas & Oil Savoy soon. How can they obtain royalties if we have not signed, and can they leave us out financially? We did not sign a lease because we have real concerns about the environment, but are wondering what are our rights are and about compensation? We are retired and on a fixed income so it is difficult for us to find out what are right are by hiring an Attorney we cannot afford at this time?

Lenawee County Michigan

1 Response

An action to quiet title is a lawsuit brought in a court having jurisdiction over land disputes, in order to establish a party's title to real property against anyone and everyone, and thus "quiet" any challenges or claims to the title. The notification required is normally through public means, such as in the legal notices section of local newspapers. There is usually a comment period to object to this proceeding. I suggest you check with the city and get more details as to why they are doing this.

When you state that your neighbors have signed oil and gas leases, that tells me that the quiet title had nothing to do with ownership of existing private property, including mineral rights ownership. Since you have not signed an oil and gas lease, you may be in a better situation than your neighbors. The oil and gas lease offered initially is “written by the company and for the company.” The City of Adrian has already signed an oil and gas lease, as mentioned in their most recent council meeting. That lease should be a public document. I suggest you get a copy. I did some web searching this morning and from what I have read, it is a much better lease economically and environmentally than what is offered in the “standard” lease, which is probably what your neighbors signed. If you change your mind about leasing, you can use the city’s agreement as a guide. I would be very interested in obtaining a copy of the lease myself, if you can get one.

If Savoy decides to drill an oil and gas well, they must have all of the land affected by that well under a lease or a compulsory pooling agreement, or they cannot drill the well. Your mineral income cannot be stolen. It is the responsibility of the DEQ Department of Oil, Gas and Minerals to protect the public and insure everyone owning mineral rights is paid their fair share if their minerals are harvested. There are options to the lease the company initally offers, including negotiating a better lease both economically and environmentally, a non-development lease, or compulsory pooling. Based on what you said in this question, you are probably in a better situation than your neighbors that probably signed what is called the “standard lease” that the oil companies offer. Many landowners sign this and have no understanding of what it means or its consequences, short term and long term.

Oil and gas leasing is complex, but many landowners are learning to understand it. Leasing is a choice. You do not have to lease if you do not want to. That is when compulsory pooling may come into effect if a well is drilled that harvests some of the minerals you own. You are smart to not sign the lease until you understand it. I am going to refer you to some resources.
MSU Extension has a web page for oil and gas leasing education: There is a narrated slide show titled “Understanding and Negotiating the Oil and gas Lease” that I recommend you watch. It is the type of presentation I make at public educational meetings. There is also a document titled “Compulsory Pooling and the Landowner that has not Signed an Oil and Gas Lease.” This explains in detail how compulsory pooling works.

If you have additional questions, contact me again, including calling me at 231-873-6841. A small acreage owner such as yourself is also a good candidate for a non-development lease. This assures you that no well site, road, tanks, etc. are placed on your property. You will learn a lot watching the narrated slide show.