Leiper v. Gallegos
Facts: A landowner leases oil and gas rights under their property to an oil company. Later, the owner defaults on a tax bill on the surface rights to a parcel of their real estate. The county forecloses and sells the parcel to a buyer. The tax deed conveying the parcel to the buyer does not include oil or gas royalties. Drilling operations commence to access the underground oil and gas.
Claim: The buyer seeks a percentage of royalties resulting from the drilling operation on the parcel, claiming they hold an interest in the oil and gas beneath the parcel since they own the land on which the drilling operation is to occur.
Counterclaim: The landowner claims the buyer holds no interest in the oil and gas beneath the parcel since the tax deed conveying the land to the buyer only conveyed the surface rights to the parcel, not oil and gas rights.
Holding: A California appeals court holds the buyer has no interest in the oil and gas beneath the parcel since the tax deed conveying the land to the buyer only conveyed surface rights to the parcel, not oil and gas rights. [Leiper v. Gallegos (November 20, 2019)_CA6th_]
Editor’s note — Since a property owner does not told title to oil and gas in the same way they hold title to real estate, oil and gas rights are not taxed in conjunction with the surface property. Here, because only the surface rights to the parcel were taxed, only the surface rights were conveyed by the tax deed.
Related article:
Seriously? Governor Newsom and his gang are shutting down oil and gas drilling in California. There’s no royalties to be have anymore so this article is irrelevant