66-5-108 - Preservation, or extinguishment and reversion of mineral interests.
66-5-108. Preservation, or extinguishment and reversion of mineral interests.
(a) (1) The general assembly finds that many owners of agricultural property who have separated titles have difficulty acquiring loans and in other ways have been hindered in fully developing the surface of land.
(2) The general assembly further finds that there are mineral estates, separated from the surface, that have not been properly registered in the counties in which they are located, and are, therefore, not on the tax rolls, causing a significant loss of revenue to many Tennessee counties.
(3) Further, the general assembly finds that many surface owners cannot discover from records at their courthouses whether they own the underlying mineral estate, or if they do not, who does, and that this situation causes undue hardship and title uncertainty for surface owners.
(4) The general assembly further finds that where there are abandoned mineral estates, those on which no development has taken place, no taxes paid and no claim filed pursuant to this section, the rational development of minerals in Tennessee is hindered.
(5) Thus, to promote commerce and agriculture and proper development of surface and mineral estates and to remedy uncertainties in title, the general assembly adopts this section.
(b) For the purposes of this section and §§ 67-5-804(b), 67-5-809 and 67-5-2502(d):
(1) Mineral interest means the interest which is created by an instrument, transferring either by grant, assignment, or reservation, or otherwise, an interest, of any kind, in coal, oil and gas, and other minerals;
(2) Statement of claim means a document or instrument to be filed by the owner of a mineral interest in real property to make claim to that mineral interest; and
(3) Use of mineral interest means that a mineral interest shall be deemed to be used when there are any minerals being produced thereunder or when operations are being conducted thereon for injection, withdrawal, storage or disposal of water, gas or other fluid substances, or when rentals or royalties are being paid to the owner thereof for the purposes of delaying or enjoying the use or exercise of such rights, or when any such use is being carried out on any tract with which such mineral interest may be unitized or pooled for production purposes, or when taxes are paid on such mineral interest by the owner of the land.
(c) Any interest in coal, oil and gas, and other minerals shall, if unused for a period of twenty (20) years, be extinguished, unless a statement of claim is filed in accordance with subsection (d), and the ownership of the mineral interest shall revert to the owner of the surface.
(d) (1) The statement of claim provided in subsection (c) shall be filed by the owner of the mineral interest prior to the end of the twenty-year period set forth in subsection (c) or within three (3) years after July 1, 1987, whichever is later.
(2) The statement of claim shall contain the name and address of the owner or owners of such mineral interest. The claim shall cite tax maps and parcel numbers for the owner or owners of surface above the mineral estate, and a reference to the instrument under which the interest is claimed.
(3) The statement of claim shall be filed with the office of the register of deeds in the county in which such land is located.
(4) Upon filing of the statement of claim within the time provided, it shall be prima facie evidence in any legal proceedings that such mineral interest was being used on the date the statement of claim was filed.
(e) (1) Any person who will succeed to the ownership of any mineral interest upon the lapse thereof may commence such lapse by filing, with the clerk and master of the county in which the mineral interest is located, a complaint of claim of abandoned mineral interest which may be in the following or a similar form:
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(5) All notices provided for in this section shall state the name of the owner of the mineral interest, if known, as shown of record, a description of the land and the name of the person filing the complaint of claim of abandoned mineral interest.
(6) In any county having a population of not less than thirty-two thousand six hundred (32,600) nor more than thirty-two thousand seven hundred (32,700) according to the 1980 federal census or any subsequent federal census, upon the filing of the statement of claim provided in subsection (d) or the order provided in subdivision (e)(4) in the register of deeds office for the county where such interest is located, the register shall record the same in a book to be kept for that purpose, which shall be known as the Dormant Mineral Interest Record, and shall indicate by marginal notation on the instrument creating the original mineral interest and the instrument creating the interest of the current surface owner, the filing of the statement of claim or order.
(7) In order for the judicially determined lapse to be effective as to the subsequent interest holders, a certified copy of the final order evidencing the same must be recorded in the register of deeds office in the county where the property is located.
(8) The clerk and master shall charge a fee of thirty dollars ($30.00) for the filing of the complaint of claim of abandoned mineral interest and the order provided for in this section and shall collect the fees necessary for the publication required in this section.
(9) No complaint for claim of abandoned mineral interest shall be accepted for filing prior to July 1, 1990.
(f) (1) Upon the filing of the statement of claim as provided in subsection (c), the register shall record the same in a book to be kept for that purpose which shall be known as the Dormant Mineral Interest Record and shall enter in the index where the instrument creating the original mineral interest is indexed a notation referencing the statement of claim. Upon the filing of the order as provided in subdivision (e)(4), the register shall record the order in the Dormant Mineral Interest Record and shall enter the filing of the order in the indexes referencing the instrument creating the original mineral interest and the instrument creating the interest of the current surface owner.
(2) In any county having a population of not less than thirty-two thousand six hundred (32,600) nor more than thirty-two thousand seven hundred (32,700) according to the 1980 federal census or any subsequent federal census, upon the filing of the statement of claim as provided in subsection (c) or the proof of service of notice as provided in subsection (e) in the register of deeds office for the county where such interest is located, the register shall record the same in a book to be kept for that purpose, which shall be known as the Dormant Mineral Interest Record, and shall indicate by marginal notation on the instrument creating the original mineral interest the filing of the statement of claim or affidavit of publication and service of notice.
(g) The provisions of Acts 1987, chapter 282, may not be waived at any time prior to the expiration of the twenty-year period provided in subsection (c).
(h) This section applies in all ways to property owned by the state of Tennessee.
(i) The provisions of this section may not be waived at any time prior to the expiration of the twenty-year period provided in subsection (c).
(j) No action shall be brought by any person to contest the lapse of a mineral interest pursuant to this section after three (3) years from the date such interest lapsed.
(k) (1) Any person who prevails in an action to quiet title to challenge a statement of claim or a complaint for claim of abandoned mineral interests filed pursuant to this section may be awarded reasonable attorney's fees and costs if the court finds that the statement of claim or the complaint was not filed in good faith. A court may find that a statement of claim or the complaint was not filed in good faith if such was filed without reasonable inquiry, with no factual basis, and for purposes of harassment.
(2) If the court finds no record of taxes paid or statement of claim filed for the lapsed mineral interests which references the mineral estate by tax map and parcel number, then a complaint for claim of abandoned mineral interest shall be deemed to have been filed in good faith.
(l) The only parties of interest pursuant to this section shall be an owner of the mineral interest and a person who shall succeed to the ownership of the mineral interest upon its lapse. Any third person claiming title or interest in any matter pursuant to this section shall prove by verified complaint, affidavit or other evidence that the third person's rights are or will be violated and that such third person will suffer injury, loss or damage if not allowed to become a party thereto.
[Acts 1987, ch. 282, §§ 1, 2, 7, 9, 12; 1988, ch. 636, §§ 15, 16; 1988, ch. 702, §§ 1, 2; 1990, ch. 902, §§ 17, 18.]