Oral Transfer Of An Immovable Is Established In Louisiana

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In Louisiana, in order to have a valid oral transfer of immovable property under Civil Code Art. 1839, two requirements must be met:

  • Delivery must be actual—physical possession must be in the transferee who claims title, and
  • Recognition by the transferor under oath.

In Harter v. Harter, mineral interests (which are immovables) were properly assigned because the transferor sufficiently admitted to the transfer and there was performance. 

The Facts – Sibling Rivalry Worthy of Jacob and Esau

Mailee Harter died and left four children: Steve, Mike, David, and Jan. Steve was named independent administrator of the estate. Each of the children was a residuary legatee owning a 1/4th interest. Steve, in his capacity as independent administrator, sued Mike. In settlement, Mike agreed to pay off three promissory notes and purchase the interest of Harter Energy, LCC for $1 million cash, transferring all interests to Harter Oil Company (owned solely by Mike). Mike also forfeited his interest in the estate and released all rights he might have against the estate and the remaining heirs or arising out of Steve’s handling of the estate.

David and Jan felt like Steve was mishandling the estate and after discussing the issues with Mike, David, Jan and Mike agreed that Harter Oil would sell a 25% interest to David and a 25% interest to Jan in the leases Mike had purchased from the estate. The sale price was financed by Harter Oil. In return, David and Jan agreed to sue Steve to remove him as independent administrator and any recovery would go to Mike.

Mike decided to sell two of Harter’s Oil leases. The purchaser discovered that David and Jan were working interest owners, so Mike instructed his employee to remove David and Jan from all of Harter Oil’s records. Mike then sent a note to David and Jan telling them that he was not satisfied with the progress of the suit against Steve and while he would continue to pay them $12,000 for the remainder of year, they would then need to reevaluate their deal. The suit with Steve was eventually settled. Mike sold the remaining leases.

David and Jan sued Mike in order to obtain their share of the sale price. (We aren’t surprised, are we?)

The Requirements Are Met

Mike’s actions constituted an actual delivery of the working interests, and internal records reflected a transfer to David and Jan. David and Jan were added to the ownership decks and portions of the money earned were applied to the loans. David and Jan were given monthly checks and 1099s and were kept informed of monthly production.

The Art. 1839 requirement of “recognition under oath” was satisfied by Mike’s admission of issuing monthly payments which were derived from the lease revenues, instructing an employee to make entries in the company’s internal records evidencing a transfer of 25% to each David and Jan and to add them to the ownership decks. This is despite his denial under oath of his intention to make the transfer. 

This was an appeal of an involuntry dismissal in favor of Mike the grantor, so the case was remanded.

Takeaway

Mommas and daddies, die broke; it’s easier on the kids. If you can’t die broke, raise your children to be less like Jacob.

The dude in the picture?  The undisputed King of Zydeco, Clifton Chenier, who died on December 12, 1987.

Topics:  Assignments, Estate Planning, Heirs, Mineral Rights, Oral Contracts

Published In: General Business Updates, Energy & Utilities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Gray Reed & McGraw, P.C. | Attorney Advertising

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