What Is An Enforceable Property Description?

http://www.energyandthelaw.com/files/2013/04/Treasure-of-the-Sierra-Madre.jpgValid Description? We don’t need no valid stinking description!

Actually, in May v. Buck, a Texas Court of Appeals says you do.  The need for a sufficient property description in a oil and gas transaction seems like an easy-enough and fundamental concept to grasp, but its application has escaped many a contracting party.

Question: Is “ … a 100 acre spacing centered around the David Morris Gas Unit #1 in Leon County, Texas” a valid description? Read on for the answer.

The Facts

May and Buck entered into a Letter Agreement in which May would acquire certain acreage. Buck was to assign “all the minerals and a 100 acre spacing centered around the David Morris Gas Unit #1 in Leon County, Texas.” The agreement also stated, “[t]he acreage referred to within this agreement is better described in Exhibit A attached to this agreement and made a part of this agreement.” Unfortunately, after May provided the capital for the leases, Buck did not assign the interests, and the parties ended up in the courthouse. Buck defended by asserting that May’s claim was barred by the statute of frauds because of an insufficient description.

May’s Problem

No document existed identifying the “100 acre spacing centered around the David Morris Gas Unit #1” and there was no information about the shape or boundaries of the 100 acres. Exhibit “A” described 563.465 acres described in four tracts and included specific references to instruments filed in Leon County. The 563.465 could be identified, the David Morris Gas Unit could be identified, but both May and Buck’s experts at trial identified several configurations for the 100 acre tract. To make matters worse, the experts disagreed whether the “David Morris #1” reference was to the unit or the wellbore.

The Result

The court reiterated the well settled rule: “To be sufficient, the writing must furnish within itself, or by reference to some other existing writing, the means or data by which the land to be conveyed may be identified with reasonable certainty.” Because several different configurations were possible, one could not identify the 100 acre tract with reasonable certainty. As a result, May came away without his land and his money.

The Takeaway

A letter agreement to convey an interest in real property is subject to the statute of frauds (The rule is not limited to deeds and leases). As a result, identifying the subject land should not be like digging for gold, where “X” marks the spot. The agreement must identify the lands with reasonable certainty. If the location of the lands is open to multiple interpretations, the agreement will be invalid.

Valuable Trivia

“We don’t need no stinking badges” is one of the most commonly misquoted lines in movie history.

Topics:  Documentation, Lot Descriptions, Statute of Frauds, Writing Requirement

Published In: General Business Updates, Energy & Utilities Updates, Residential Real Estate 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.

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