400 Aston Meadows, Ltd. v. Devon Energy Production Co.

CASE NOTE

Richard F. Brown

 
The following is not a legal opinion.  You should consult your attorney if the case may be of significance to you.
 
Aston Meadows, Ltd. v. Devon Energy Production Co., 359 S.W.3d. 856 (Tex. App.—Fort Worth 2012, pet. denied) held that an oil and gas lease describing land located in two counties but recorded in only one county is constructive notice to successors in interest in both counties.  The case also held that although the leased premises was described in separate tracts, the entire leased premises was a single tract for the purpose of effecting constructive notice under the recording statutes.  A 1977 oil, gas and mineral lease granted to the predecessor of Devon Energy Production Co. (“Devon”) covered several hundred acres out of a larger tract located in both Tarrant and Wise Counties.  In 1977, the lease was recorded in Wise County only.  Under the terms of the lease, Lessor leased “the following described land,” which was then described in two separate tracts, followed by a Mother Hubbard Clause.  Tract I is shown in yellow and was located in both Wise and Tarrant Counties.  Tract II is shown in green.  The western part was located in both Wise and Tarrant Counties.  The eastern part was located solely in Tarrant County.  In 2001, Aston Meadows (“Meadows”) purchased 182.024 acres (the “Property”) in Tarrant County to be used as a residential development.  Most of the Property was located in the eastern part of Tract II.  Meadows had no actual knowledge of the lease, or of oil and gas operations, and Meadows’s title policy did not show the lease.  The deed into Meadows described the land as “being located in Tarrant County, [but] also describe[d] it as ‘a portion of that certain tract of land described in deed to The Jack W. Wilson Family Trust, recorded in Volume 11964, page 683, Deed Records, Tarrant County, Texas.’  The deed to the Jack W. Wilson Family Trust describe[d] the property being conveyed as located in ‘Tarrant County and Wise County.’”  The lease was recorded in Tarrant County in 2002, after Meadows purchased the Property.   Meadows subdivided the property, recorded a plat, and sold lots.  Devon drilled horizontally under the Property, and in 2007 Meadows, et al., sued for conversion, trespass and injunctive relief.  The issues were (1) whether the lease as recorded in Wise County put Meadows on notice and defeated Meadows’s status as a bona fide purchaser and (2) whether the lease consisted of separate and distinct tracts, or one contiguous tract.
 
The court noted that a person may be charged with constructive notice of a deed in another county when facts within the chain of title would put a reasonably prudent person on inquiry.  To be properly recorded, an instrument must “be eligible for recording and must be recorded in the county in which a part of the property is located.”  According to the court, this rule has consistently been interpreted to provide that if a single tract is located in multiple counties, recording in any of the counties is sufficient to provide constructive notice in all of the counties.
 
Meadows asserted that prior case law was distinguishable on the facts for various reasons, but the court concluded “that when an instrument relates to a contiguous tract of land located in more than one county, the recording of that instrument in only one of the counties is sufficient to comply with the requirements of section 11.001(a).”
 
Meadows also argued that the court’s interpretation of § 11.001(a) places an undue burden on purchasers to search property records in every county in which property is located.  The court downplayed the weight of the burden, and noted that the alternative would be to place the burden on a prior recorder to continually check the property records for subsequent subdivisions—a result clearly contrary to the legislative intent of the Property Code.
 
In determining whether the lease described one contiguous tract, the court found that the intent was to lease one contiguous tract described in two parts, rather than to lease two or three tracts in different counties.  The court relied upon the language delineating the “leased premises” as “the following described land” (followed by a description of two tracts), an exception described as “from the above two tracts,” and the Mother Hubbard Clause.
 
This case makes clear that purchasers of real property have a duty to inquire into records of other counties when facts alluding to other counties appear in their chain of title.  In addition, a property description in an oil and gas lease that describes multiple tracts will be treated as one contiguous tract when the language of the lease evidences an intent to treat the multiple tracts as one contiguous lease.