Bulletin: CA2014001

Dear Associates: 

Stewart Title Guaranty Company wants to remind you that significant claims may occur when outstanding rights to mineral and other substances are not excepted in title insurance policies.

Such losses often occur because the search of title is not long enough to discover the severance of rights in mineral and other substances, or because the title insurance agent relied on a starter, such as a prior title insurance policy.

Company Policy:

A.      For the following California counties and portions of counties (where oil and gas shale formations are located) add the exception shown below to Schedule B of each Preliminary Report, Commitment, Binder, or Policy unless it can be omitted under Paragraph C:

*West of the extension of the east line of Merced County extended southerly to the south line of Kern County at the point on said south line where the line marking the eastern boundary of Ventura County and the western boundary of Los Angeles County connects. See map attached for more detail.

B.      For all other California counties add the exception shown below to Schedule B of each Preliminary Report, Commitment, binder, or Policy unless,

1.   the land described is within a city or town limits or within a residential subdivision and there is no known mineral activity (including but not limited to oil and gas extraction) within one mile of the land or

2.   the exception can be omitted under Paragraph C.

C.      For all California Counties the mineral exception shown below need not be added to Preliminary Reports, Commitments or Policies if either:

1.   the report, commitment, binder or policy contains an exception for a specific grant, reservation or lease of 100% of all minerals or subsurface substances or

2.   you secure Underwriter approval to remove the exception shown below. Such approval will be based upon any additional search and examination the Underwriter may require, an assessment of the potential for development of minerals in the area and consideration of any state law reserving mineral or similar rights apart from patent reservations.

Exception

"Minerals of whatsoever kind, subsurface and surface substances, including but not limited to coal, lignite, oil, gas, geothermal resources, brine, uranium, clay, rock, sand and gravel in, on, under and that may be produced from the Land, together with all rights, privileges, and immunities relating thereto, whether or not appearing in the Public Records or listed in Schedule B. The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed."

A starter may not be relied upon for the search and examination required to remove this exception.

Always include in Schedule B any specific grant, reservation, or lease of minerals or other substances (such as caliche, gravel, rock, coal, lignite) that your search reflects. You should also add the following at the end of the specific exception (although the policy does not insure the title to any interest that is excepted): "The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed."

If you have customarily included a patent and waters exception, you should continue to do so. A common patent exception is: "(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the Public Records.” If you remove any patent exception, you should review the patent and be satisfied that applicable state or federal law enabling the patents does not reserve any minerals or similar rights.

The foregoing policy does not affect the potential availability of endorsements that provide coverage for damage to buildings or improvements on the land resulting from the future exercise of any right to use the surface of the land for the extraction or development of minerals or any other subsurface substances, such as the ALTA 9-06 series and the ALTA 35-06 series, pursuant to applicable Guidelines.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter. 

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