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					           “Comparing Pennsylvania and Texas Law on Ownership and Marital Rights:

            Common Law vs. Community Property – Impact on Oil and Gas Leasing”

                              Co-authored by Lilly Tade Van Maele and Rebecca Seidl

I.      INTRODUCTION

        The Marcellus Shale Formation (commonly referred to as the Marcellus shale) is a layer

of marine sedimentary rock located in the eastern United States.1 Underlying much of the

Appalachian Basin, the Marcellus shale extends from West Virginia to southwestern New York

State.2 Pennsylvania has been producing natural gas from conventional shallow low-production

wells for many years. Decades of production and the resulting infrastructure there from, lend a

distinct transportation advantage to operations in the Marcellus shale. Further, its geographical

location makes it even more attractive due to its proximity to densely-populated eastern states in

the eastern seaboard.

        Underlying approximately two-thirds of Pennsylvania at a depth of 5,000 to 8,000 feet,

the Marcellus shale is projected to hold trillions of cubic feet of natural gas, which according to

several studies, could conservatively supply U.S. consumption for nearly two decades.3 The

Marcellus shale has long been considered prohibitively expensive to access;4 however, its




1
  Pennsylvania Department of Environmental Protection, Marcellus Shale Fact Sheet,
http://www.elibrary.dep.state.pa.us/dsweb/Get/Document-77964/0100-FS-DEP4217.pdf (accessed Jan. 13, 2011).
2
  Geology.com, Marcellus Shale—Appalachian Basin Natural Gas Play, http://geology.com/articles/marcellus-
shale.shtml (accessed January 13, 2011).
3
  Mary Esch, Estimated gas yield from Marcellus shale goes up: Albany, N.Y., Associated Press, Nov. 4, 2008;
U.S. Department of Energy, Modern Shale Gas Development in the United States: A Primer at 173,
http://www.netl.doe.gov/technologies/oil-gas/publications/epreports/shale_gas_primer_2009.pdf (Spring 2009).
4
  Pennsylvania Department of Environmental Protection, Marcellus Shale Fact Sheet,
http://www.elibrary.dep.state.pa.us/dsweb/Get/Document-77964/0100-FS-DEP4217.pdf (accessed Jan. 13, 2011).
economic viability and long-term return on investment is strengthened by the advancement of

certain drilling technologies.5

          Previously, conventional wells drilled in the Marcellus shale drew gas, but not in

significantly-marketable quantities. Through traditional vertical drilling, and advancements in

horizontal drilling, combined with a process known as “hydraulic fracturing”, natural gas is

extracted from the Marcellus shale. The Marcellus shale has emerged economically viable, and

has thus received much deserved attention as a profitable natural gas play.

          The hydraulic fracturing techniques used in the Marcellus shale were borrowed and

revised from those originally used in the Barnett shale in Texas.6 Currently, Texas is the only

state that has more active wells than Pennsylvania. 7 Notwithstanding the number of producing

wells in Texas, estimates predict that the Marcellus shale is 10 times larger than the Barnett

shale.8

          As a result of the emerging profitability of the Marcellus shale, many Texas exploration

and production companies have transitioned their work to Pennsylvania. Their experience in

Texas shale formations, such as the Barnett, allows them to contribute invaluable skills in

procuring natural gas liquids from unconventional plays. For example, Texas-based Range

Resources Corp. of Fort Worth has become a significant player in Pennsylvania, and has opened




5
  Geology.com, supra n. 1.
6
  John A. Harper, The Marcellus Shale - An Old “New” Gas Reservoir in Pennsylvania, 38 Pennsylvania Geology
9 (Spring 2008).
7
  U.S. Energy Information Administration, Number of Producing Gas Wells,
http://www.eia.doe.gov/dnav/ng/ng_prod_wells_s1_a.htm (Dec. 28, 2010).
8
  Mary Esch, Estimated gas yield from Marcellus shale goes up: Albany, N.Y., Associated Press, Nov. 4, 2008;
U.S. Department of Energy, Modern Shale Gas Development in the United States: A Primer at 173,
http://www.netl.doe.gov/technologies/oil-gas/publications/epreports/shale_gas_primer_2009.pdf (Spring 2009).


                                                                                                               2
an office in Canonsburg. Range Resources Chairman and CEO John Pinkerton believes that,

“Because of the size and breadth of this play, you have to be here every day.”9

        As land managers, title examiners, and exploration and production companies transition

into Pennsylvania, and as Pennsylvania-based land managers and title examiners search for

guidance in an ever-evolving legal landscape, there are several critical differences between

Pennsylvania law and Texas law that are important to understand. The focus of this article is to

highlight the major distinctions between the marital property systems employed by

Pennsylvania and Texas. Failure to understand these legal variances could result in numerous

title problems relating to spousal ownership.             The gravity of these problems will depend

foremost on the nature of the subject property, such as: homestead rights; local law; community

property classification; or various other considerations. Additionally, ownership of the property

determines the proper lessor of an oil, gas and mineral lease, and the manner in which royalty

payments are to be distributed.

        The similarities and differences between the two states are outlined in the following

three sub-topics: marital property systems; homestead rights; and intestate succession. Each

sub-topic begins with a discussion and analysis of Texas law, followed by a discussion and

analysis of Pennsylvania law, and concludes with practical considerations.

II.     MARITAL PROPERTY SYSTEMS

        In the United States, there are two categories of marital property systems: community

property and common law.10 The community property system is based upon a partnership


9
 Casey Junkins Jobs, Revenues, and Risks-Sides Picked in Gas Drilling Battle. The Intelligencer,
http://www.theintelligencer.net/page/content.detail/id/548639/Jobs--Revenue-and-Risks--Sides-P---.html. (Nov. 7,
2010).
10
   Erica Driskell, Comment, Dissipation of Marital Assets and Preliminary Injunctions, 20 J. Am. Acad.
Matrimonial Law 135, 157 (2006).


                                                                                                               3
theory in that both spouses contribute equally to the marriage.11                   Each spouse owns an

undivided one-half (1/2) interest in the income earned by either spouse during marriage.12 In

contrast, under common law, the separate earnings of each spouse are owned individually by

that spouse, and not shared with the other spouse. 13 Common ownership does not result as a

consequence of the marriage in common law jurisdictions.14

        A.       Texas

        Community property in Texas dates back to its beginnings as a Spanish province, and

existed long before Texas gained its independence from Mexico.15 Only eight other states

employ a community property system: Arizona, California, Idaho, Louisiana, Nevada, New

Mexico, Washington, and Wisconsin.16

        The Texas Constitution is the primary authority on classifying property.17 In Arnold v.

Leonard, the Supreme Court of Texas explained that the legislature is prohibited from altering

the classifications of separate and community property as set forth in the Texas Constitution.18

Notably, though, the Texas Constitution does not expressly define community property.19

Rather, the Texas Constitution identifies certain property as separate property, and implies that

all other property not characterized as such is community property.20 Article 16, Section 15 of

the Texas Constitution defines separate property as “all property, both real or personal, of a

spouse owned or claimed before marriage, and that acquired afterward by gift, devise or

11
   Id. at 156.
12
   Gen. Ins. Co. of Am. v. Casper, 426 S.W.2d 606, 609 (Tex. Civ. App.—Tyler 1968).
13
   Gerry W. Beyer, Wills, Trusts, and Estates §1.3.2, 7 (3d ed. Aspen 2009).
14
   Aloysius A. Leopold, Loss of Earning Capacity Benefits in the Community Property Jurisdiction -- How do you
Figure?, 30 St. Mary’s L.J. 367, 420 (1999).
13. Id. citing William Q. de Funiak & Michael J. Vaughn, Principles of Community Property § 1, 1 (2d ed. 1971).
15
   Fred A. Lang & Aloysius A. Leopold, Land Titles and Title Examination §1.1, 2 (3d ed. West 2005).
16
   Id. citing William Q. de Funiak & Michael J. Vaughn, Principles of Community Property § 1, 1 (2d ed. 1971).
17
   See Tex. Const. art. XVI, 15.
18
   Arnold v. Leonard, 114 Tex. 535, 539-540 (Tex. 1925).
19
   See Tex. Const. art. XVI, § 15.
20
   See Tex. Const. art. XVI, 15.


                                                                                                              4
descent.”21 This “implied exclusion” approach creates a presumption in favor of community

property.22

        The Texas Family Code reaffirms the constitutional presumption of community

property.23 Community property is defined as all property acquired during marriage, other than

separate property.24 The Texas Family Code also expands the scope of separate property by

including the recovery for one spouse’s personal injuries.25 According to Section 3.001 of the

Texas Family Code, separate property now consists of: (1) the property owned or claimed by

the spouse before marriage; (2) the property acquired by the spouse during marriage by gift,

devise, or descent; and (3) the recovery for personal injuries sustained by the spouse during

marriage, except any recovery for loss of earning capacity during marriage.26 In Graham v.

Franco, the Texas Supreme Court upheld this statutory addition to the Texas Family Code, and

concluded that said addition did not alter the meaning of separate property as set forth in the

Texas Constitution.27

        In 1859, the Texas Supreme Court recognized that “the principle which lies at the

foundation of the whole system of community property is that whatever is acquired by the joint

efforts of the husband and wife, shall be their common property.”28 While Texas courts have

long embraced the principles of community property, they have minimized the presumption in

21
   See Tex. Const. art. XVI, § 15.
22
   Aloysius A. Leopold, Loss of Earning Capacity Benefits in the Community Property Jurisdiction -- How do you
Figure?, 30 St. Mary’s L.J. 367, 420 (1999).
13. Id. citing William Q. de Funiak & Michael J. Vaughn, Principles of Community Property § 1, 1 (2d ed. 1971).
23
   Tex. Fam. Code Ann. § 3.003 (2009). Section 3.003 states: (a) Property possessed by either spouse during or on
dissolution of marriage is presumed to be community property. (b) The degree of proof necessary to establish that
property is separate property is clear and convincing.
24
   Tex. Fam. Code Ann. §. 3.003 (a).
25
   See Tex. Fam. Code Ann. §3.001(3) (2009).
26
   Tex. Fam. Code Ann. §3.001 (2009). See Graham v. Franco, 488 S.W. 2d 390, 391 (Tex. 1972).
27
   Graham v. Franco , 488 S.W.2d 390, 395 (Tex. 1972) (explaining that by “adopting the provisions of Section 15
of Article 16 of our constitution, the people did not intend to change the common law or the Spanish law under
which Texas operated”).
28
   Stephens v. Stephens, 292 S.W. 290, 293 (Tex. Civ. App. 1927) citing DeBlane v. Lynch & Co., 23 Tex. 25, 28
(1859).


                                                                                                                5
favor of community property.29 This presumption can be rebutted by clear and convincing

evidence.30    For example, property that is acquired during the marriage may defeat the

community property presumption, if, by clear and convincing evidence, it can be demonstrated

that the property was purchased entirely by separate funds. Similarly, the status of property

acquired by either spouse prior to marriage cannot be subsequently altered, even though a

portion of the purchase price is paid for with community funds.31

          Evolving case law highlights another method of classification based on the time of

acquisition.32 According to the “inception of title” doctrine, the characterization of property is

fixed as separate or community property at the moment it is acquired.33 Title vests at the first

instance that a party has a right of claim to the property.34 However, the property’s original

character can be subsequently altered by an agreement between the spouses.35 Furthermore, a

conveyance of community property between husband and wife vests title in the recipient

spouse’s separate estate.36

        B.       Pennsylvania

        Pennsylvania belongs to the majority of states who have adopted the common law

system, and does not recognize the concept of community property. Under the English-based

common law, the husband and wife were viewed as an indivisible unit.37 Tenancy by the




29
   Aloysius A. Leopold, “Loss of Earning Capacity” Benefits in the Community Property Jurisdiction How do you
Figure?, 30 St. Mary’s L.J. 367, 379 (1999).
30
   See Tex. Fam. Code Ann. § 3.003 (b).
31
   Odstrcil v. Odstrcil, 384 S.W.2d 403, 406 (Tex.Civ.App.—Houston 1964, writ dismissed).
32
   See Graham v. Franco, 488 S.W.2d 390, 395 (Tex. 1972).
33
   Smith v. Buss, 135 Tex. 566, 144 S.W.2d 529 (1940).
34
   Hallum v. Hallum, 2010 Tex. App. LEXIS 9541 (Tex. App. —Houston 1st Dist. Dec. 2, 2010).
35
   Tex.Const. art. XVI, § 15.
36
   Lewis v. Simon, 72 Tex. 470, 474 10 S.W. 554;555 (1889); Story v. Marshall, 24 Tex. 305, 76 Am. Dec. 106
(1859); Tison v. Gass, 102 S.W. 751; 754 (1907); Baker v. Baker, 55 Tex. 577 (1881).
37
   A Summary of Selected Oil and Gas Law: Comparison of Laws on Leasing, Exploration and Production
(Prepared as part of a 2010 AAPL 56th Annual Meeting).


                                                                                                            6
entirety evolved from this common law concept of unity.38

         A tenancy by the entirety is a form of co-ownership in real and personal property

available only to a married couple.39 The estate requires the joinder of five unities: time, title,

interest, possession, and marriage.40 Pennsylvania Supreme Court Justice Musmanno explains a

tenancy by the entirety as follows:

         A husband and wife own an estate in entireties as if it were a living tree, whose
         fruits they share together. To split the tree in two would be to kill it and then it
         would not be what it was before when either could enjoy its shelter, shade, and
         fruit as much as the other.41

         The early concept of unity provided that husband and wife could not acquire property in

any way other than as one entirety.42 Any intent contrary to taking by the entirety was viewed

as immaterial, and it did not matter that such intent was expressed within a deed.43 In 1913, the

Supreme Court of Pennsylvania softened its approach, however, by recognizing a grantor’s

intent to create separate interests, so long as said intent was expressly stated.44 Such an express

provision would allow a husband and wife to each take individual, undivided interests in the

property.45 Still, a conveyance to husband and wife, absent a clear intent to convey individual

interests to each, creates a tenancy by the entirety.46 It is the grantees’ marital status, therefore,

that determines their right to take title to the property as tenants by the entirety.47 Hence, a

conveyance to an unmarried couple will not create a tenancy by the entirety.48



38
   Beihl v. Martin, 236 Pa. 519, 522 (Pa. 1912).
39
   BLACK’S LAW DICTIONARY 1506 (8th ed. 2004).
40
   Id.
41
   Sterrett v. Sterrett, 166 A.2d 1, 2 (Pa. 1960).
42
   Beihl v. Martin, 236 Pa. 519, 522, 523 (Pa. 1912).
43
   Id.
44
   Blease v. Anderson, 241 Pa. 198 (1913).
45
   Blease v. Anderson, 241 Pa. 198, 204 (1913).
46
   Holmes Estate, 414 Pa. 403 (1964).
47
   Id.
48
   Masgai v. Masgai, 460 Pa. 453 (1975).


                                                                                                    7
         The common law concepts of tenancy by the entirety apply to “marital property” as

defined in Title 23, Chapter 35 of the Pennsylvania Consolidated Statutes.49 According to the

general rule, marital property consists of all property acquired by either party during the

marriage, as well as the increase in value of any property that was acquired prior to marriage.50

Title 23, Chapter 35 also lists several exceptions to marital property, including property

acquired prior to marriage or by gift, devise or descent.51

         There is a presumption that property acquired during the marriage is classified as marital

property, regardless of whether title is held individually or by both parties.52 This presumption

can be overcome by evidence that the property was acquired prior to marriage; by gift, bequest,

devise or descent; or as otherwise enumerated in Title 23, Chapter 35 of the Pennsylvania

Consolidated Statutes.53 Regardless of whether the property was acquired during the marriage,

each spouse can convey their separate property without the joinder of the other spouse.54

         Conversely, one spouse cannot unilaterally convey the property held by the entirety in

an attempt to destroy the entireties estate.55 During the marriage, a tenancy by the entirety may

be severed by a joint conveyance of the estate executed by both parties, or by mutual agreement

between husband and wife.56 A tenancy by the entirety will also be severed upon divorce.57

After a divorce, tenants by the entireties own the property as tenants in common, holding title to

the property in separate distinct titles, in equal one-half shares.58 Either of them may bring an



49
   23 Pa.C.S. § 3501.
50
   Id.
51
   Id.
52
   Id.
53
   23 Pa.C.S §3501 (a) .
54
   In re Fitzgibbon’s Estate, 272 Pa. 345 (1922).
55
   Gasner v. Pierce, 286, Pa. 529 (1926).
56
   Biehl v. Martin, 236 Pa. 519, 84 A. 953 (1912).
57
   In re Estate of Maljovec, 412 Pa. Super. 80, 85 (Pa. Super. Ct. 1991).
58
   23 Pa.C.S. § 3507(a).


                                                                                                 8
action against the other to have the property sold and the proceeds divided between them.59 As

tenants in common, either party may convey to the other his or her undivided interest in the

property without the joinder of the other tenant.60 The remainder of the marital property is

subject to an equitable distribution to both husband and wife; 61 however, if the property is not

marital property then the court may direct its partition.62

        C.       Practical Considerations

        Under Texas Law, the characterization of marital property has a significant impact on

identifying the proper executing parties to an oil, gas and mineral lease. Hence, landmen and

title examiners should familiarize themselves with the definition of separate property as set forth

in Article 16, Section 15 of the Texas Constitution. Recall that property that does not fall within

this definition of separate property is presumed to be community property.

        The management of separate and community property is prescribed in the Texas Family

Code.63 The separate property of one spouse is subject to that spouse’s “sole management,
                               64
control and disposition.”           Therefore, an oil, gas and mineral lease covering the separate

property of one spouse need only be executed by the owning spouse.

        Unlike separate property, community property may be subject to either the sole

management of one spouse or the joint management of both spouses. Section 3.102 of the

Texas Family Code provides that, “During marriage, each spouse has the sole management,

control, and disposition of the community property that the spouse would have owned if single,”




59
   23. Pa.C.S. §3507 (a).
60
   23 Pa.C.S. § 3508.
61
   See Keen v. Keen, 315 Pa. Super 161 (Pa. Super. Ct. 1983).
62
   Estep vs. Estep, 326 Pa.Super. 404, 413, 474 A.2d 302, 313 (1984), rev’d, 508 Pa. 623, 500 A.2d 418 (1985).
63
   Tex. Fam. Code §§ 3.101-.102.
64
   Tex. Fam. Code § 3.101.


                                                                                                                 9
and lists examples of such property.65 Property is presumed to be the sole management of a

spouse if it is held in that spouse’s name.66

        That being said, property held in the name of only one spouse is not necessarily

determinative of its character.67 All other community property that does not fall within Section

3.102 of the Texas Family Code is subject to the joint management of both spouses, and any

conveyance requires the joinder of both spouses.68 Often, a landman or title examiner is unable

to determine whether property is sole-managed or community-managed, and as a matter of

prudence, should require the joinder of both spouses to an oil, gas and mineral lease.69

        In Pennsylvania, the status of property acquired prior to marriage is not altered by the

subsequent marriage of the spouses.70 Marriage at the time of conveyance is necessary for the

creation of a tenancy by the entireties.71 This rule may be overcome by a later deed executed by

and between the spouses during their marriage, which evidences their desire to hold title as

tenants by the entireties.72

        Unlike the concept of sole-managed property in Texas, there is no general presumption

that one spouse alone has the authority to convey property held by the entirety.73 Neither

spouse, acting independently and without consideration of the other, may adversely affect the

estate.74 In some cases, a conveyance by one spouse may benefit the entirety, however, this




65
   Tex. Fam. Code § 3.102 (a).
66
   Tex. Fam. Code § 3.104(a).
67
   49 Baylor L. Rev. 271, 278 (1997).
68
   Tex. Fam. Code § 3.102(c).
69
   Paul G. Yale, To Waive, or Not to Waive: Analyzing Oil and Gas Title Opinion Requirements, 27th Annual
Advanced Oil, Gas and Energy Resources Law Course (October 8-9, 2009).
70
   Stuckey v. Keefe’s Extrs., 26 Pa. 397, 403 (1856).
71
   Frederick v. Southwick, 165 Pa. Superior Ct. 78, 83, 67 A. 2d 802, 805 (1949).
72
   Stavish v. Stavish, 14 Pa. D. & C.3d 367, 370 (1980).
73
   Polka v. May, 383 Pa. 80, 84 (1955).
74
   Schweitzer v. Evans, 360 Pa. 552, 555-56(1949).


                                                                                                            10
action may be repudiated by a non-consenting spouse.75

        During the fall of 1947, Pennsylvania briefly adopted the concept of community

property. Pennsylvania enacted the Community Property Law of 1947 (Act No. 550), effective

September 1, 1947, which provided that “all property acquired by either the husband or wife

during marriage and after the effective date of the act, except that which is separate property of

either, is to be deemed community or common property of the husband and wife, and each shall

be vested with an undivided one-half interest therein.”76 Shortly thereafter, on November 26,

1947, the Supreme Court of Pennsylvania in Wilcox v. Penn Mutual Life Insurance Co.,

unanimously held the Community Property Law wholly invalid.77 Although the Community

Property Law was repealed, title issues between September 1, 1947, and November 26, 1947,

must be considered within the context of community property.

        Which marital property system is employed when a resident of Pennsylvania, a common

law state, purchases property in Texas, a community property state? This issue was addressed

in Huston v. Colonial Trust Co.78 According to principles of the common law, a spouse’s

earnings are his or her separate property.79 Real property purchased in a community property

state takes on the same character as the separate property earnings used to purchase said

property.80 Following this reasoning, the court in Orr v. Pope held it to be “the law of the state”

that where husband residing in a common law state purchases real property in Texas with his

separate earnings, said real property is considered his separate estate.81




75
   Id. at 556.
76
   Wilcox v. Penn Mutual Life Insurance Co., 357 Pa. 581, 584 (1947).
77
   Id. at 602.
78
   Huston v. Colonial Trust Co., 266 S.W.2d 231 (Tex. App.—El Paso, 1954)
79
   Id. at 233. (citing Oliver v. Robertson, 41 Tex. 422, 425 (1874)).
80
   Id.
81
   Orr v. Pope, 400 S.W.2d 614 (Tex. Civ. App.—Amarillo, 1966).


                                                                                                11
III.    HOMESTEAD

        A.       Texas

        Homestead, like community property, is provided for in the Texas Constitution as a

fundamental tenet of Texas law.82 Primarily created as a protection against creditors, the

homestead provision also protects the rights of spouses.83                       Regardless of a tract’s

characterization as community or separate property, homestead property cannot be conveyed

without both spouses’ explicit consent.84 Homestead laws are gender-neutral, and extend to

both single and married individuals.85 Physical occupancy of the tract, or overt actions of

preparation with the intention to reside on the tract in the future, are necessary to establish a

tract’s homestead character.86

        A rural homestead is defined by the Texas Constitution as a tract of land not more than

200 acres, which is not located in a town or city, and is limited to 100 acres for a single

person.87 An urban homestead can be used as a home, or home and business, and is limited to

10 acres.88 Article 16, Section 50 of the Texas Constitution requires the consent of each owner,

and his or her spouse, prior to the sale or encumbrance of homestead property.89 Whether the

homestead property is community property or separate property of one spouse, neither spouse

may convey the property without the other’s joinder, subject to certain exceptions.90 These




82
   Tex. Const. Ann. Art XVI, §51.
83
   James W. Paulsen, Forum, Introduction: The Texas Home Equity Controversy in Context, 26 St. Mary's L.J. 307,
310-11 (1995).
84
   Tex. Const. of 1845, art. VI, § 22.
85
   Mary Lou Cassidy, Yours, Mine or Ours – Who Bought the Farm?, 18th Annual Advanced Oil, Gas and Mineral
Law Course, Ch. 14, 4 (2000).
86
   Gilmore v. Dennison, 131 Tex. 398, 115 S.W.2d 902 (1938).
87
   Tex. Const. Ann. Art. XVI § 51.
88
   Tex. Const. Ann. Art. XVI § 51.
89
   Tex. Const. Ann. Art. XVI, §50.
90
   Tex. Fam. Code Ann. §5.001.


                                                                                                            12
exceptions are listed in Sections 5.003 and 5.101-.102 of the Texas Family Code.91

          A tract’s homestead character extends to its unsevered mineral estate.92 Since oil and gas

leases convey an interest in real property, they fall within the general rule that both spouses

must join in the conveyance of homestead property.93 Conversely, if the surface and mineral

estates are severed, the surface estate’s homestead designation does not extend to the severed

mineral estate.94 Therefore, an oil, gas and mineral lease covering a severed mineral estate does

not require the joinder of both spouses if said mineral estate is the separate property of one

spouse.

          Regarding homestead property, the failure to secure the signatures of both spouses does

not void the oil and gas lease, but rather, renders it inoperative.95 Until an oil and gas lease is

obtained and executed by both spouses, the homestead property remains wholly unleased.96 The

Texas Title Standards presumes that a tract of land that includes surface ownership is

homestead, and prior to relying on a conveyance by one spouse alone, the examiner should

require a definite showing that the subject land is not homestead property.97

          B.     Pennsylvania

          Pennsylvania does not have a homestead property concept similar to those of Texas and

other true homestead states. The word “homestead” is used in Pennsylvania to describe a partial

ad valorem tax benefit available for certain residential properties upon particular terms and




91
   See Tex. Fam. Code Ann. §§5.003 and 5.101-.102.
92
   Gulf Production Co. v. Continental Oil Co., 132 S.W.2d 553 (Tex. 1939).
93
   Id.
94
   See Comment to Tex. Title Std. §14.90.
95
   See Comment to Tex. Title Std. § 14.90.
96
   See Griffin v. Bell, 202 S.W. 1034 (Civ. App. 1918, err. Ref).
97
   See Caution to Tex. Title Std. § 14.90.


                                                                                                 13
conditions.98 Although Pennsylvania does not offer the protection of homestead, spouses’ rights

are safeguarded by the elective share, which is discussed in detail below.

        C.      Practical Considerations

        In Texas, a lease taken from a married lessor who owns both the surface and mineral

estates should be investigated as to a possible homestead status.99 A review of the public

records is an unsound method of establishing a tract’s homestead character.100 This is because

the public records hardly ever contain evidence conclusive of a tract’s homestead character.101

For instance, a lessee is on notice of a tract’s possible homestead status if it is occupied by the

owner as his home.102 An affidavit from the tract’s owner that designates other property as his

or her homestead, and stating that the subject tract is not his or her homestead, is conclusive and

should be required.103

        As a matter of prudence, an examiner should obtain a non-signing spouse’s ratification

of an oil and gas lease potentially covering a homestead tract.104

IV.     INTESTATE SUCCESSSION

        A.      Texas

        In the instance that the record title owner dies without leaving a will, he is said to have

died intestate, and property passes by intestate succession as governed by the Texas intestacy

statutes.105 Because community and separate property are treated differently under the Texas’


98
   A Summary of Selected Provisions of Pennsylvania Oil and Gas Law for the Landman, (Prepared as part of a
2008 Comparison of Selected Provisions of the Oil and Gas Laws of Selected States), Russell L. Schetroma
Culbertson, Weiss, Schetroma and Schug, P.C.
99
   Mary Lou Cassidy, Yours, Mine or Ours – Who Bought the Farm?, 18th Annual Advanced Oil, Gas and Mineral
Law Course, 2 (2000).
100
    See Caution to Tex. Title Std. § 14.90.
101
    See Caution to Tex. Title Std. § 14.90.
102
    Texas Land & Loan Co. v. Blalock, 76 Tex. 85, 89 (Tex. 1890).
103
    Tex. Const. Ann. Art XVI, §50.
104
    Id.
105
    See Tex. Prob. Code § 38 and § 45.


                                                                                                         14
intestacy statutes, it follows that a threshold determination must be made as to whether the

decedent’s subject property is characterized as community or separate.

                    1.       Prior to September 1, 1993

                    A title examiner in Texas must take particular notice of the decedent’s date of

           death, as several changes to the intestacy laws went into effect on September 1, 1993.

           Prior to September 1, 1993, if a decedent who owned separate real property was married

           with children at the time of death, then two-thirds (2/3) of the decedent’s separate

           property was inherited equally among his children. 106 The remaining one-third (1/3) of

           the decedent’s separate property vested in the surviving spouse as a life estate, with the

           remainder to the children and their descendants.107 For community property, however, a

           decedent’s undivided one-half (1/2) community property interest was inherited equally

           among the decedent’s children.

                    To illustrate the nature of intestate succession as it applies to community

           property prior to September 1, 1993, consider the following hypothetical:

                    Harry and Wanda live in Texas. After getting married, they purchase a ranch

           outside of Austin. Eventually, Harry and Wanda decide to expand their family and have

           three children, being:     Albert, Barry, and Cindy. Based on the Inception of Title

           Doctrine, the ranch is classified as Harry and Wanda’s community property. Harry and

           Wanda each owned an undivided one-half (1/2) interest in the ranch. If Harry died

           without a will prior to September 1, 1993, his interest in the ranch, being an undivided

           one-half (1/2) community property interest, would pass in equal shares to his three




106
      Tex. Prob. Code § 38 (b)(1)
107
      Tex. Prob. Code § 38 (b)(1)


                                                                                                  15
         children, Albert, Barry, and Cindy. By operation of law, each child would own an

         undivided one-third (1/3) of Harry’s one-half (1/2) interest in the ranch.

                  2.       Effective September 1, 1993

                  The legislative changes to the laws on intestate succession did not affect a

         decedent’s separate property estate. Accordingly, as noted above, if a decedent who

         owned separate real property was married with children at the time of death, then two-

         thirds (2/3) of the decedent’s separate property was inherited equally among his

         children. 108 The remaining one-third (1/3) of the decedent’s separate property vested in

         the surviving spouse as a life estate, with the remainder to the children and their

         descendants.109

                  For community property, however, if a decedent is married with children at the

         time of death, the decedent’s community property interest would vest entirely in the

         surviving spouse, so long as all surviving children are issue of the decedent and the

         decedent’s surviving spouse.      In the event there are children from outside of the

         marriage on the decedent’s date of death, the decedent’s community property interest

         vests in his children.110

                  Consider again the illustration from above. If Harry dies intestate on or after

         September 1, 1993, all of his community property interest in the ranch vests in his

         surviving wife, Wanda. Albert, Barry, and Cindy would not inherit any interest in the

         ranch.




108
    Tex. Prob. Code § 38 (b)(1)
109
    Tex. Prob. Code § 38 (b)(1)
110
    Tex. Prob. Code § 45 (b).


                                                                                               16
         B.       Pennsylvania

                  1.       Property Held by the Entireties Estate

                  As noted, under Pennsylvania law, husband and wife are considered one person,

         and a tenancy by the entirety cannot exist without this marital relationship.111 Upon the

         death of one spouse, the estate as a whole is not altered, but continues to be held by the

         surviving spouse.112 However, the surviving spouse ceases to hold title to the property

         as a tenant in the entirety.113 In other words, the surviving spouse becomes the sole

         owner of the complete estate.114

                  The Supreme Court of Pennsylvania declared that this right of survivorship “has

         been the settled law for centuries”, and “is founded upon the nature of the marriage.”115

         Survivorship in the entire estate is a key feature of tenancy by the entirety.

         Consequently, one spouse may not disrupt the other spouse’s right of survivorship in the

         entireties estate.116

                  As expressed in Diver v. Diver, upon the death of a spouse, the property held by

         the entireties estate does not descend to the decedent’s heirs.117 However, if a tenancy

         by the entirety was terminated prior to the death of either spouse, then upon their deaths,

         each spouse’s interest passed to their respective estates.118 Upon the simultaneous death

         of a husband and wife, one-half (1/2) of the entireties estate passes to the wife’s heirs,

         and the other one-half (1/2) of the entireties estate passes to the husband’s heirs.119


111
    Clingerman v. Sadowski, 513 Pa. 179, 183 (1986).
112
    Diver v. Diver, 56 Pa. 106, 109 (1867).
113
    Id.
114
    In re Holmes Estate, 414 Pa. 403, 407 (1964).
115
    Id. (citing Rogers v. Grider, 31 Ky. 242, 244 (1833)).
116
    Shapiro v. Shapiro, 424 Pa. 120, 136 (1966).
117
    Diver v. Diver, 56 Pa. 106, 109 (Pa. 1867).
118
    Clingerman v. Sadowski, 513 Pa. 179, 190 (1986).
119
    20 Pa.C.S. § 8503.


                                                                                                   17
                 This right of survivorship distinguishes Texas and Pennsylvania intestacy laws.

        Recall that under Texas law, both community property and separate property are subject

        to intestate succession. But, since a tenancy by the entirety vests the entire estate in the

        surviving spouse, the entireties estate is not subject to the laws of intestate succession.

                 2.       All Other Property Not Part of the Entireties Estate

                 Intestate succession is governed by Chapter 21 of Title 20 of the Pennsylvania

        Consolidated Statutes. All property that does not pass by will is subject to the laws of

        intestacy.120 Title to the decedent’s property vests in his or her surviving heirs at the

        moment of his or her death.121

                 Per Chapter 21, if the intestate decedent is not survived by children or parents,

        then the entire estate of the intestate decedent passes to the surviving spouse.122 Where

        the decedent is survived, however, by a spouse and the decedent’s children or the

        decedent’s parents, the decedent’s estate is divided amongst the surviving spouse and the

        decedent’s children or parents.

                 In the case that the decedent is survived by his or her spouse and their issue, the

        first $30,000 plus one-half (1/2) of the decedent’s remaining estate passes to the

        surviving spouse.123 Where the decedent is survived by issue who are not also issue of

        the surviving spouse, the surviving spouse inherits only one-half (1/2) of the decedent’s

        remaining estate.124 Finally, if a decedent is survived by no issue, but is survived by a

        spouse and parent(s) of the decedent, the surviving spouse inherits the first $30,000, plus



120
    In re Luongo, 2003 Pa. Super. 171, 823 A.2d 942, 2003 Pa. Super. LEXIS 923 (Pa. Super. Ct. 2003).
121
    Fullerton v. Fullerton, 89 D.&C. 607, 608 (1953).
122
    20 Pa. Cons. Stat. § 2102(1); In re Estate of Kirk 369 Pa. Super. 515, 535 A.2d 669 1988 Pa. Super. LEXIS 30
(1988).
123
    20 Pa.C.S. § 2102(3).
124
    20 Pa.C.S. § 2102(4).


                                                                                                               18
         one-half (1/2) of the decedent’s remaining estate.125

                  Should any part of the intestate decedent’s estate not pass to the surviving

         spouse, then it shall pass to the following individuals in the following order:126

                        (1)     Issue of the decedent;

                        (2)     Decedent’s parents if no issue survives the decedent;

                        (3)     Decedent’s siblings if no issue or parents survive the decedent;

                        (4)     Decedent’s grandparents if no issue, parents or siblings survive the

                                decedent;

                        (5)     Decedent’s aunts, uncles and their children and grandchildren if no

                                issue, parents, siblings or grandparents survive the decedent; and

                        (6)     If none of the previous individuals survive, then the decedent’s estate

                                passes to the Commonwealth of Pennsylvania.

                  Pennsylvania’s probate laws also afford the surviving spouse protection in the

         form of an elective share.127 An elective share provides the surviving spouse an interest

         in the decedent’s assets in which the decedent “retained important rights of ownership at

         death.”128 For example, the surviving spouse could elect to take against property held

         jointly between the decedent and a third party.129 This spousal election does not include

         property that has been wholly or jointly conveyed away, and in which no interest is

         retained.130




125
    20 Pa.C.S. § 2102(2).
126
    20 Pa.C.S. § 2103.
127
    20 Pa.C.S. § 2201-11.
128
    Estate of Kotz, 486 Pa. 444, 454 (1979).
129
    20 Pa.C.S. § 2203.
130
    In re Estate of Behan, 399 Pa. 314, 320 (Pa. 1960).


                                                                                                     19
                Chapter 21 of Title 20 of the Pennsylvania Consolidated Statutes lists several

        examples in which the surviving spouse has an elective share of an undivided one-third

        (1/3) interest in the decedent’s property and/or estate.131 Included in this list is the right

        to an elective share in property passing by will or intestacy.132 The surviving spouse has

        six months after the date of the decedent’s death or probate, whichever is later, to file a

        written notice of his or her intent to take, or not to take, the elective share.133

                Upon the death of a spouse, legal title to that spouse’s property passes to the

        heirs of the decedent by operation of law, and does not require a conveyance by deed or

        court action.134 Nonetheless, the decedent’s property may be subject to a court order and

        authorized actions by a properly appointed personal representative of the intestate

        estate.135 Within two years after the decedent’s death, the court may appoint a personal

        representative, and the heirs of the decedent remain subject to the actions of the personal

        representative.136 When this course of action is pursued, letters of administration are

        issued to the personal representative by the Register of Wills.137

        C.      Practical Considerations

        In Texas, an important, practical consideration when examining instances of intestate

succession and its impact on oil, gas, and mineral leasing is who must execute an oil, gas, and

mineral lease. If the record title owner dies intestate, or if the owner dies testate but the will was

not probated, then the examiner must, in the absence of administration, identify the heirs of the


131
    20 Pa.C.S. § 2203(a).
132
    20 Pa.C.S. § 2203(a)(1).
133
    20 Pa.C.S. § 2210.
134
    Fullerton v. Fullerton, 89 D.&C. 607, 608 (1953).
135
    Brown v. Bailey, 1952 Pa. Dist. & Cnty. Dec. LEXIS 59; 84 Pa. D. & C. 269, 274 (1952).
136
    A Summary of Selected Provisions of Pennsylvania Oil and Gas Law for the Landman (Prepared as part of a
2008 Comparison of Selected Provisions of the Oil and Gas Laws for Selected States), Russel L. Schetroma
Culbertson, Weiss, Schetroma and Schug, P.C.
137
    20 Pa.C.S. § 3155.


                                                                                                        20
decedent, along with the devisees in any unprobated will, and require that all of them join in any

conveyance of the property of the decedent. Such requirement also extends to oil, gas and

mineral leases.

         In order to ascertain the identity of the heirs of the decedent, an examiner may rely upon

an Affidavit of Heirship with respect to the family history and the identities of the heirs at law at

the time of death.138 Affidavits of Heirship are recorded in the real property records of the

county in which the decedent owned real property.139 Preferably, an Affidavit of Heirship is

averred to by non-interested parties; however, it is not required. An Affidavit of Heirship must

be sworn to by the affiant, and contain a proper jurat, a clause identifying when, where, and

before whom the affidavit was sworn to.          It should also contain the following necessary

information: the names and residences of the decedent’s heirs; the relationship of each heir to

the decedent; the decedent’s marital history, including the names and addresses of all spouses

and children, whether born or adopted; the date of death and heirs of any predeceased spouse or

child; and a general description of the real and personal property belonging to the estate.140 A

subsequent conveyance or an oil, gas, and mineral lease must be from all interested heirs named

in the Affidavit of Heirship. Without the joinder of such heirs, their undivided interest in the

subject land remains unleased.

         In Pennsylvania, the rights of the heirs remain subject to the rights of any personal

representatives appointed within two years from the date of death. Therefore, it is not prudent

to take a lease from the heirs within two years of the date of death, absent a joinder in that deed




138
    Title Standards, Section 11.70.
139
    Id.
140
    Id.


                                                                                                  21
by a properly appointed personal representative.141 When conveying real property, the heirs

should reconcile any gaps in the chain of record title between the decedent and the grantee by

reciting in the deed the manner in which the title descended. In Pennsylvania, Affidavits of

Heirship, executed by as many known heirs as may be found, should be used to reconcile any

gaps in the chain of title.

V.      CONCLUSION

        At the end of 2010, the Marcellus Shale continued to increase its natural gas production,

and industry sources predict this trend will continue in 2011. 142 According to Bill Holland,

Associate Editor of Gas Daily, “The drilling is going to be getting even bigger in the Marcellus

shale in 2011.”143

        Located about 1,500 miles southwest of Pennsylvania, deep in the heart of Texas, lies an

equally impressive shale play, the Eagle Ford shale formation. Previously overshadowed by

other areas of domestic production, the Eagle Ford is thought to be one of the biggest oil and

gas formations in the United States.144 Chairman and CEO of Houston’s EOG Resources, Mark

G. Papa forecasted that, “the Eagle Ford would probably be the hottest single area in all the

lower 48 states in 2011.”145

        Given the status of both shale plays, land managers, title attorneys and exploration and

production companies will undoubtedly find themselves crossing state lines. As identified in

this article, property systems in Pennsylvania and Texas vary significantly. Therefore, industry

141
    A Summary of Selected Provisions of Pennsylvania Oil and Gas Law for the Landman, (Prepared as part of a
2008 Comparison of Selected Provisions of the Oil and Gas Laws of Selected States), Russell L. Schetroma
Culbertson, Weiss, Schetroma and Schug, P.C.
142
      Joe Napsha, Pittsburgh Tribune-Review, Marcellus Wells, Output Up in Third Quarter,
http://www.pittsburghlive.com/x/pittsburghtrib/business/s_704974.html (accessed Jan. 17, 2011).
143
    Id.
144
      Bill Clanton, Fuelfix.com, South Texas Shale Attracting Interest and Billions of Dollars,
http://fuelfix.com/blog/2011/01/03/s-texas-shale-attracting-interest-and-billions-of-dollars/ (accessed Jan. 17,
2011).
145
    Id.


                                                                                                             22
professionals should familiarize themselves with the laws of each state. The topics discussed in

this article are intended to highlight major considerations regarding marital property rights as

they relate to Texas and Pennsylvania. It is not intended to be an exhaustive source on the

subject.   Materials such as the Texas Title Standards, and the American Association of

Petroleum Landman’s Comparison of Laws on Leasing, Exploration and Production, are also

helpful guides in understanding the two legal systems beyond the scope of this article.




                                                                                             23
        Lilly Tade Van Maele and Rebecca Seidl are Associates with the law firm of Burleson

Cooke L.L.P. headquartered in Houston, Texas. Ms. Van Maele assists clients in oil and gas

related matters, including title examination and drafting instruments affecting real property

interests. Ms. Van Maele has also been involved in general business transactions. Ms. Seidl’s

experience includes advising oil and gas companies in preparation of agreements regarding

acquisition and divestiture of oil and gas assets. Ms. Seidl renders title opinions for clients with

leasehold interests in the Barnett shale. Her experience includes analyzing and interpreting

deeds, contracts, agreements, assignments and other title instruments affecting surface and

mineral estates, royalty interests and developmental interests, as well as various other oil and

gas title issues.




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