The Cost of Missing or Ambiguous Language in Texas Deeds

Unclear Language in Texas Deeds

Conveying real property relies heavily on the exchange of accurate information and mutual agreements based on that information. Formal contracts are in place to verify the agreements and obligate both parties in those agreements. Sometimes, however, drafting errors within the contract itself undo that hard work. Fortunately, the Texas Property Code (§§5.027-03) is in place to allow for the correction of mistakes, and most often any mistake is corrected with little effort or expense. Since all parties must agree on material corrections for them to be implemented, problems arise when one party disagrees. Long-term litigation has resulted from missing and vague wording within the contract, especially when one party does not agree to changes.

One case where that situation led to protracted litigation centered on mineral rights for a property that was sold. The sellers owned 115 acres of land and listed that property for sale, but they specifically stated at the time of listing that they would retain mineral rights to the property. They received an offer from potential buyers which included the transfer of mineral rights with the sale, an offer that they firmly refused. After exchanging several offers, the parties ultimately agreed on a price and the sellers’ reservation of mineral rights to the property.

Based upon their agreement, the sellers’ realtor prepared the sales contract using a TREC Farm and Ranch Contract. The reservations section of this contract addressed the sellers’ desire to retain mineral rights to the property, specifically stating, “RESERVATIONS; Seller reserves the following mineral, water, royalty, timber, or other interests: SEE ATTACHED OIL, GAS AND MINERAL LEASE.” A copy of the 2001 oil and gas lease which originally designated mineral rights to the sellers was included with the contract. Signed by sellers and buyers, the contract was sent to the closing attorney at the title company who drafted the sellers’ papers, along with a Warranty Deed with Vendor’s lien.

Unfortunately, due to an oversight, the attorney’s deed did not include information about the sellers’ retaining mineral rights, which meant that according to the title, the mineral rights conveyed to the buyers. When the sellers discovered the error, the closing attorney reached out to the buyers asking them to sign a correction deed which acknowledged the sellers’ mineral rights. The buyers refused to sign the corrections deed, filing a declaratory judgment action requesting that they be declared owner of the mineral rights. The sellers then filed a counterclaim as well as a third-party claim against the drafting attorney and title company underwriter. Because according to the drafting attorney and title company, the buyers had signed an errors and omissions agreement at closing, the attorney and underwriter filed counter/cross action claims against the buyers as well.

The initial ruling was in favor of the buyers, but the sellers, the attorney, and the title company all appealed the verdict. During the appeals process, the use of the phrase “SEE ATTACHED OIL and GAS Lease” was deemed too ambiguous to offer definitive proof of mineral rights. Finally ordered to mediation, the parties settled out of court with the title company paying $20,000 for attorney’s fees to the sellers. The drafting attorney was ordered to pay the buyers $75,000 for a deed conveying mineral rights back to the seller.

Sadly, the lengthy litigation was unnecessary and completely preventable. The ambiguity in the reservation section of the contract should have prevented the closing in the first place since, while it indicated that something was being reserved for the sellers, it did not state exactly that the sellers retained mineral rights for the property.

Careless errors which cost time, money, and peace of mind for all involved are avoidable. A real estate lawyer provides an extra set of eyes to review documents, helping to save all parties from difficult and costly litigation.

All information provided on (hereinafter "website") is provided for informational purposes only and is not intended to be used for legal advice. Users of this website should not take any actions or refrain from taking any actions based upon content or information on this website. Users of this site should contact a licensed Texas attorney for a full and complete review of their legal issues.