Friday, May 11, 2018

Reservations vs. Exceptions

Originally published by John McFarland.

On April 27 the Texas Supreme Court issued its opinion in Perryman v. Spartan Texas Six Capital Partners, Ltd., No. 16-0804. The dispute was over ownership of the royalty interest in 206 acres of land in Montague County and construction of a royalty reservation in a conveyance of the property.  The Supreme Court disagreed with the trial court’s and court of appeals’ construction of the deed reservation and with the construction argued by both sides in the dispute.  The case illustrates the need to be clear in drafting deed reservations and exceptions.

In 1977, Ben Perryman conveyed the 207 acres to his son and daughter-in-law, Gary and Nancy Perryman. The deed contains the following:

LESS, SAVE AND EXCEPT an undivided one-half (1/2) of all royalties from the production of oil, gas and/or other minerals that may be produced from the above described premises which are now owned by Grantor.

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