Mineral Rights And Wrongs

An attorney who had ignored “red flags” in providing assurances that a real estate transaction had conveyed 100% of mineral rights has been suspended for 180 days by the Kansas Supreme Court

the respondent failed to properly and diligently research the mineral title to the property, despite several clear indications that the sellers did not own 100% of the mineral interests, before providing assurances to the parties to the transaction that the seller could convey 100% of the mineral interests.

The problem went back to a 1947 conveyance.

The Gove County property being auctioned by Farm & Ranch Realty was formerly owned by Enoch Nelson of Gove County, Kansas. Enoch Nelson previously owned the land in its entirety, including all surface and mineral interests. In 1947, Enoch Nelson transferred all surface land interest and a one-half (1/2) interest in the mineral rights to D. Laverne Webb.

The D. Laverne Webb interest in the surface and mineral rights was transferred to other individuals over the following years. From the evidence, there appears to be no record that the one-half interest in the mineral rights reserved by Enoch Nelson was transferred to any other individual or entity.

What we had here (among other violations) was a failure to communicate

In this case, the respondent violated KRPC 1.4(a) when he failed to respond to multiple requests from the buyer for information regarding the status of the mineral interest the buyer had purchased. The buyer spent three years trying to obtain confirmation from the respondent about the mineral interests and ultimately had to hire another attorney to obtain the information requested.

Further, the respondent failed to communicate information that he knew about to the buyer that could affect the buyer’s interest in the property, including the fact that multiple oil and gas leases executed by others on the property could present an issue for the buyer and that further legal action may be necessary to establish the buyer’s rights.

And a failure to supervise

Attorneys in supervisory positions must properly supervise nonlawyer assistants. Here, the respondent failed to properly supervise his employees to ensure proper research was conducted to create a complete and accurate mineral title opinion. Further, the respondent failed to properly supervise his employees to ensure that accurate information was properly communicated between his office and his clients.

Dishonesty

The respondent knowingly misrepresented the facts when he failed to advise the buyer of the concerns he saw that could lead to the conclusion that not all of the mineral interest was transferred to the buyer during the 2015 real estate sale.

Further, by the time the respondent testified during his deposition, he knew there was some problem with the title but continued to insist that his mineral title opinion was 100% accurate. At the time of the formal hearing, this inconsistency was never fully explained by the respondent.

Sanction

The only issue left to be determined is the appropriate discipline. During oral arguments, both the Disciplinary Administrator’s office and respondent Eland agreed the panel’s recommendation of a 180-day suspension was appropriate discipline and that no reinstatement hearing under Supreme Court Rule 232 (2023 Kan. S. Ct. R. at 293) was necessary. See Supreme Court Rule 232(d) (2023 Kan. S. Ct. R. at 294). This court is not bound by the recommendations made by the Disciplinary Administrator or the hearing panel, however. In re Long, 315 Kan. 842, 853, 511 P.3d 952 (2022). That said, after considering the evidence presented, the recommendations of the hearing panel, and the recommendations of the parties, we determine the recommended discipline is appropriate. We also agree that respondent Eland need not undergo a reinstatement hearing.

(Mike Frisch)