Making Marketable Title – Defeating Easements & Mineral Rights Interests Under the (California)

Marketable Record Title Act

By Cecilia E. Rendon, Esq. and John (“Jack”) Quirk, Esq. Law Firm of Bright and Brown

Permission to Publish

All Rights Reserved

Ed. The following paper was given at the International Right of Way Association, Chapter 67’s Utility and Mock Trial Seminar in March 14, 2017.

Caveats: “Uniform” – Don’t be fooled.

The nominal ‘uniformity’ in the “Uniform Marketable Record Title Act” refers solely to the model legislation that was proposed for enactment. That uniformity has been destroyed by the various state legislatures in the enacting. Do not think that you can refer to the Texas, Oklahoma or Delaware “Uniform Marketable Record Title Act” and find the statute as enacted and applicable in California.

Moreover, even within the California Marketable Record Title Act, there are numerous and substantial differences in the ways that the Act deals with the various categories of interests addressed in the Act—mortgages and deeds of trust, mineral rights, unexercised options, determinable interests and powers of termination, unperformed contracts for sale of real property, and abandoned easements. Do not take action concerning an easement based on your recollection or even your review of provisions concerning deeds of trust.

‘WHEN” – We have included here (to the best of our ability) the relevant law as it is in effect in California THIS YEAR (2017). If you need to know the law applicable in some other year (before or after 2017) you need to review a source which reflects the relevant law FOR THAT YEAR.

What follows here is almost entirely a bare recital of the text of the statutes, as codified in California, and some legislative and law revision commentary, with very little case law summary. If you have a question of any significance concerning the interpretation or application of the following you should consult an attorney.

In preparing these materials we have not been asked to, and have not attempted to, provide the answer to any specific legal question.

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Table of Contents

Page

Part 1. Introduction: The California Marketable Record Title Act 1

Part 2. The Varying Role (Including None) of the Notice of Intent To Preserve Interests

4

Part 3. The Varying Effect of “Expiration” Under the Act. 10

Part 4. The (California) Marketable Record Title Act (with comments; 2017)

12

Part 5. Termination Under the Act of “Abandoned” Easements and “Dormant” Mineral Rights – A Side-by-Side Comparison

42

Part 6. Protecting Easements and Terminating “Abandoned” Easements or Under the Act – The Land Professional’s Role

47

Part 7. Actions to Terminate “Abandoned” Easements or “Dormant” Mineral Rights Under the Act – The Land Professional’s Role

63

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Part 1. Introduction: The California Marketable Record Title Act 1

Before setting into a discussion of the Act, we want to provide some background discussion of: (a) the manner in which the California recording statute affects the Common Law rule concerning priority of title: “First in Time is First in Right,” (b) how the recording statute, in turn, provides a perceived justification or need for the Act, and (c) the diverse roles that the notice of intent to preserve rights or interests plays in the operation of the Act with regard to the interests of diverse nature addressed in the Act.

First, take a moment to ask yourself, “What is title?” what does “title” mean? Black’s Law Dictionary (7th ed. 1999), p. 1493, defines “title” as: “The union of all elements (as ownership, possession and custody) constituting the legal right to control and dispose of property; the legal link between a person who owns property and the property itself.” As useful as that definition might be in some context, it falsely suggests that “title” involves nothing more than a relationship between a person and specific property. Actually, it is frequently more correct and usually more helpful to think of “title” as involving relationships between or among two or more people with respect to specific property. Viewed this way, “title” (to real property) is a shorthand reference to the enforceable rights and obligations that individual persons have against others (private persons or governmental entities) concerning the entry into, use, possession and improvement of real property.

A complete description of a particular person’s “title” to specific real property would include: (a) the rights they have concerning that property that specific other persons are bound to respect, as well as the limitations of such rights, and (b) the specific obligations they owe to specific other persons concerning that property, as well as the qualifications or limitations of such obligations. Owners have rights and obligations not shared with the general public, but which are specific to their individual “ownership” interest in particular property. Non-owners have only such rights and obligations concerning specific property as are shared by the general public—they have no particular, specific personal interest and therefore no particular, specific, personal rights or obligations concerning the property. Considered in this way, “title” to real property involves all of the varied relationships with respect to specific property between each of the persons who comprise its “owners” and all other persons who are not included among its owners. Such “ownership” of real property is not a single, uniform, unvarying relationship between each of its owners, on one hand, and each other “non-owners,” on the other. The rights of owners may vary among them and between each of them and varying others who are non-owners—and the obligations owned by particular owners to particular non-owners may also vary greatly.

(a) Recording and the Common Law rule: “First in Time is First in Right”

Under the English Common Law title to real property was an objective matter; meaning that ownership of specific real property was under the law the same for all. The common law rule that applied to conflicting land titles was “prior in tempore portior est in jure”— meaning “First in time is first in right.” While this is an objective standard, it was frequently difficult to apply, particularly in regard to

1 The Marketable Record Title Act (hereinafter referred to simply as the “Act”) appears in § 880.020, et seq., of the California Civil Code (hereinafter referred to as the “Code”). It seems to be anyone's guess why there is no § 880.010. References herein to specific sections of the Act as they appear in the Code are in the form “88x.xxx.”

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establishing or proving the objective state of title, and no less often harsh in its application because it was not always possible to conveniently determine at any given time what had previously occurred. This was due at least in part to the fact that the English common law did not include or recognize a system for the recording or registration of land records. Thus, for example, at common law if the only “witness” to an event had been bundled up and put on a ship bound for Tahiti then the event could not readily be proven to have occurred. We can say that title under the Common Law was theoretically objective, but in practice subjective—because dependent upon the ability at any time to recall or prove what had occurred at some time in the past.

The California recording statute does not entirely abrogate or supplant the Common Law Rule, but merely qualifies it—albeit in a very significant way. The rule in California continues to be “First in time is

first in right,” except where otherwise provided by the recording statute.2 The principal provisions of California’s statute for the recording of real property records are found in Civil Code §§ 1213 and 1214, but it seems to make more sense for our purposes to consider them in the opposite order:

§ 1214. Prior recording of subsequent conveyances, mortgages, judgments. Every conveyance of real property or an estate for years therein, other than a lease for a term not exceeding one year, is void as against any subsequent purchaser or mortgagee of the same property, or any part thereof, in good faith and for a valuable consideration, whose conveyance is first duly recorded, and as against any judgment affecting the title, unless the conveyance shall have been duly recorded prior to the record of notice of action. [Emphasis added.]

Thus, among those persons who acquire a subsequent adverse interest (“potentially benefited persons”) only those who acquire their interest for value and in good faith are actually protected by the recording statute against prior but subsequently recorded adverse claims. Operating in this manner, the recording statute does not entirely supplant the Common Law Rule, but merely creates a procedure through which the preservation or avoidance of the Common Law Rule for potentially benefited persons is dependent not merely upon the act (and time) of recording but upon the acquisition of their interest for value and in good faith.

Of course, prior purchasers or encumbrancers also can protect themselves against the claim of a subsequent purchaser or encumbrancer by being themselves the first to record. But only a subsequent purchaser or encumbrancer for value and in good faith may avoid application of the Common Law Rule concerning priorities of title and entirely avoid the effect of a previously created conveyance by

recording prior to any adverse claimant.3

2 “The common law of England, so far as it is not repugnant to or inconsistent with the Constitution of the United States, or the Constitution or laws of [California], is the rule of decision in all the courts of this State.” (Cal. Civ. Code, §22.2)

3 It is important in this context to remember that proper indexing is an integral and essential part of effective recording. As explained in Hochstein v. Romero (1990) 219 Cal.App.3d 447, 452: “… before the constructive notice will be conclusively presumed, the document must be “recorded as prescribed by law.” (Civ. Code, §1213.) A document not indexed as required by statute (see Gov. Code, §§ 27230-27265), does not impart constructive notice because it has not been recorded ‘as prescribed by law.’ “If [improperly indexed], it is to be regarded the same as if not recorded at all.’ (Cady v. Purser (1901) 131 Cal. 552, 558 [63 P. 844].) Thus, it is not sufficient merely to record the document. ‘California has an 'index system of recording,' and ... correct indexing is essential to proper recordation. [Citations.]” [¶] The California courts have consistently reasoned

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Significantly, good faith or bona fides (knowledge of a subsequent conveyance or encumbrance) and acquisition of an interest for value are irrelevant to the rights of a prior purchaser or encumbrancer who first records because their priority is established by the Common Law Rule—not dependent upon the recording statute. By being the first to record, a prior purchaser or encumbrancer merely preserves the application of the Common Law Rule as to her and prevents any subsequent purchaser or encumbrancer from gaining any benefit against her under the recording statute, thus preserving her advantage or “priority” under the Common Law Rule.

In addition to protecting titles, against either prior or subsequent instruments, the recording statute serves to create and provide a “conclusive” body of documents that can be reviewed by a potential purchaser or encumbrancer for information to determine the state of title to which they would be subject. This conclusive body of documents represents the matter “of record” to which a present conveyance is subject or, in other words, the matter to which any further purchaser or encumbrancer is necessarily subject. The general content of this “conclusive” body of documents is as provided in Civil Code § 1213:

§ 1213. Record of conveyances; constructive notice; recording certified copies; effect. Every conveyance of real property or an estate for years therein acknowledged or proved and certified and recorded as prescribed by law from the time it is filed with the recorder for record is constructive notice of the contents thereof to subsequent purchasers and mortgagees; ….

“Record title” can be understood as a reference to title as it can be ascertained solely from all of the relevant matters appearing of record at any given moment to which any purchaser or encumbrancer is necessarily subject at that time. This “record title” is objective—the same for all—just as legal title under the Common Law Rule is objective in theory (if subjective in proof). But unlike legal title determined under the Common Law Rule, “record” title under the California recording statute is objective both in theory and in practice because the record is inherently a reliable source to proof the facts of recording history.

There are, though, two remaining sources of subjectivity inherent in the recording system. The first of these results from the fact that the recording statute may or may not apply to the benefit of a potentially protected persons—it only applies to the benefit of persons who act “in good faith” and “for value.” A person who does NOT take for value (who acquires by gift or by distribution from a decedent’s estate) does not have the protection of the recording statute (beyond the protection obtained by their predecessor in interest who acquired for value). And a person who acts with knowledge (or notice) of matters bearing on title but which are outside record title also is not protected (with respect to those matters) by the recording statute. Due to that limitation, “legal” title under California law may not be the same for everyone; it may be subjective notwithstanding that “record” title is objective. The record simply cannot reveal matters that do not appear of record such as bad faith, prior unrecorded instruments, etc.

that the conclusive imputation of notice of recorded documents depends upon proper indexing because a subsequent purchaser should be charged only with notice of those documents which are locatable by a search of the proper indexes. Conversely, where the document is improperly indexed and hence not locatable by a proper search, mere recordation is insufficient to charge the subsequent purchaser with notice.”

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The second source of subjectivity in current legal title is not due to what the formal record of title omits but of what it includes—and specifically what it includes from the remote past instruments placed of record in the remote past whose current value and validity are indeterminable without resort to litigation. The Act seeks to address both of these sources of subjectivity in the operation of the recording statute.

(b) The Recording Statute and the Act

Because the recording statute limits is protect to those who acquire their interests for value and in good faith, a need arises to definitively clear from title interests that may be subject to uncertainty on that basis. Also, because the recording statute makes purchasers and encumbrances subject to matters already appearing of record, the need arises for a device to reliably remove from consideration matters which are remote in time but which, despite the passage of time, can neither be safely ignored nor otherwise expeditiously removed. The Act is meant to address both of these needs—in varying ways and to varying extent. But before getting into more specific discussion, it seems best to briefly consider (a) the conditions the Act is intended to address, and (b) the general solutions to those conditions intended by the Act. These topics are discussed in the first section of the Act – § 880.020.

The Problems: “Real property title transactions should be possible with economy and expediency” and “the status and security of recorded real property titles should be determinable to the extent practicable from an examination of recent records only.”

However, “Interests in real property and defects in titles created at remote times, whether or not of record, often constitute unreasonable restraints on alienation and marketability of real property because the interests are no longer valid or have been abandoned or have otherwise become obsolete.”

“Such [remote in time] interests and defects produce litigation to clear and quiet titles, cause delays in real property title transactions, and hinder marketability of real property.”

The General Solution: “It is the purpose of the Legislature in enacting this [Act] to simplify and facilitate real property title transactions in furtherance of public policy by enabling persons to rely on record title to the extent provided in this title, with respect to the property interests specified in this title, subject only to the limitations expressly provided in this title and notwithstanding any provision or implication to the contrary in any other statute or in the common law. This title shall be liberally construed to effect the legislative purpose.”

And, further, and particularly relevant to the discussion in Part 2, immediately below, this may be an opportune point to focus attention more practically and narrowly on the “notice of intent to preserve interests” as a specific device, among others, through which the Act attempts to implement those solution.

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Part 2. The Varying Role (including None) of the Notice of Intent to Preserve Interests

California Civil Code §880.310 (in the Act) authorizes the making and recording of a “notice of intent to

preserve” 4 for certain—but not all—of the various interests addressed within the Act. Code §887.060 (within the “Abandoned Easements” provisions of the Act) makes more specific provision concerning the substance, timing and effect of a notice of intent to preserve easements, as does Code §883.230 (within the “Mineral Rights” provisions of the Act) concerning notices of intent to preserve such interests. Insofar as the Act attempts to address the problem of title issues arising from recorded documents that are “remote in time” by its provisions concerning the recording (or not) of a notice of intent to preserve an interest, it is worthwhile to note that the provisions of the Act on that subject vary widely.

The Act itself is divided into seven chapters: ch.1 “General Provisions,” including provisions concerning the basic Notice of Intent to Preserve an Interest (§ 880.310); ch.2 “Ancient Mortgages and Deeds of Trust;” ch.3 “Mineral Rights;” ch.4 “Unexercised Options;” ch.5 “Powers of Termination;” ch.6 “Unperformed Contracts for Sale of Real Property;” and ch.7 “Abandoned Easements.” The notice of intent to preserve interests does not come into play in each of these chapters—and, where it does, its use and effect vary widely among the several chapters.

Ch 1—General Provisions—

The basic provisions concerning notices of intent to preserve the various interests addressed by the Act, as well as the basic form of such notices, appear in art. 3, ch.1, “Preservation of Interests.” These provisions not only describe the effect of timely recording (or failing to timely record) a notice of intent to preserve an interest (§ 880.310), but also provide the basic general form and content of such a notice, including the character of the interest claimed and a legal description of the property in which the interest is claimed (§§ 880.330 and 880.340), persons who may record such a notice (§ 880.320) and the place and manner of its recording (§ 880.350).

We do not at this point go into provisions of the Act in any great detail other than with respect to its provisions concerning Notices of Intent to preserve interests. But it is important to at least note that there are significant differences among the several chapters of the Act as to the form and substances—indeed, the availability—of notices of intent to preserve the affected interests (and other matters as well).

Ch 2—Ancient Mortgages and Deeds of Trust—

The provisions of the Act concerning Ancient Mortgages and Deeds of Trust allow for recording of a notice to preserve those interests only once (882.020(a)(3)) and provide that upon the expiration of the relevant period of time—whether based on the original recording of the mortgage or deed of trust, or based on recording of such a notice of intent—the lien of such mortgage or deed of trust automatically “expires and is not enforceable by action for foreclosure commenced, power of sale exercised, or any

4 The Notice of Intent to Preserve interests is referred to hereinafter simply as a “Notice of Intent.” Chapter 3 of the Act, “Mineral Rights,” is comprised of Article 1—“General Provisions,” § 883.110, et seq., and Article 2—“Termination of Dormant Mineral Rights,” § 883.210, et seq. Chapter 7 of the Act, “Abandoned Easements" includes 887.010, et seq.

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other means asserted after [such time].” (§ 882.020(a).) Just in case that is not clear enough, § 882.030 provides as follows:

§ 882.030 Effect of expiration of lien of security interest. Expiration of the lien of a mortgage, deed of trust, or other security interest pursuant to this chapter or any other statute renders the lien unenforceable by any means commenced or asserted thereafter and is equivalent for all purposes to a certificate of satisfaction, reconveyance, release, or other discharge of the security interest, and execution and recording of a certificate of satisfaction, reconveyance, release, or other discharge is not necessary to terminate or evidence the termination of the security interest. Nothing in this section precludes execution and recording at any time of a certificate of satisfaction, reconveyance, release, or other discharge.

Ch 3—Dormant Mineral Rights—

The provisions of the Act concerning Termination of Dormant Mineral Rights treat the subject of a notice of intent to preserve mineral rights in a markedly different way from the provisions concerning Ancient Mortgages, etc. In fact, unlike the provisions of § 882.020 for Ancient Mortgages, etc., concerning expiration of mortgages and deeds of trust, the conditions in which a mineral right is dormant are provided in § 883.220 without any mention of a notice of intent to preserve such rights—

§ 883.220 Dormant Rights; Conditions

“For the purpose of this article, a mineral right is dormant if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to terminate the mineral right:

“(a) There is no production of the minerals and no exploration, drilling, mining, development, or other operations that affect the minerals, whether on or below the surface of the real property or on other property, whether or not unitized or pooled with the real property.

“(b) No separate property tax assessment is made of the mineral right or, if made, no taxes are paid on the assessment.

“(c) No instrument creating, reserving, transferring, or otherwise evidencing the mineral right is recorded.”

The notice of intent to preserve mineral rights, the number of times such a notice may be recorded, and a departure from the general requirement of a specific property description, appear in § 883.230—along with a surprising provision for the “late-filing” of a notice.

§ 883.230 Notice of intent to preserve mineral right; effect

“(a) An owner of a mineral right may at any time record a notice of intent to preserve the mineral right.

“(b) In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the mineral rights claimed as otherwise required by paragraph (2) of subdivision (b) of Section 880.330 and in lieu of the legal description of the real property in which the interest is claimed as otherwise required by paragraph (3) of subdivision (b) of Section 880.330 and notwithstanding the provisions of

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Section 880.340 or any other provision in this title, a notice of intent to preserve a mineral right may refer generally and without specificity to any or all mineral rights claimed by claimant in any real property situated in

the county.5

“(c) A mineral right is not dormant for the purpose of this article if [either]:

“(1) A notice of intent to preserve the mineral right is recorded within 20 years immediately preceding commencement of the action to terminate the mineral right.

“(2) A notice of intent to preserve the mineral right is recorded pursuant to Section 883.250 after commencement of the action to terminate the mineral right.”

A dormant mineral right is not terminated automatically, but its termination requires “an action to terminate a mineral right” brought in the superior court of the county in which the affected real property is located (§ 883.240(a)). Such an action is generally filed and prosecuted under the same procedures as provided for a quiet title action (§ 883.240(b)).

If a notice of intent to preserve is filed after the commencement of such an action, but before the action has proceeded to final judgment, the court must dismiss the action subject to payment of litigation costs including attorney fees (§ 883.250).

When such an action has been successfully prosecuted to final judgment, the mineral right adjudged “terminated” as a dormant mineral right “is unenforceable and is deemed to have expired [and] a court order terminating a mineral right pursuant to this article is equivalent for all purposes to a conveyance of the mineral right to the owner of the real property.” (§ 883.260.)

Ch 4—Unexercised Options—

The provisions of the Act concerning Unexercised Options include no provision for or even mention of a notice of intent to preserve such interests. Rather, an “option to purchase real property” expires unless another recorded instrument giving notice of either its exercise of its extension is recorded within six months after the option expires according with its terms or, if the option provides no expiration date,

six months after the recording of the instrument that creates or gives notice of the option (§ 884.010).6 However, even when it expires the option is not necessarily unenforceable between the parties, but the instrument that creates or gives notice of it merely “ceases to be notice to any person or to put any person on inquiry with respect to the exercise or existence of the option or of any contract, conveyance, or other writing that may have been executed pursuant to the option.” (§ 884.020.)

Ch 5—Powers of Termination—(and Determinable Interests)

5 This provision figures prominently in the discussion below of legitimate collateral uses of the notice of intent to preserve mineral rights Interests or easements.

6 As originally enacted, these provisions included some uncertainty whenever the option itself did have an express expiration date, but that express expiration date did not appear on the face of a recorded short form, memorandum or other notice of the option. An amendment was adopted, effective January 1, 2013, to make it clear that the option expires six months after recording unless an expiration date of the option is clear on the face of the recorded evidence of the option.

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The provisions of the Act address “conditional” interests in two broad ways. First, determinable interests—of automatic termination upon the occurrence of a limiting condition, are for the most part converted into interests on condition subsequent—terminable by the holder of a power of termination

upon the occurrence of a condition subsequent. (§ 885.020.)7 Second, a power of termination automatically expires 30 years after the last to occur of the recording of the instrument creating it or the timely recording of a notice of intent to preserve it (§ 885.030(a))—whether or not the instrument creating the power expressly provides for some other duration or period of enforcement. (§ 885.030(b).)

The effect of such expiration is provided in § 885.060, as follows:

§ 885.060 Effect of expiration of power; application to equitable servitude; construction of law.

“(a) Expiration of a power of termination pursuant to this chapter makes the power unenforceable and is equivalent for all purposes to a termination of the power of record and a quitclaim of the power to the owner of the fee simple estate, and execution and recording of a termination and quitclaim is not necessary to terminate or evidence the termination of the power.

“(b) Expiration of a power of termination pursuant to this chapter terminates the restriction to which the fee simple estate is subject and makes the restriction unenforceable by any other means, including, but not limited to, injunction and damages.

“(c) However, subdivision (b) does not apply to a restriction for which a power of termination has expired under this chapter if the restriction is also an equitable servitude alternatively enforceable by injunction. Such an equitable servitude shall remain enforceable by injunction and any other available remedies, but shall not be enforceable by a power of termination. This subdivision does not constitute a change in, but is declaratory of, the existing law. However, nothing in this subdivision shall be construed to make enforceable any restriction prohibited or made unenforceable by

other provisions of law, including Section 53.” 8

Ch 6—Unperformed Contracts for Sale of Real Property—

The Act’s provisions concerning unperformed contracts for the sale of real property do not include any provision concerning the recording of a notice of intent to preserve such an interest, but do permit an extension of time to perform under the contract.

§ 886.030. Expiration date; recorded extension; waiver

“(a) Except as otherwise provided in this section, a recorded contract for sale of real property expires of record at the later of the following times:

7 Section 885.014 (“Application of chapter; power of termination”) provides two exceptions to that automatic conversion: “This chapter does not apply to any of the following: (a) A power of termination conditioned upon the continued production or removal of oil or gas or other minerals. (b) A power of termination as to separately owned improvements or fixtures conditioned upon the continued leasehold or possessory interest in the underlying land.” That first exception seems directly applicable to the determinable (or automatically expiring) character of a conventional oil and gas lease.

8 E.g., Civil Code § 53 declares discriminatory restrictions on ownership or use of real property to be void.

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“(1) Five years after the date for conveyance of title provided in the contract or, if no date for conveyance of title is provided in the contract, five years after the last date provided in the contract for satisfaction of the specified conditions set forth in the contract.

“(2) If there is a recorded extension of the contract within the time prescribed in paragraph (1), five years after the date for conveyance of title provided in the extension or, if no date for conveyance of title is provided in the extension, five years after the last date provided in the extension for satisfaction of the specified conditions set forth in the contract.

“(b) The time prescribed in this section may be waived or extended only by an instrument that is recorded before expiration of the prescribed times.”

As in the case of the Act’s provisions concerning expired options, but unlike the Act’s provisions concerning expiration of Ancient Mortgages, etc., and termination of dormant mineral rights, expiration of a contract for the sale of real property does not make the contract unenforceable between the contracting parties, but only removes its effect as a “cloud on title.”

§ 886.040. Effect of expiration of recorded contract

“Upon the expiration of record of a recorded contract for sale of real property pursuant to this chapter, the contract has no effect, and does not constitute an encumbrance or cloud, on the title to the real property as against a person other than a party to the contract.” [Emphasis added.]

Ch 7—Abandoned Easements—

The Act’s provisions concerning abandoned easements, and the operation and procedures concerning a notice of intent to preserve an easement, are largely indistinguishable from the Act’s provisions on those matters in the context of dormant mineral rights.

A easement is not terminated automatically, but its termination requires an action to confirm it as “abandoned” brought in the superior court of the county in which the affected real property is located (§ 887.040(ab). Such an action is generally filed and prosecuted under the same procedures as provided for a quiet title action (§ 887.040(c)).

If a notice of intent to preserve is filed after the commencement of such an action, but before the action has proceeded to final judgment, the court must dismiss the action subject to payment of litigation costs including attorney fees (§ 887.070).

When such an action has been successfully prosecuted to final judgment, the mineral right adjudged “terminated” as a dormant mineral right “is unenforceable and is deemed to have expired [and] a court order establishing abandonment of an easement pursuant to this article is equivalent for all purposes to a conveyance of the easement to the owner of the real property.” (§ 887.080.)

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Establishing “abandonment” of an easement under the Act (but not outside the Act9) requires an action by the owner to establish such abandonment, brought in the relevant superior court, and following in general the same procedure as for a quiet title action. (§ 887.040.)

The conditions for abandonment, as follows, must have been satisfied for a period of 20 years prior to filing the action to establish abandonment of an easement:

§ 887.050. Conditions necessary

“(a) For purposes of this chapter, an easement is abandoned if all of the following conditions are satisfied for a period of 20 years immediately preceding

commencement of the action to establish abandonment of the easement: 10

“(1) The easement is not used at any time.

“(2) No separate property tax assessment is made of the easement or, if made, no taxes are paid on the assessment.

“(3) No instrument creating, reserving, transferring, or otherwise evidencing the easement is recorded.

“(b) This section applies notwithstanding any provision to the contrary in the instrument creating, reserving, transferring, or otherwise evidencing the easement or in another recorded document, unless the instrument or other document provides an earlier expiration date.”

A notice of intent to preserve an easement may be recorded either within 20 years prior to commencement of the action or after commencement of the action, and such a notice need not include a specific description of the property but may refer to any and all easements held by the person recording the notice within the relevant county.

§ 887.060. Notice of intent to preserve easement; recording

“(a) The owner of an easement may at any time record a notice of intent to preserve the easement.

“(b) In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the easement claimed, as otherwise required by paragraph (2) of subdivision (b) of Section 880.330, and in lieu of the legal description of the real property in which the interest is claimed, as otherwise required by paragraph (3) of subdivision (b) of Section 880.330, and notwithstanding the provisions of Section 880.340, or any other provision in this title, a notice of intent to preserve an easement may refer generally and without specificity to any or all easements claimed by the claimant in any real property situated in the county.

9 "This chapter supplements and does not limit or otherwise affect the common law governing abandonment of an easement or any other procedure provided by statute or otherwise for clearing an abandoned easement from title to real property." (§ 887.030.)

10 Note the similarity throughout these provisions to the provisions concerning “dormant” mineral rights under § 883.220.

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“(c) An easement is not abandoned for purposes of this chapter if either of the following occurs:

“(1) A notice of intent to preserve the easement is recorded within 20 years immediately preceding commencement of the action to establish the abandonment of the easement.

“(2) A notice of intent to preserve the easement is recorded pursuant to Section 887.070 after commencement of the action to establish the abandonment of the easement and before judgment is entered in the action.”

Under these provisions, a court order establishing abandonment of an easement “is equivalent for all purposes to a conveyance of the easement to the owner of the real property.” (§ 887.080.)

Hopefully, the foregoing is sufficient to convince you that, despite any superficial similarities among the provisions in each of the several chapters of the Act, either generally or with respect specifically to notices of intent to preserve rights or interests, each of the several chapters of the Act must be reviewed and understood separately. In your endeavor to take or avoid action under any of the Act’s provisions, you will want to refer specifically to the chapter or chapters in the Act that are relevant to that specific endeavor.

Part 3. The Varying Effect of “Expiration” Under the Act

The Act refers to the circumstances in which interests are affected by its provisions in various terms—expiration, termination, abandonment, dormant, etc. That variety of expression is not our focus here. Rather we consider here the ways in which the consequences of such circumstances affect the interests of varying nature which are addressed by the Act.

Ch 1 General Provisions

§ 880.250. Absolute nature of times prescribed; extending time; revival of interests. (a) The times prescribed in this title for expiration or expiration of record of an interest in real property or for enforcement, for bringing an action, or for doing any other required act are absolute and apply notwithstanding any disability or lack of knowledge of any person or any provisions for tolling a statute of limitation and notwithstanding any longer time applicable pursuant to any statute of limitation. (b) Nothing in this title extends the period for enforcement, for bringing an action, or for doing any other required act, or revives an interest in real property that expires and is unenforceable, pursuant to any applicable statute of limitation.

§ 880.260. Action or proceeding tolling expiration or expiration of record. An interest in real property, as specified in this title, does not expire or expire of record and is not unenforceable pursuant to this title at the time prescribed in this title if within the time an action is commenced to enforce, establish, clear title to, or otherwise affect the interest and a notice of the pendency of the action is recorded as provided by law. For the purpose of this section, action includes special proceeding and arbitration proceeding.

Ch 2 – Ancient Mortgages and Deeds of Trust

§ 882.030. Effect of expiration of lien of security interest. Expiration of the lien of a mortgage, deed of trust, or other security interest pursuant to this chapter or any other statute renders the lien unenforceable by any means commenced or asserted thereafter and is equivalent for all purposes to a certificate of satisfaction, reconveyance, release, or other discharge of the

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security interest, and execution and recording of a certificate of satisfaction, reconveyance, release, or other discharge is not necessary to terminate or evidence the termination of the security interest. Nothing in this section precludes execution and recording at any time of a certificate of satisfaction, reconveyance, release, or other discharge.

Ch 3 – Dormant Mineral Rights

§ 883.260. Termination under article; effect. A mineral right terminated pursuant to this article is unenforceable and is deemed to have expired. A court order terminating a mineral right pursuant to this article is equivalent for all purposes to a conveyance of the mineral right to the owner of the real property.

Ch 4 –Unexercised Options

§ 884.020. Effect of expiration of record. Upon the expiration of record of an option to purchase real property, the recorded instrument that creates or gives constructive notice of the option ceases to be notice to any person or to put any person on inquiry with respect to the exercise or existence of the option or of any contract, conveyance, or other writing that may have been executed pursuant to the option.

Ch 5 – Powers of Termination (and Determinable Interests)

§ 885.060. Effect of expiration of power; application to equitable servitude; construction of law. (a) Expiration of a power of termination pursuant to this chapter makes the power unenforceable and is equivalent for all purposes to a termination of the power of record and a quitclaim of the power to the owner of the fee simple estate, and execution and recording of a termination and quitclaim is not necessary to terminate or evidence the termination of the power. (b) Expiration of a power of termination pursuant to this chapter terminates the restriction to which the fee simple estate is subject and makes the restriction unenforceable by any other means, including, but not limited to, injunction and damages. (c) However, subdivision (b) does not apply to a restriction for which a power of termination has expired under this chapter if the restriction is also an equitable servitude alternatively enforceable by injunction. Such an equitable servitude shall remain enforceable by injunction and any other available remedies, but shall not be enforceable by a power of termination.

Ch 6 – Unperformed Contracts for the Sale of Real Property

§ 886.040. Effect of expiration of recorded contract. Upon the expiration of record of a recorded contract for sale of real property pursuant to this chapter, the contract has no effect, and does not constitute an encumbrance or cloud, on the title to the real property as against a person other than a party to the contract.

Ch 7—Abandoned Easements

§ 887.080. Effect of Abandonment. An abandoned easement is unenforceable and is deemed to have expired. A court order establishing abandonment of an easement pursuant to this chapter is equivalent for all purposes to a conveyance of the easement to the owner of the real property.

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Part 4. The (California) Marketable Record Title Act; (with comments; 2017)

Chapter 1—General Provisions; Article 1—Construction

§ 880.020. Legislative declaration and purpose

(a) The Legislature declares as public policy that:

(1) Real property is a basic resource of the people of the state and should be made freely alienable and marketable to the extent practicable in order to enable and encourage full use and development of the real property, including both surface and subsurface interests.

(2) Interests in real property and defects in titles created at remote times, whether or not of record, often constitute unreasonable restraints on alienation and marketability of real property because the interests are no longer valid or have been abandoned or have otherwise become obsolete.

(3) Such interests and defects produce litigation to clear and quiet titles, cause delays in real property title transactions, and hinder marketability of real property.

(4) Real property title transactions should be possible with economy and expediency. The status and security of recorded real property titles should be determinable to the extent practicable from an examination of recent records only.

(b) It is the purpose of the Legislature in enacting this title to simplify and facilitate real property title transactions in furtherance of public policy by enabling persons to rely on record title to the extent provided in this title, with respect to the property interests specified in this title, subject only to the limitations expressly provided in this title and notwithstanding any provision or implication to the contrary in any other statute or in the common law. This title shall be liberally construed to effect the legislative purpose. (Added by Stats.1982, c. 1268, p. 4671, § 1. Amended by Stats.2011, c. 46 (S.B. 284), §1.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of section 880.020 is drawn from North Carolina marketable title legislation, N.C. Gen. Stat. § 47B-1 (1976; Supp. 1981). The declaration of public policy is intended to demonstrate the significance of the state interest served by this title and the importance of the retroactive application of the law to the effectuation of that interest. See In re Marriage of Bouquet, 16 Cal.3d 583, 592, 546 P.2d 1371, 1376, 128 Cal.Rptr. 427, 432 (1976) (upholding changes in the community property laws as retroactively applied). A statute may require recordation of previously executed instruments or of extensions of time if a reasonable time is allowed for recordation. See discussion in 1 A. Bowman, Ogden's Revised California Real Property Law § 10.4, at 415-16 (1974). The burden on holders of old interests of recording a notice of intent to preserve or an extension of time is outweighed by the public good of more secure land transactions. See, e.g., Wichelman v. Messner, 250 Minn. 88, 121, 83 N.W.2d 800, 825 (1957) (upholding Minnesota marketable title legislation): . . . [A] number of marketable title acts have been passed by various states. Such limiting statutes are considered vital to all who are engaged in or concerned with the conveyance of real property. They proceed upon the theory that the economic advantages of being able to pass uncluttered title to land far outweigh any value which the outdated restrictions may have for the person in whose favor they operate. These statutes reflect the appraisal of state legislatures of the "actual economic significance of these interests weighed against the inconvenience and expense caused by their continued existence for unlimited periods without regard to altered

•Page 14

circumstances." . . . They must be construed in the light of the public good in terms of more secure land transactions which outweighs the burden and risk imposed upon owners of old outstanding rights to record their interests. Subdivision (b) is drawn from Section 9 of the Model Marketable Title Act. If the application of a particular statute or common law rule conflicts with the provisions of this title, this title governs. (16 Cal.L.Rev.Comm. Reports 401).

§ 880.030. Construction not to limit or affect equitable principles or recording statutes

Nothing in this title shall be construed to:

(a) Limit application of the principles of waiver and estoppel, laches, and other equitable principles.

(b) Affect the operation of any statute governing the effect of recording or failure to record, except as specifically provided in this title. (Added by Stats.1982, c. 1268, p. 4672, § 1.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of Section 880.030 is new; notwithstanding the maximum record duration or period of enforceability of interests in property pursuant to this title, the owner of an interest may waive or be estopped from asserting the interest within the prescribed time, or other equitable defenses may apply. Subdivision (b) is drawn from Section 7 of the Model Marketable Title Act. (16 Cal.L.Rev.Comm. Reports 401).

Article 2—Application of Title

§ 880.240. Interests not subject to expiration pursuant to title

The following interests are not subject to expiration or expiration of record pursuant to this title:

(a) The interest of a person in possession (including use or occupancy) of real property and the interest of a person under whom a person in possession claims, to the extent the possession would have been revealed by reasonable inspection or inquiry.

(b) An interest of the United States or pursuant to federal law in real property that is not subjected by federal law to the recording requirements of the state and that has not terminated under federal law.

(c) An interest of the state or a local public entity in real property.

(d) A conservation easement pursuant to Chapter 4 (commencing with Section 815) of Title 2. (Added by Stats.1982, c. 1268, p. 4672, § 1.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of Section 880.240 is drawn from Section 3-306(2) of the Uniform Simplification of Land Transfers Act (1977). Subdivision (a) makes clear that if a person in possession claims under another person, whether by lease, license or otherwise, the interest of the other person does not expire. Subdivision (b) is drawn from Section 6 of the Model Marketable Title Act and Section 3-306(4) of the Uniform Act. The Comment to the Model Act states, "The exception as to claims of the United States would probably exist whether stated in the statute or not." Subdivision (c) is comparable to provisions in a number of jurisdictions that have enacted marketable record title legislation. The interest of a public entity is not subject to fractionalization and the current address of the public entity is always known. Subdivision (d) recognizes that a conservation easement may be created that is perpetual in duration. Section 815.2. (16 Cal.L.Rev.Comm. Reports 401).

§ 880.250. Absolute nature of times prescribed; extending time; revival of interests

(a) The times prescribed in this title for expiration or expiration of record of an interest in real property or for enforcement, for bringing an action, or for doing any other required act

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are absolute and apply notwithstanding any disability or lack of knowledge of any person or any provisions for tolling a statute of limitation and notwithstanding any longer time applicable pursuant to any statute of limitation.

(b) Nothing in this title extends the period for enforcement, for bringing an action, or for doing any other required act, or revives an interest in real property that expires and is unenforceable, pursuant to any applicable statute of limitation. (Added by Stats.1982, c. 1268, p. 4672, § 1.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of Section 880.250 makes clear that there can be no off-record waivers, extensions, or tolling of the expiration time for, or enforceability of, an interest in real property pursuant to this title. While off-record waivers, extensions, or tolling (including partial payments in the case of a mortgage or deed of trust) may be effective for purposes of general statutes of limitation, they cannot extend the duration or enforceability of an interest past the times prescribed in this title. Whether a recorded waiver, extension, or tolling is effective depends upon the statute governing the particular interest. Compare Section 882.020 (waiver or extension of time for enforcement of mortgage or deed of trust) with Section 885.030 (no waiver or extension of time for expiration of power of termination). Subdivision (b) is drawn from Section 7 of the Model Marketable Title Act and Section 3-308 of the Uniform Simplification of Land Transfers Act (1977).

§ 880.260. Action or proceeding tolling expiration or expiration of record

An interest in real property, as specified in this title, does not expire or expire of record and is not

unenforceable pursuant to this title at the time1 prescribed in this title if within the time1 an action is commenced to enforce, establish, clear title to, or otherwise affect the interest and a notice of the pendency of the action is recorded as provided by law. For the purpose of this section, action includes special proceeding and arbitration proceeding. (Added by Stats.1982, c. 1268, p. 4673, § 1.)

LAW REVISION COMMISSION COMMENT. Section 880.260 makes clear1 that there is no expiration of an interest in real property by operation of law pursuant to this title if a lis pendens is recorded before expiration. This is a specific application of the general provisions governing the effect of a lis pendens. See Code Civ.Proc. § 409. (16 Cal.L.Rev.Comm. Reports 401).

1 We are not sure that the section actually makes this clear. However, if you read “if within the time…” as “if prior

to the time prescribed in this title an action is commenced…” then we believe you get a better sense of what is intended. CER/JQ

Article 3—Preservation of Interests

§ 880.310. Recordation of notice of intent

(a) If the time within which an interest in real property expires pursuant to this title depends upon recordation of a notice of intent to preserve the interest, a person may preserve the person's interest from expiration by recording a notice of intent to preserve the interest before the interest expires pursuant to this title. Recordation of a notice of intent to

preserve an interest in real property after the interest has expired1 pursuant to this title does not preserve the interest.

(b) Recordation of a notice of intent to preserve an interest in real property does not preclude a court from determining that an interest has been abandoned or is otherwise unenforceable pursuant to other law, whether before or after the notice of intent to preserve the interest is recorded, and does not validate or make enforceable a claim or

•Page 16

interest that is otherwise invalid or unenforceable. Recordation of a notice of intent to preserve an interest in real property creates a presumption affecting the burden of proof that the person who claims the interest has not abandoned and does not intend to abandon the interest. (Added by Stats.1982, c. 1268, p. 4673, §1.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of Section 880.310 is drawn from Sections 2(d) and 4(a) of the Model Marketable Title Act and Sections 3-303(3) and 3-305 of the Uniform Simplification of Land Transfers Act (1977). Subdivision (a) imposes no limit on the number of times a notice of intent to preserve may be recorded; so long as the interest has not expired at the time of recordation, preservation of an interest in

perpetuity is possible.2 If a person owns a part interest in real property, the notice of intent preserves only the

part interest owned by the person for whom the notice is recorded. If a person owns an interest in real property that is one of several related interests in real property, the notice of intent preserves only the interest owned by the person for whom the notice is recorded and not the related interests of other persons. However, a person may record an interest on behalf of other owners of the interest, if so authorized by the others. See Section 880.320 (who may record notice). Subdivision (b) is drawn from Section 3-309 of the Uniform Act, with the addition of language to make clear that a notice of intent to preserve does not affect the validity of any interest in real property under law apart from this title but that the notice creates a presumption against abandonment. [16 Cal.L.Rev.Comm. Reports 401].

1 In applying this section, it is necessary to distinguish between “expired,” on one hand, and “dormant” (§ 883.220)

or “abandoned” (§ 887.050), on the other. See § 883.230(c)(2) and § 887.060(c)(2). CER/JQ

2 This is only true in the absence of specific provision otherwise. See, e.g., 882.020 establishing a maximum life for

a mortgage or deed of trust based solely on recording a notice of intent to preserve! CER/JQ

§ 880.320. Persons entitled to record notice of intent

A notice of intent to preserve an interest in real property may be recorded by any of the following persons:

(a) A person who claims the interest.

(b) Another person acting on behalf of a claimant if the person is authorized to act on behalf of the claimant or if the claimant is one of a class whose identity cannot be established or is uncertain at the time of recording the notice of intent to preserve the interest. (Added by Stats.1982, c. 1268, p. 4673, §1.)

§ 880.330. Requisites of notice of intent

Subject to all statutory requirements for recorded documents:

(a) A notice of intent to preserve an interest in real property shall be in writing and signed and verified by or on behalf of the claimant. If the notice is made on behalf of a claimant, the notice shall include a statement of the authority of the person making the notice.

(b) The notice shall contain* all of the following information:

(1) The name and mailing address of the claimant. If the notice is made by or on behalf of more than one claimant the notice shall contain the name and mailing address of each claimant.

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(2) A statement of the character of interest claimed.1 The statement shall include a reference by record location to the recorded document that creates or evidences the interest in the claimant.

(3) A legal description of the real property in which the interest is claimed.1 The description may be the same as that contained in the recorded document that creates or evidences the interest in the claimant. (Added by Stat.1982, c. 1268, p. 4673, §1.)

LAW REVISION COMMISSION COMMENTS. 1982 Addition Section 880.330 is drawn from portions of Sections 4(a) and (5) of the Model Marketable Title Act and from Sections 2-302(b) and 2-308(b) of the Uniform Simplification of Land Transfers Act (1977). Under subdivision (b), if the interest is a restriction that affects the use or enjoyment of more than one parcel of real property that was created by a recorded document containing a general description of all of the parcels, the legal description required may be the same as the general description. The introductory portion of Section 880.330 makes clear that all other statutory requirements must be complied with. See, e.g., Section 1170 (recorded document must be duly acknowledged or proved and certified) (16 Cal.L.Rev.Comm. Reports 401).

1 This is only true in the absence of specific provision otherwise. See, e.g., § 883.230(b), re dormant mineral rights, and § 887.060(b), re abandoned easements. CER/JQ

§ 880.340. Form of notice of intent to preserve interest

Subject to all statutory requirements for recorded documents, a notice of intent to preserve an interest

in real property shall be in substantially1 the following form:

Recording requested by:

[RECORDING INFORMATION]

[FOR USE OF RECORDER]

After recording return to:

SPACE ABOVE FOR USE OF COUNTY RECORDER ONLY, PLEASE

Indexing instructions. This notice must be indexed as follows:

Grantor and grantee index--each claimant is a grantor2.

NOTICE OF INTENT TO PRESERVE INTEREST

This notice is intended to preserve an interest in real property from extinguishment pursuant to Title 5 (commencing with Section 880.020) of Part 2 of Division 2 of the Civil Code (Marketable Record Title).

Claimant Name:

Mailing address: (must be given for each claimant)

Interest Character3 (e.g., power of termination):

Record location*** of document creating or evidencing interest in claimant:

Real Property Legal description3 (may be same as in recorded document creating or

evidencing interest in claimant):

•Page 18

I assert under penalty of perjury that this notice is not recorded for the purpose of slandering title to real property and I am informed and believe that the information contained in this notice is true. If this notice is made on behalf of a claimant, I assert under penalty of perjury that I am authorized to act on behalf of the claimant.

Signed: _______________________ Date: __________ (claimant)

________________________ (person acting on behalf of claimant) ***Certificate of acknowledgement required.

(Added by Stats.1982, c. 1268, p. 4674, §1. Amended by Stats.2012, c. 94 (A.B. 1642), §1.)

LAW REVISION COMMISSION COMMENTS. 1982 Addition Section 880.340 incorporates the requirements of Section 880.330 (contents of notice). The introductory portion of Section 880.340 makes clear that all other statutory requirements must be complied with. See, e.g., Gov't Code § 27351.6 (printed forms) (16 Cal.L.Rev.Comm. Reports 401).

1 Beware the tendency of recorder’s staff to consider ‘substantially’ the same to be synonymous with ‘exactly’ the same. You want to depart from this format as little as possible. CER/JQ

2 See § 880.350(b), below, re indexing. CER/JQ

3 Only true in the absence of specific provision otherwise. See, e.g., § 883.230(b), re dormant mineral rights, and § 887.060(b), re abandoned easements. CER/JQ

§ 880.350. County of recording notice of intent

(a) A notice of intent to preserve an interest in real property shall be recorded in the county in which the real property is situated.

(b) The county recorder shall index a notice of intent to preserve an interest in real property in the index of grantors and grantees. The index entry shall be for the grantor, and for the purpose of this index, the claimant under the notice shall be deemed to be the grantor. If a notice of intent to preserve is recorded by or on behalf of more than one claimant, each claimant shall be deemed to be a grantor and a separate index entry shall be made for

each1 claimant. (Added by Stats.1982, c. 1268, p. 4675, §1.)

1 Anticipate a separate indexing fee for the second and each additional “grantor.” Who do you suppose is the “grantee”? No one? CER/JQ

§ 880.360. Slandering title; recording notice of intent

A person shall not record a notice of intent to preserve an interest in real property for the purpose of slandering title to the real property. If the court in an action or proceeding to establish or quiet title determines that a person recorded a notice of intent to preserve an interest for the purpose of slandering title, the court shall award against the person the cost of the action or proceeding, including a reasonable attorney's fee, and the damages caused by the recording. (Added by Stats.1982, c. 1268, p. 4675, §1.)

•Page 19

LAW REVISION COMMISSION COMMENT. 1982 Addition Section 880.360 is comparable to provisions in a number of jurisdictions that have enacted marketable record title legislation, and makes clear that recordation of a notice of intent to preserve an interest under this title is not privileged. Section 880.360 does not affect the elements of the cause of action for slander of title and codifies the measure of recovery for slander of title, with the addition of reasonable attorney's fees. See 4 B. Witkin, Summary of California Law Torts § 328 (8th ed. 1974). (16 Cal.L.Rev.Comm. Reports 401).

§ 880.370. Extension of time for recordation of notice

If the period prescribed by statute during which a notice of intent to preserve an interest in real property must be recorded expires before, on, or within five years after the operative date of the statute, the period is extended until five years after the operative date of the statute. (Added by Stats.1982, c. 1268, p. 4675, §1.)

CHAPTER 2. ANCIENT MORTGAGES AND DEEDS OF TRUST

§ 882.020. Expiration date; lien of security interest of record; power of sale deemed exercised

(a) Unless the lien of a mortgage, deed of trust, or other instrument that creates a security interest of record in real property to secure a debt or other obligation has earlier expired pursuant to Section 2911, the lien expires at, and is not enforceable by action for foreclosure commenced, power of sale exercised, or any other means asserted after, the later of the following times:

(1) If the final maturity date or the last date fixed for payment of the debt or performance of the obligation is ascertainable from the recorded evidence of

indebtedness,1 10 years after that date.

(2) If the final maturity date or the last date fixed for payment of the debt or performance of the obligation is not ascertainable from the recorded evidence of

indebtedness,1 or if there is no final maturity date or last date fixed for payment of the debt or performance of the obligation, 60 years after the date the instrument that created the security interest was recorded.

(3) If a notice of intent to preserve the security interest is recorded within the time

prescribed in paragraph (1) or (2),2 10 years after the date the notice is recorded.

(b) For the purpose of this section, a power of sale is deemed to be exercised upon recordation of the deed executed pursuant to the power of sale.

(c) The times prescribed in this section may be extended in the same manner and to the same extent as a waiver made pursuant to Section 360.5 of the Code of Civil Procedure, except that an instrument is effective to extend the prescribed times only if it is recorded before expiration of the prescribed times. (Added by Stats.1982, c. 1268, p. 4676, § 1. Amended by Stats.2006, c. 575 (A.B. 2624), §1.)

LEGISLATIVE COMMITTEE COMMENT. Section 882.020 prescribes a maximum time for enforcement of a

mortgage or deed of trust.3 It operates to bar enforcement of a mortgage or deed of trust after the time

prescribed even though the general statutes of limitation may not have run due to tolling, partial payment, or waiver. See Code Civ.Proc. §§ 337 (four-year statute of limitation); 360 (partial payment turns back statute); 360.5 (waiver of statute of limitation); 351-358 (tolling of statute). The section does not extend the time provided by the general statutes of limitation that apply to enforcement of a mortgage or other lien. Cf. Code Civ.Proc. § 337 (four-

•Page 20

year limitation period). The section limits the time for exercise of a power of sale under a deed of trust, reversing

the rule of case law that such a power of sale "never outlaws." 3 See, e.g., 3 B. Witkin, Summary of California Law,

Security Transactions in Real Property §§ 84-85 (8th ed. 1973). If the underlying obligation of a mortgage or other lien is barred by the general statutes of limitation before the time prescribed in this section the mortgage or other lien may expire and be unenforceable pursuant to Section 2911, even though a power of sale under a deed of trust remains enforceable. The cloud on title of such a mortgage or other lien that has expired and is unenforceable may be removed by judicial action, or may be removed by operation of law after passage of the time prescribed in this section. See Sections 2911 (lien extinguished by lapse of statute of limitation) and 882.030 (effect of expiration).

Subdivision (a) adopts a 10-year maximum enforcement period after maturity of the obligation3secured by the

mortgage or deed of trust. This period is drawn from the comparable 10-year period of the Model Mortgage Limitation Act § 4(a) and the Uniform Simplification of Land Transfers Act (1977) § 3-408(a). Subdivision (a) adopts a 60-year maximum enforcement period after recordation of the security instrument in cases where the maturity date of the obligation cannot be ascertained from the record, whether because the obligation provided no maturity date, because the maturity date is variable depending on facts not in the record, or because the

obligation specifies no maturity date. In either case, subdivision (a) provides for a one-time only automatic4

extension of enforceability for an additional 10 years upon recording4 a notice of intent to preserve the lien. The

effect of subdivision (a) is to prescribe a maximum life for a mortgage or deed of trust based exclusively on the record for marketability of title purposes. Subdivision (c) provides for waiver or extension of the time for enforcement of a mortgage or deed of trust under subdivision (a). The waiver or extension must be recorded to be effective. This accomplishes the purpose of enabling a determination of enforceability based on the record alone. Under this provision, a waiver or extension may be made only for a period of four years at a time.

1 Note that this is true whether the recorded evidence of the indebtedness is a short form of the deed of trust or the long form. If the maturity or last date fixed for payment is not in that recorded document, then the expiration is governed by subsection (b). CER/JQ

2 It is clear here and in the section as a whole that the extension is only available on a one-time basis for recording notice of intent to preserve. Also see notes of decisions under topics 1 and 2, below. CER/JQ

3 This result is more directly stated in § 882.030. CER/JQ

4 We are not sure that “automatic” is a correct description of an extension that results from filing a notice of intent. It’s like referring to a door that opens when you push it open as an ‘automatic’ door. CER/JQ

NOTES OF DECISIONS

1. Maturity date Maturity date of promissory note secured by deed of trust was not ascertainable from the record, and thus power of sale under deed of trust did not expire until sixty years after its recordation; there was no evidence that the note was ever recorded, and the deed of trust did not state the maturity date of the note. Nicolopulos v. Superior Court (App. 2 Dist. 2003) 130 Cal.Rptr.2d 626, 106 Cal.App.4th 304.

2. Ascertainable from the record Term "ascertainable from the record" in statute stating that the lien of a deed of trust expires ten years after the final maturity date of the obligation if that date is ascertainable from the record does not include the contents of unrecorded documents referred to in a recorded document. Nicolopulos v. Superior Court (App. 2 Dist. 2003) 130 Cal.Rptr.2d 626, 106 Cal.App.4th 304.

•Page 21

3. Estoppel Holder of deed of trust was not estopped from relying on the sixty-year limitation period in foreclosing on property, although deed holder could have enforced his rights as soon as property owner stopped paying on promissory note secured by deed and owner made substantial improvements to the property thereafter and no longer had records to prove entire obligation was satisfied; deed holder did not make any action or statement on which property owner relied, deed holder had no duty to speak, and property owner was aware of all facts known by deed holder. Nicolopulos v. Superior Court (App. 2 Dist. 2003) 130 Cal.Rptr.2d 626, 106 Cal.App.4th 304. Mortgages . 345

4. Laches Doctrine of laches did not prevent deed holder from asserting sixty-year limitation period and exercising power of sale in deed of trust in nonjudicial foreclosure; deed holder was not seeking equitable relief or asserting an equitable right, deed holder did not file a lawsuit, and there was no particular prejudice or inequity to property owner, who had signed and benefitted from promissory note, signed deed of trust, and did not repay obligation. Nicolopulos v. Superior Court (App. 2 Dist. 2003) 130 Cal.Rptr.2d 626, 106 Cal.App.4th 304. Mortgages . 345

§ 882.030. Effect of expiration of lien of security interest

Expiration of the lien of a mortgage, deed of trust, or other security interest pursuant to this chapter or any other statute renders the lien unenforceable by any means commenced or asserted thereafter and is equivalent for all purposes to a certificate of satisfaction, reconveyance, release, or other discharge of the security interest, and execution and recording of a certificate of satisfaction, reconveyance, release, or other discharge is not necessary to terminate or evidence the termination of the security interest. Nothing in this section precludes execution and recording at any time of a certificate of satisfaction, reconveyance, release, or other discharge. (Added by Stats.1982, c. 1268, p. 4676, § 1.)

LEGISLATIVE COMMITTEE COMMENT. Section 882.030 is drawn from the Model Mortgage Limitation Act § 4 and from the Uniform Simplification of Land Transfers Act (1977) § 3-408(b). Under this section, running of the enforcement period prescribed in Section 882.020 (expiration of record of mortgage or deed of trust) or any other statute such as Section 2911 (lien extinguished by lapse of statute of limitation) has the effect of complete discharge of the mortgage or deed of trust; this reverses the rule that a mortgage or deed of trust barred by the statute of limitations may be equitably enforced. See, e.g., Puckhaber v. Henry, 152 Cal. 419, 93 P. 114 (1907); Mix v. Sodd, 126 Cal.App.3d 386, 178 Cal.Rptr. 736 (1981). (16 Cal.L.Rev.Comm. Reports 401; 82 S.J. 11018, 12489).

§ 882.040. Application of chapter

(a) Subject to Section 880.370 (grace period for recording notice) and except as otherwise provided in this section, this chapter applies on the operative date to all mortgages, deeds of trust, and other instruments that create a security interest in real property to secure a debt or other obligation, whether executed or recorded before, on, or after the operative date.

(b) This chapter shall not cause the lien of a mortgage, deed of trust, or other security interest in real property to expire or become unenforceable before the passage of five years after the operative date of this chapter. (Added by Stats.1982, c. 1268, p. 4676, § 1.)

LEGISLATIVE COMMITTEE COMMENT. Subdivision (a) of Section 882.040 makes clear the legislative intent to apply this chapter immediately to existing security interests. Section 880.370 provides a five-year grace period for recording a notice of intent to preserve a security interest that expires by operation of this chapter before, on, or within five years after the operative date of this chapter. Subdivision (b) provides a five-year grace period to enable enforcement of security interests that would be outlawed by the enactment of this chapter and a shorter grace period for enforcement of interests that would be outlawed within five years after the enactment of this

•Page 22

chapter. The five-year grace periods do not operate as an extension of any other statute of limitation or of the time within which an effective waiver or extension of the statute of limitation must be made pursuant to Code of Civil Procedure Sections 337 (statute of limitation) and 360.5 (waiver of statute of limitation). See Section 880.250 (relation of title to statutes of limitation) (16 Cal.L.Rev.Comm. Reports 401; 82 S.J. 11018, 12489).

CHAPTER 3. MINERAL RIGHTS

ARTICLE 1. GENERAL PROVISIONS § 883.110. Mineral right defined

As used in this chapter, "mineral right" means an interest in minerals, regardless of character, whether fugacious or nonfugacious, organic or inorganic, that is created by grant or reservation, regardless of form, whether a fee or lesser interest, mineral, royalty, or leasehold, absolute or fractional, corporeal or incorporeal, and includes express or implied appurtenant surface rights. (Added by Stats.1984, c. 240, § 2.)

LAW REVISION COMMISSION COMMENT. Section 883.110 defines mineral rights broadly to include a fee interest as well as any lesser interest and to include oil and gas as well as in-place minerals such as ores, metals, and coal. Cf. In re Waltz, 197 Cal. 263, 240 P. 19 (1925) (characterizing mineral rights). Section 883.110 also makes clear that for the purposes of this chapter, surface rights appurtenant to a mineral interest are included within the meaning of "mineral right." Cf. Callahan v. Martin, 3 Cal.2d 110, 43 P.2d 788 (1935) (grant of minerals includes implied right of entry to extract them).

§ 883.120. Application of chapter; mineral rights reserved to United States;

mineral rights not subject to expiration

(a) This chapter does not apply to a mineral right reserved to the United States (whether in a patent, pursuant to federal law, or otherwise) or to an oil or gas lease, mining claim, or other mineral right of a person entitled pursuant thereto, to the extent provided in Section 880.240.

(b) This chapter does not apply to a mineral right of the state or a local public entity, or of any other person, to the extent provided in Section 880.240. (Added by Stats.1984, c. 240, § 2.)

§ 883.130. Abandoned mineral rights Nothing in this chapter limits or affects the common law governing abandonment of a mineral right or any other procedure provided by statute for clearing an abandoned mineral right from title to real

property.1 (Added by Stats.1984, c. 240, § 2.) LAW REVISION COMMISSION COMMENTS. 1984 Addition Section 883.130 makes clear that although this chapter includes a statute by which a dormant mineral right may be terminated (see Sections 883.210-883.270), this chapter is not intended to limit the common law of abandonment of mineral rights. See, e.g., Gerhard v. Stephens, 68 Cal.2d 864, 442 P.2d 692, 69 Cal.Rptr. 612 (1968) (mineral right in oil and gas subject to abandonment). Thus, for example, nothing in this article affects the common law determination of abandonment of an oil or gas lease. See, e.g., Banks v. Calstar Petroleum Co., 82 Cal.App.2d 789, 187 P.2d 127 (1947); Berry v. Kelly, 90 Cal.App.2d 486, 203 P.2d 80 (1949). Nor is this chapter the exclusive means by which title to property may be cleared of an abandoned mineral right. See, e.g., Code Civ.Proc. §§ 760.010-764.070 (quiet title). [17 Cal.L.Rev.Comm.Reports 957 (1984)].

•Page 23

1 The dormant mineral rights provisions are in addition to and not a replacement of the common law rule of abandonment of incorporeal hereditaments. (See, e.g., Gerhard v. Stephens (1968) 68 Cal.2d 864). See § 887.030 for similar provisions concerning the common law rules for abandonment of easements. CER/JQ

§ 883.140. Mineral right lease; expiration or abandonment; quitclaim deed

(a) As used in this section:

(1) "Lessee" includes an assignee or other successor in interest of the lessee.

(2) "Lessor" includes a successor in interest or heir or grantee of the lessor.

(b) If the term of a mineral right lease has expired or a mineral right lease has been abandoned by the lessee, the lessee shall, within 30 days after demand therefor by the lessor, execute, acknowledge, and deliver, or cause to be recorded, a deed quitclaiming all interest in and to the mineral rights covered by the lease. If the expiration or abandonment covers less than the entire interest of the lessee, the lessee shall execute, acknowledge, and deliver an appropriate instrument or notice of surrender or termination that covers the interest that has expired or been abandoned.

(c) If the lessee fails to comply with the requirements of this section, the lessee is liable for all damages sustained by the lessor as a result of the failure, including, but not limited to, court costs and reasonable attorney's fees in an action to clear title to the lessor's interest. The lessee shall also forfeit to the lessor the sum of one hundred fifty dollars ($150).

(d) Nothing in this section makes a quitclaim deed or other instrument or notice of surrender or termination, or a demand therefor, a condition precedent to an action to clear title to the

lessor's interest. (Added by Stats.1984, c. 240, § 2.)

LAW REVISION COMMISSION COMMENT. Section 883.140 continues the substance of former Section 794. Cf. Section 886.020 and Comment thereto (release of contract for sale of real property). [17 Cal.L.Rev.Comm.Reports 957 (1984) ].

ARTICLE 2. TERMINATION OF DORMANT MINERAL RIGHT

§ 883.210. Action to terminate dormant mineral right

The owner of real property subject to a mineral right may bring an action to terminate the mineral right pursuant to this article if the mineral right is dormant. (Added by Stats.1984, c. 240, § 2.)

LAW REVISION COMMISSION COMMENT. Section 883.210 authorizes termination of dormant mineral rights, subject to the limitations and conditions in this article. This is consistent with public policy to enable and encourage full use and development of real property, including both surface and subsurface interests. Section 880.020 (declaration of policy and purposes). Section 883.210 is also consistent with the common law rule that mineral rights in oil and gas are subject to abandonment, and applies to mineral rights in other substances as well. See Sections 883.110 ("mineral right" defined) and 883.130 (law governing abandonment not affected) and Comments thereto; cf. Section 883.140 (clearing record of expired or abandoned mineral right lease). This article supplements common law principles of abandonment by providing a separate and independent basis for terminating a dormant mineral right. [17 Cal.L.Rev.Comm.Reports 957 (1984) ].

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§ 883.220. Dormant rights; conditions

For the purpose of this article, a mineral right is dormant if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to terminate the mineral

right:1

(a) There is no production of the minerals and no exploration, drilling, mining, development, or other operations that affect the minerals, whether on or below the surface of the real property or on other property, whether or not unitized or pooled with the real property.

(b) No separate property tax assessment is made of the mineral right or, if made, no taxes are paid on the assessment.

(c) No instrument creating, reserving, transferring, or otherwise evidencing the mineral right is recorded. (Added by Stats.1984, c. 240, § 2.)

LAW REVISION COMMISSION COMMENT. Section 883.220 defines dormancy for the purpose of this article; it does not affect the common law of abandonment. See Section 883.130 (law governing abandonment not affected). The 20-year period prescribed in Section 883.220 is consistent with the 20-year period prescribed by statute for termination of a right of entry or occupation of surface lands under an oil or gas lease. Code Civ.Proc. §§ 772.010-772.060. The 20-year period can be extended indefinitely by recordation of a notice of intent to preserve the

mineral right. 1 Section 883.230 (preservation of mineral right). [17 Cal.L.Rev.Comm.Reports 957 (1984) ].

1 Compare this with, e.g., provisions discussed above concerning ancient mortgages and deeds of trust. CER/JQ

§ 883.230. Notice of intent to preserve mineral right; effect

(a) An owner of a mineral right may at any time record a notice of intent to preserve the mineral right.

(b) In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the mineral rights claimed as otherwise required by paragraph (2) of subdivision (b) of Section 880.330 and in lieu of the legal description of the real property in which the interest is claimed as otherwise required by paragraph (3) of subdivision (b) of Section 880.330 and notwithstanding the provisions of Section 880.340 or any other provision in this title, a notice of intent to preserve a mineral right may refer generally and without specificity to any or all mineral rights claimed by claimant in any

real property situated in the county.1

(c) A mineral right is not dormant for the purpose of this article if:2

(1) A notice of intent to preserve the mineral right is recorded within 20 years immediately preceding commencement of the action to terminate the mineral right.

(2) A notice of intent to preserve the mineral right is recorded pursuant to Section 883.250

after commencement of the action to terminate the mineral right.3

(Added by Stats.1984, c. 240, § 2.)

LAW REVISION COMMISSION COMMENT. Section 883.230 makes recording a notice of intent to preserve a mineral right conclusive evidence of non-dormancy for purposes of this article. Recording a notice of intent to preserve also creates a presumption affecting the burden of proof that the claimant has not abandoned the mineral right for purposes of a determination of abandonment pursuant to common law. Section 880.310 (notice of intent to preserve interest). [17 Cal.L.Rev.Comm.Reports 957 (1984)].

•Page 25

1 There are serious reasons to consider including the detailed specific information along with the general statement permitted by this section. CER/JQ

2 See § 887.060(c) for similar provisions concerning the circumstances in which filing of a notice of intent to preserve an easement may prevent it from being “abandoned” under the Act. Note, though that in § 887.060(c)(2) a notice of intent recorded after filing of an action is expressly required to be recorded “before judgment is entered in the action,” a requirement not expressly stated here in regard to dormant mineral right actions. CER/JQ

3 And see § 883.250 for details concerning such a “late filed” notice of intent to preserve. CER/JQ

§ 883.240. Actions; place; procedure

(a) An action to terminate a mineral right pursuant to this article shall be brought in the superior court of the county in which the real property subject to the mineral right is located.

(b) The action shall be brought in the same manner and shall be subject to the same procedure as an action to quiet title pursuant to Chapter 4 (commencing with Section 760.010) of Title 10 of Part 2 of the Code of Civil Procedure, to the extent applicable. (Added by Stats.1984, c. 240, § 2.)

LAW REVISION COMMISSION COMMENT. Section 883.240 incorporates, insofar as applicable, the general quiet title procedures for an action to terminate a dormant mineral right pursuant to this article. See Code Civ.Proc. §§ 760.010-764.070. [17 Cal.L.Rev.Comm.Reports 957 (1984)].

§ 883.250. Late notice of intent to preserve mineral right; condition of dismissal of action

In an action to terminate a mineral right pursuant to this article, the court shall permit the owner of the mineral right to record a late notice of intent to preserve the mineral right as a condition of dismissal

of the action,1 upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the mineral right or portion thereof as to which the notice is recorded. As used in this section, the term "litigation expenses" means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee. (Added by Stats.1984, c. 240, § 2.)

LEGISLATIVE COMMITTEE COMMENT. Section 883.250 enables a mineral right owner to preserve the mineral right after commencement of an action to terminate the right by filing a late notice of intent to preserve the

interest.1 This authority is conditioned upon payment of the property owner's litigation expenses. If the mineral

rights are fractionated, the mineral right owner must pay only the fraction of litigation expenses that corresponds to the mineral rights preserved. Litigation expenses include disbursements made for title reports and other disbursements made in preparation for the litigation as well as court costs and attorney fees incurred in connection with the litigation. [17 Cal.L.Rev.Comm.Reports 957 (1984); 18 Cal.L.Rev.Comm. Reports 71 (1984)].

1 This, of course, significantly limits the practical utility of an action to terminate a dormant mineral right—unless there is no chance that any of the defendants will actually be located and appear. CER/JQ

§ 883.260. Termination under article; effect

A mineral right terminated pursuant to this article is unenforceable and is deemed to have expired. A court order terminating a mineral right pursuant to this article is equivalent for all purposes to a conveyance of the mineral right to the owner of the real property. (Added by Stats.1984, c. 240, § 2.)

•Page 26

LAW REVISION COMMISSION COMMENT. Section 883.260 makes clear that termination of a dormant mineral right has the effect of a reconveyance to the surface owner. See also Section 883.240 (court procedure) and Code Civ.Proc. §§ 764.010-764.070 (effect of quiet title judgment). [17 Cal.L.Rev.Comm.Reports 957 (1984) ].

§ 883.270. Application of article

Subject to Section 880.370 (grace period for recording notice), this article applies to all mineral rights, whether executed or recorded before, on, or after January 1, 1985. (Added by Stats.1984, c. 240, § 2.)

LAW REVISION COMMISSION COMMENT. Section 883.270 makes clear the legislative intent to apply this article to mineral interests existing on the date this article becomes operative (January 1, 1985). Section 880.370 provides a five-year grace period for recording a notice of intent to preserve a mineral interest that would be subject to termination pursuant to this article before, on, or within five years after the operative date of this article. See Sections 883.230 (preservation of mineral right) and 880.370 (grace period for recording notice) and Comments thereto. [17 Cal.L.Rev.Comm.Reports 957 (1984) ].

CHAPTER 4. UNEXERCISED OPTIONS

§ 884.010. Expiration date; recorded instrument

If a recorded instrument creates or gives constructive notice of an option to purchase real property, the option expires of record if no conveyance, contract, or other instrument that gives notice of exercise or extends the option is recorded within the following times:

(a) If the expiration date of the option is ascertainable from the recorded instrument,1 six months after that expiration date.

(b) If the expiration date of the option is not ascertainable from the recorded instrument or the recorded instrument indicates that the option provides no expiration date, six months after the date the instrument that creates or gives constructive notice of the option is recorded.

(c) This section shall become operative on January 1, 2013. (Added by Stats.2011, c. 46 (S.B.284), § 3, operative Jan. 1, 2013. Former section 884.010, added by Stats.1982, c. 1268, p. 4677, § 1, amended by Stats. 2011, c.46 (S.B. 284, § 2, repealed by its own terms, operative Jan. 1, 2013.)

LAW REVISION COMMISSION COMMENT (to 1982 Legislation). Subdivision (a) of Section 884.010 reduces the period of former Section 1213.5 for expiration of record of an option from one year to six months after expiration by its terms. Under subdivision (b) an option with no prescribed term expires of record six months after its recordation rather than one year after its expiration by operation of law as provided under former Section 1213.5. This modifies the rule that if an option provides no expiration date it may be exercised within a reasonable time after it is executed. See, e.g., 1 B. Witkin, Summary of California Law, Contracts § 129 (8th ed. 1973). Subdivision (b) does not prescribe the time within which such an option must be exercised; it only limits the effect of the

option on third persons.2 See Section 884.020 (effect of expiration). Nothing in Section 884.010 affects the

application of the Rule Against Perpetuities to an option,3 whether the option expires within a fixed or indefinite

period in accordance with its terms or whether it expires by operation of law within a reasonable time after it is executed. See, e.g., 3 B. Witkin, Summary of California Law, Real Property § 304 (8th ed. 1973).Nothing in Section 884.010 affects an option to purchase included in the terms of the lease of a lessee in possession. See Section 880.240(a) (interests excepted from title). [16 Cal.L.Rev.Comm. Reports 401]

1 As with mortgages and deeds of trust, the expiration date must appear in the recorded instrument for subsection (a) to apply. This is true whether the recorded evidence of the option is a short form or memorandum or the long form. Otherwise the expiration is governed by subsection (b). CER/JQ

•Page 27

2 Actually, neither subsection (a) nor subsection (b) directly limits the time within which an option must be exercised. However, the effect of ‘expirtion’ provided in § 884.020 is merely to limit the effect of the option as constructive notice to third parties. CER/JQ

3 But see Probate Code § 21200, et sec., the [California] Uniform Statutory Rule “Against” (or “About”) Perpetuities, for what is left in California of the Rule Against Perpetuities. CER/JQ

§ 884.020. Effect of expiration of record

Upon the expiration of record of an option to purchase real property, the recorded instrument that creates or gives constructive notice of the option ceases to be notice to any person or to put any person on inquiry1 with respect to the exercise or existence of the option or of any contract, conveyance, or other writing that may have been executed pursuant to the option. (Added by Stats.1982, c. 1268, p. 4677, § 1.)

LAW REVISION COMMISSION COMMENT. Section 884.020 continues the substance of a portion of former Section 1213.5. An option that has expired of record does not affect third persons but may still affect the parties to the

option.1 See Section 884.010 (expiration of record) and Comment thereto. [16 Cal.L.Rev.Comm. Reports 401]

1 Compare § 886.040 concerning the effect of an expired recorded contract for the sale of real property: ”…the contract has no effect, and does not constitute an encumbrance of cloud, on the title to the real property as against a person other than a party to the contract.” In contrast, not only the parties, but also third parties with actual knowledge of the option from sources other than the record may remain subject to an expired option. What about a third party who acquires actual knowledge of the option from a review of the record before its expiration? CER/JQ

§ 884.030. Application of chapter

(a) Except as otherwise provided in this section, this chapter applies on the operative date to all recorded instruments that create or give constructive notice of options to purchase real property, whether executed or recorded before, on, or after the operative date.

(b) This chapter shall not cause an option that expires according to its terms within one year before, on, or within one year after the operative date of this chapter to expire of record until one year after the operative date.

(c) This chapter shall not cause an option that provides no expiration date and that is recorded before the operative date of this chapter to expire of record until five years after the operative date of this chapter.

(d) Nothing in this chapter affects a recorded instrument that has ceased to be notice to any person or put any person on inquiry with respect to the exercise or existence of an option pursuant to former Section 1213.5 before the operative date of this chapter. (Added by Stats.1982, c. 1268, p. 4677, § 1.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of Section 884.030 continues the effect of former Section 1213.5 to govern all options now in existence or hereafter created. Subdivision (b) is intended to protect fixed term option holders who may have relied on the one-year expiration period formerly provided in Section 1213.5. Subdivision (c) is intended to protect indefinite term option holders before the operative date of this statute from expiration until an adequate time after the operative date, during which time an exercise or extension of the option may be recorded. Subdivision (d) makes clear that this chapter does not revive options that have expired pursuant to prior law (16 Cal.L.Rev.Comm. Reports 401).

•Page 28

CHAPTER 5. POWERS OF TERMINATION

§ 885.010. Definitions

(a) As used in this chapter:

(1) "Power of termination" means the power to terminate a fee simple estate in real property

to enforce a restriction2 in the form of a condition subsequent to which the fee simple estate is subject, whether the power is characterized in the instrument that creates or evidences it as a power of termination, right of entry or reentry, right of possession or

repossession, reserved power of revocation, or otherwise,1 and includes a possibility of reverter that is deemed to be and is enforceable as a power of termination pursuant to

Section 885.020.3

(2) "Power of termination" includes the power created in a transferee1 to terminate a fee

simple estate in real property to enforce a restriction on the use of the real property in the form of a limitation or condition subsequent to which the fee simple estate is subject, whether the power is characterized in the instrument that creates or evidences it as an executory interest, executory limitation, or otherwise, and includes the interest known at common law as an executory interest preceded by a fee simple determinable.

(b) A power of termination is an interest in the real property.

(c) For the purpose of applying this chapter to other statutes relating to powers of termination, the terms "right of reentry," "right of repossession for breach of condition subsequent," and comparable terms used in the other statutes mean "power of termination" as defined in this section. (Added by Stats.1982, c. 1268, p. 4677, § 1. Amended by Stats.1991, c. 156 (A.B.1577), § 15.)

LAW REVISION COMMISSION. Section 885.010 redefines the right of entry as a power of termination, the more descriptive and technically accurate of the two terms. See, e.g., Parry v. Berkeley Hall School Foundation, 10 Cal.2d 422, 74 P.2d 55 (1937). Places in the code where old terminology is used include Sections 791 and 793 ("right of re-entry") and 1046 ("right of reentry, or of repossession for breach of condition subsequent"). Despite redefinition, the power of termination is an interest in property and is subject to provisions governing property interests. See, e.g., Section 699 (future interests pass by succession, will, and transfer). A power of termination is transferable whether it would be classified at common law as a right of entry or possibility of reverter. See Section 1046. This resolves uncertainty in the case law. See, e.g., Johnston v. City of Los Angeles, 176 Cal. 479, 168 P. 1047 (1917) and Victoria Hospital Assn. v. All Persons, 169 Cal. 455, 147 P. 124 (1915). (16 Cal.L.Rev.Comm. Reports 401).

1991 Amendment

Section 885.010 is amended to include an executory limitation on a fee simple within the scope of this chapter. The language of subdivision (a)(2) extends the definition of "power of termination" to include an executory interest created in a transferee of real property. For the purpose of this chapter, the inclusion of such executory interests extends the traditional use of the term "power of termination" beyond rights of entry and related interests that were retained by the grantor. The traditional description of an executory interest preceded by a fee simple determinable in subdivision (a)(2) makes the coverage of this provision complete. The fee simple determinable is abolished in Section 885.020. See Comment to Section 885.020.

Executory interests are also subject to the limitations provided in the statutory rule against perpetuities. See Prob.Code §§ 21202 (application of statutory rule), 21205 (90-year wait-and-see period). Thus, an executory interest that becomes invalid under the statutory rule against perpetuities may not be renewed under this chapter. Similarly, if an executory interest terminates under this chapter, it is fully terminated and does not continue for purposes of the statutory rule against perpetuities. See Section 885.060 (effect of expiration of power of termination). [21 Cal.L.Rev.Comm.Reports 53 (1991)]

•Page 29

1 The common law future interests remaining in a grantor after grant of a qualified fee simple interest were either the possibility of reverter, following a fee simple determinable (FSD), or the variously labeled right-of-reentry or power of termination, following a fee simple subject to condition subsequent (FSCS). The difference being whether the interest conveyed to a grantee ended automatically upon occurrence of the limiting condition (FSD) or whether the occurrence of the limiting condition merely gave rise to a right to terminate the interest conveyed to the grantee. Thus, O to A, so long as the property remains zoned for agriculture—FSD. O to A, provided that O may re-enter and at such time as the property is no longer zoned for agriculture—FSCS. In contrast, at common law any future interest created in a grantee after grant of a qualified fee simple interest to another grantee was an executory interest—whether the limiting condition operated to end the intervening interest of merely gave rise to a power of termination, and the intervening interest was a fee simple subject to executory interest (FSEI). CER/JQ

2 It remains unclear just how narrowly or broadly the phrase ‘to enforce a restriction’ is to be understood. ‘Enforce a restriction’ suggests something that the grantee is obliged either to do or refrain from doing. However, a conveyance of land from O to A for so long as the land is not included in an incorporated city, seems to put in place a conditional limitation involving something largely beyond the power of the grantee to control. CER/JQ

3 The statement: “Power of termination…includes a possibility of reverter that is deemed to be and is enforceable as a power of termination pursuant to Section 885.020, read together with § 885.015 (“This chapter does not apply to the following….”) and the reference to Dabney v, Edwards in the Law Revision Comment to § 885.020, creates substantial and unnecessary confusion. CER/JQ

NOTES OF DECISIONS 1. Power of termination "Power of termination" was reversionary interest held by grantor of 60-foot strip of land to be used for right-of-way for electric railroad. Concord & Bay Point Land Co. v. City of Concord (App. 1 Dist. 1991) 280 Cal.Rptr. 623, 229 Cal.App.3d 289.

2. Personal covenant Deed conveying right-of-way to railroad for construction of branch line "provided that" railroad continuously work and operate line contained personal covenant to build and operate branch line, rather than condition subsequent, although granting clause stated that conveyance was given in consideration of sum of $1 and "in further consideration of conditions, provisions and covenants hereinafter contained." Sanders v. East Bay Mun. Utility Dist. (App. 1 Dist. 1993) 20 Cal.Rptr.2d 1, 16 Cal.App.4th 125, rehearing denied and modified.

§ 885.015. Application of chapter; power of termination

This chapter does not apply to any of the following:

(a) A power of termination conditioned upon the continued production or removal of oil or

gas or other minerals.1

(b) A power of termination as to separately owned improvements or fixtures conditioned

upon the continued leasehold or possessory interest in the underlying land.1 (Added by

Stats.1982, c. 1268, p. 4678, § 1. Amended by Stats.1991, c. 156 (A.B.1577), §16.)

LEGISLATIVE COMMITTEE COMMENT. Section 885.015 makes clear1 that this chapter applies only to classical

possibilities of reverter and rights of entry. It does not affect the characterization, duration, or manner of

enforcement of such contemporary hybrids2 as a reversionary interest in mineral rights retained by the owner of

property subject to an oil and gas lease,2 or a reversionary interest of the owner of land in separately owned

buildings, improvements, or fixtures, built or to be built on land subject to a ground or air rights lease2 in which

the owner of the buildings, improvements, or fixtures is the lessee. (16 Cal.L.Rev.Comm. Reports 401).

•Page 30

1991 Amendment

Section 885.015 is amended to refer to powers of termination, for consistency with the broadened scope of this chapter. See Section 885.010(b) ("power of termination" includes executory interest). This revision makes the exception provided in this section coextensive with the interests covered by this chapter. [21 Cal.L.Rev.Comm.Reports 53 (1991).]

1 Little or nothing is made “clear” by this section—either standing alone or when read in conjunction with other provisions of the chapter on powers of termination. The final sentence of § 885.010(a)(1), above, includes in ‘power of termination’ “a possibility of reverter that is deemed to be and is enforceable as a power of termination pursuant to Section 885.020.” Section 885.020 provides that “Fees simple determinable and possibilities of reverter are abolished. Every estate that would be at common law a fee simple determinable is deemed to be a fee simple subject to a restriction in the form of a condition subsequent. Every interest that would be at common law a possibility of reverter is deemed to be and is enforceable as a power of termination.” If nothing more were said, then every possibility of reverter would be a power of termination and every FSD for be an FSSC. However, the Law Revision Commission Comment to § 885.015 claims that the section “makes clear” that the entire chapter on powers of termination “applies only to classical possibilities of reverter and rights of entry….[but]…does not” apply to interests created in lessors and lessees by “such contemporary hybrids” as either oil and gas leases or ground and air leases. Let us suppose that O grants to A certain land so long as oil and gas continues to be produced from the land in quantities sufficient to provide a return over and above the ongoing costs of operation. That is a clear example of the creation of a fee simple terminable and a possibility of reverter. How much if any of the chapter applies to the interests thereby created? Section 885.015 excludes from application of the chapter certain powers of termination—but says nothing expressly about possibilities of reverted. The only way the exclusion in § 885.015(a) applies to this possibility of reverter is if it is “deemed to be and is enforceable as a power of termination pursuant to § 885.020.” However, if included in the scope of § 885.010 by the provisions of § 885.020, then the interests in question seem to be paradoxically excluded from not only § 885.020 but from the chapter as a whole by the provisions of § 885.015. So the question remains—to what extent are the interest described in § 885.015 excluded from the operation of the chapter on powers of termination? CER/JQ

2 The phrase ‘contemporary hybrids’ is neither mentioned nor in any manner alluded to in this section. The only examples given of interests excepted from its operation are interests subject to a condition required continued production or removal of oil and gas or other minerals and interests conditioned upon a continued leasehold or “other possessory” interest in the underlying land. Nothing in either provision requires a lease of any kind for the exclusion to apply. We are all left to wonder just what would be considered a “contemporary hybrid” and, if such was the intent, why that was not addressed directly in the text. Please also see the note under § 885.020 below concerning reference to Dabney v. Edwards. CER/JQ

§ 885.020. Fees simple determinable and possibilities of reverter abolished

Fees simple determinable and possibilities of reverter are abolished. Every estate that would be at common law a fee simple determinable is deemed to be a fee simple subject to a restriction in the form of a condition subsequent. Every interest that would be at common law a possibility of reverter is deemed to be and is enforceable as a power of termination. (Added by Stats.1982, c. 1268, p. 4678, § 1.)

LAW REVISION COMMISSION COMMENT 1982 ADDITION. Section 885.020 abolishes the estate known at common law as the fee simple determinable and the interest known as the possibility of reverter. Cf. Section 763 (estates tail abolished); Ky.Rev.Stats. § 381.218 (Baldwin 1979) (fee simple determinable and possibility of reverter abolished). These interests were recognized late in California jurisprudence and added little to California land law.1 See Dabney v. Edwards, 5 Cal.2d 1, 53 P.2d 962 (1935) (recognizing fee simple determinable and possibility of reverter). Section 885.020 applies to existing estates and interests as well as to those created after its enactment. See Section 885.070 (transitional provisions). Section 885.020 does not affect determinable life estates

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or determinable terms for years; it applies only to fee simple estates. See Section 885.010 ("power of termination" defined). (16 Cal.L.Rev.Comm. Reports 401).

1 The citation to Dabney v. Edwards as the source of California’s recognition of the type of interests addressed by this chapter is troubling in light of the supposed exclusion of oil and gas leases from its affect. That decision discusses the determinable fee interest in the context of identifying the conventional oil and gas lease as creating just such an interest. “…the legal interest created by oil and gas leases which provide for a term of indefinite and uncertain duration, which under the common law are classified as freehold estates in the nature of a qualified or determinable fee, must be deemed to be real property….” (Dabney v. Edwards (1935) 5 Cal.2d 1, 11.) “… in any event, whether the lease be terminated by a failure to find, discover, obtain, or produce oil or gas in paying quantities, the date of such termination, at the time of the execution of the lease, could not be definitely determined, and the duration of the term of such leases is therefore necessarily uncertain. The estates created by such leases are freehold estates in the nature of determinable fees. In this conclusion we are supported by ample authority from other jurisdictions. (Id., at p. 13.) CER/JQ

NOTES OF DECISIONS

1. Validity Statute transforming possibility of reverter to a power of termination did not violate due process rights of grantor's successor in interest; possibility of a reverter was not abolished, but was merely transformed into a power of termination. Walton v. City of Red Bluff (App. 3 Dist. 1991) 3 Cal.Rptr.2d 275, 2 Cal.App.4th 117, review denied. Constitutional Law . 278(1.3); Estates In Property . 2

2. In general Property grantee's failure to raise in the trial court the issue of grantor's successor's failure to record right of reentry under the marketable record title statutes precluded consideration of that issue on appeal; statute required holder of reversionary interest to file a notice of intent to preserve that interest once every 30 years. Walton v. City of Red Bluff (App. 3 Dist. 1991) 3 Cal.Rptr.2d 275, 2 Cal.App.4th 117, review denied.

Under marketable record title statute converting common law possibility of reverter to a power of termination, the interest held by the successor in interest to the grantor was a power of termination which had to be exercised through reentry; successor did not have immediate right to property. Walton v. City of Red Bluff (App. 3 Dist. 1991) 3 Cal.Rptr.2d 275, 2 Cal.App.4th 117, review denied.

Marketable record title statute did not require compliance with statute as an element of the cause of action to reenter property or quiet title to the property, and thus failure to plead compliance with statute did not defeat claim. Walton v. City of Red Bluff (App. 3 Dist. 1991) 3 Cal.Rptr.2d 275, 2 Cal.App.4th 117, review denied.

§ 885.030. Expiration dates; recorded instruments; contrary provisions

(a) A power of termination of record expires at the later of the following times:

(1) Thirty years after the date the instrument reserving, transferring, or otherwise

evidencing the power of termination1 is recorded.

(2) Thirty years after the date a notice of intent to preserve the power of termination is recorded, if the notice is recorded within the time prescribed in paragraph (1).

(3) Thirty years after the date an instrument reserving, transferring, or otherwise evidencing the power of termination or a notice of intent to preserve the power of termination is recorded, if the instrument or notice is recorded within 30 years after the date such an instrument or notice was last recorded.

(b) This section applies notwithstanding any provision to the contrary in the instrument reserving, transferring, or otherwise evidencing the power of termination or in another

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recorded document unless the instrument or other recorded document provides an earlier expiration date. (Added by Stats.1982, c. 1268, p. 4678, § 1.)

LAW REVISION COMMISSION COMMENT. Section 885.030 provides for expiration of a power of termination after 30 years, notwithstanding a longer or indefinite period provided in the instrument reserving the power. The expiration period supplements the rule against perpetuities. The rule against perpetuities does not apply to reversionary powers of termination. See Strong v. Shatto, 45 Cal.App. 29, 187 P. 159 (1919); Prob.Code § 21225(g) (exclusion from statutory rule against perpetuities). Executory interests remain subject to the limitations provided in the statutory rule against perpetuities. See Comment to Section 885.010; Prob.Code §§ 21202 (application of statutory rule), 21205 (90-year wait-and-see period).

The expiration period runs from the date of recording rather than the date of creation of the power of termination because the primary purpose of Section 885.030 is to clear record title. The expiration period can be extended for up to 30 years at a time by recordation of a notice of intent to preserve the power of termination. See Section 880.310 (notice of intent to preserve interest). Recordation of a notice of intent to preserve the power of termination does not enable enforcement of a power that has expired because it has become obsolete due to changed conditions or otherwise. See Sections 880.310 (notice of intent to preserve interest), 885.040 (obsolete power of termination), & Comments.

For the effect of expiration of a power of termination pursuant to this section, see Section 885.060 (effect of expiration). This section does not affect conservation easements pursuant to Sections 815-816. See Section 880.240 (interests excepted from title) & Comment. See also Section 885.015 (exceptions from chapter) & Comment. [21 Cal.L.Rev.Comm. Reports 53 (1991).]

1 Particularly in view of subsection (a)(3), why not just say in subsection (a)(1) ‘ instrument creating the power of termination. CER/JQ

§ 885.040. Obsolete powers; expiration; grants to public entities, etc.

(a) If a power of termination becomes obsolete, the power expires.

(b) As used in this section, a power of termination is obsolete if any of the following circumstances applies:

(1) The restriction to which the fee simple estate is subject is of no actual and substantial benefit to the holder of the power.

(2) Enforcement of the power would not effectuate the purpose of the restriction to which the fee simple estate is subject.

(3) It would be otherwise inequitable to enforce the power because of changed conditions or circumstances.

(c) No power of termination shall expire under this section during the life of the grantor if it arises from a grant by a natural person without consideration to a public entity or to a society, corporation, institution, or association exempt by the laws of this state from taxation. (Added by Stats.1982, c. 1268, p. 4678, § 1.)

LEGISLATIVE COMMITTEE COMMENT. Section 885.040 is drawn from New York law. See N.Y., Real Prop. Actions and Proc. Law § 1951 (McKinney 1979). It codifies the rule that reversionary interests will not be enforced if the restriction does not benefit the holder of the interests. See, e.g., Young v. Cramer, 38 Cal.App.2d 64, 100 P.2d 523 (1940) (holder of interest not an owner of appurtenant property). It also codifies existing case law relating to obsolete rights of entry. See, e.g., Letteau v. Ellis, 122 Cal.App. 584, 10 P.2d 496 (1932) (changed circumstances). However, Section 885.040 also imposes a limitation on equitable doctrines denying enforcement where a public or charitable donation is involved.

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A power of termination may expire pursuant to this section if it becomes obsolete notwithstanding the fact that the 30-year statutory duration of the power has not elapsed and notwithstanding the fact that a notice of intent to preserve the power may have been filed. See Section 885.030 (expiration of power of termination). If the 30-year statutory duration of the power has elapsed the power expires regardless whether it has become obsolete within the meaning of this section. For the effect of expiration of a power of termination pursuant to this section, see Section 885.060 (effect of expiration) (16 Cal.L.Rev.Comm. Reports 401; 82 S.J. 11018, 12489).

NOTES OF DECISIONS

1. Effect Town which was granted property for use as a library was not justified in abandoning property for library uses under the "changed conditions" doctrine; town alleged that it needed a bigger, modern library building, not that the present building could not be used for the purposes of the grant or that the use of surrounding property made operation of library impracticable. Walton v. City of Red Bluff (App. 3 Dist. 1991) 3 Cal.Rptr.2d 275, 2 Cal.App.4th

117, review denied. Municipal Corporations . 223

§ 885.050. Exercise of power; notice or civil action; record

A power of termination shall be exercised only by notice or by civil action and, if the power of termination is of record, the exercise shall be of record. The notice shall be given, and any civil action

shall be commenced, within five years after breach of the restriction1 to which the fee simple estate is

subject, or such longer period as may be agreed to by the parties by a waiver or extension recorded before expiration of that period.2 (Added by Stats.1982, c. 1268, p. 4678, § 1.)

LAW REVISION COMMISSION COMMENT. Section 885.050 provides that even if a power of termination is phrased in terms of a right of entry, the power may be exercised only by notice or by civil action. This is consistent with Sections 791 (notice) and 793 (action for possession). See also Jordan v. Talbot, 55 Cal.2d 597, 361 P.2d 20, 12 Cal.Rptr. 488 (1961) (right of entry in lease).

Section 885.050 makes clear that the statutory limitation period applicable to a power of termination is five years. Cf. Code Civ.Proc. §§ 319-320 (five years). Former law was not clear. Compare, e.g., 3 B. Witkin, Summary of California Law Real Property § 188, at 1926 (8th ed. 1973) (enforcement within a "reasonable time") and Lincoln v. Narom Development Co., 10 Cal.App.3d 619, 89 Cal.Rptr. 128 (1970) (statute of limitation not applicable) with 2 A. Bowman, Ogden's Revised California Real Property Law § 23.32 (1975) (five years pursuant to Code of Civil Procedure Section 320).

Although Section 885.050 prescribes the limitation period for exercise of a power of termination to enforce breach of a restriction, it does not otherwise affect the existence or continued vitality of the power of termination as to

other breaches.3 Nor does Section 885.050 preclude earlier termination of a power of termination through waiver

or estoppel. See Section 880.030(a) (application of waiver and estoppel). See, e.g., Santa Monica v. Jones, 104 Cal.App.2d 463, 232 P.2d 55 (1951) (waiver); Wedum-Aldahl Co. v. Miller, 18 Cal.App.2d 745, 64 P.2d 762 (1937) (waiver or estoppel); Hanna v. Rodeo Vallejo Ferry Co., 89 Cal.App. 462, 265 P. 287 (1928) (waiver or estoppel) (16 Cal.L.Rev.Comm. Reports 401).

1 Here again, as in § 885.010 (see note 2 there), the assumption seems to be that the future interest in question must be associated with the breach of a restriction on the use of the land, rather than upon some broader circumstance or condition. CER/JQ

2 Despite the language chosen, it seems the intent is to require any waiver or extension to be recorded during the 5-year period immediately following occurrence of the condition or event rather than merely before expiration of such 5-year period. Although a waiver or extension recorded prior to the occurrence of the limiting event or condition would necessarily be recorded prior to the expiration of a 5-year periods following the occurrence of such event or condition, that would conflict with § 885.030(b): “This section applies notwithstanding any provision to the contrary in the instrument reserving, transferring, or otherwise evidencing the power of

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termination or in another recorded document unless the instrument or other recorded document provides an earlier expiration date.” Moreover, a recorded extension or waiver during the 5-year period following the limiting event or condition is going to have to refer to “or otherwise” evidence the power of termination, in which case § 885.030(b) seems to require that such a waiver or extension, to have any effect, must “provide for an earlier expiration date.” CER/JQ

3 So long as the power of termination has not expired (including has not become obsolete), it can be enforced for successive occurrences of the limiting event or condition even if not enforced upon prior occurrences of such event or condition. CER/JQ

NOTES OF DECISIONS

1. Accrual Under statute requiring suit to enforce power of termination to be commenced within a year after entry is made or within five years from accrual of right to enter, right to reentry accrues upon breach of condition giving rise to power of termination. Sanders v. East Bay Mun. Utility Dist. (App. 1 Dist. 1993) 20 Cal.Rptr.2d 1, 16 Cal.App.4th 125, rehearing denied and modified.

§ 885.060. Effect of expiration of power; application to equitable servitude; construction of law

(a) Expiration of a power of termination pursuant to this chapter makes the power unenforceable and is equivalent for all purposes to a termination of the power of record and a quitclaim of the power to the owner of the fee simple estate, and execution and recording of a termination and quitclaim is not necessary to terminate or evidence the termination of the power.

(b) Expiration of a power of termination pursuant to this chapter terminates the restriction to which the fee simple estate is subject and makes the restriction unenforceable by any other means, including, but not limited to, injunction and damages.

(c) However, subdivision (b) does not apply to a restriction for which a power of termination has expired under this chapter if the restriction is also an equitable servitude alternatively enforceable by injunction. Such an equitable servitude shall remain enforceable by injunction and any other available remedies, but shall not be enforceable by a power of

termination.1 This subdivision does not constitute a change in, but is declaratory of, the existing law. However, nothing in this subdivision shall be construed to make enforceable any restriction prohibited or made unenforceable by other provisions of law, including Section 53. (Added by Stats.1982, c. 1268, p. 4679, § 1. Amended by Stats.1990, c. 1114 (A.B.3220), § 1.)

LAW REVISION COMMISSION COMMENT. Section 885.060 provides for the clearing of record title to real property by operation of law after a power of termination has expired under Section 885.030 (expiration of power of termination). Title can be cleared by judicial decree prior to the time prescribed in Section 885.030 in case of an obsolete power of termination. See Section 885.040 (obsolete power of termination); Hess v. Country Club Park, 213 Cal. 613, 2 P.2d 782 (1931) (16 Cal.L.Rev.Comm. Reports 401).

1 Where the rights or obligations associated with an interest in real property are not enforceable “at law,” they may be enforceable as an equitable servitude “on the broad ground that [the burdened party] took with knowledge of the [burden or obligation] and…[considering] the intent of the parties coupled with the result of a failure to enforce it…, equity could not in conscience withhold relief.” (12 Witkin, Summary of California Law (10th ed.) § 440, p. 512.) Where the substance of a “power of termination” is enforced as an equitable servitude, the available relief may be damages, injunction, etc.—BUT NOT TERMINATION OF THE PREVIOUSLY TERMINABLE INTEREST due merely to occurrence of the limiting condition. CER/JQ

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§ 885.070. Operative date; application of chapter; prior breach of restriction on fee simple estate

(a) Subject to Section 880.370 (grace period for recording notice) and except as otherwise provided in this section, this chapter applies on the operative date to all powers of termination, whether executed or recorded before, on, or after the operative date.

(b) If breach of the restriction to which the fee simple estate is subject occurred before the operative date of this chapter and the power of termination is not exercised before the operative date of this chapter, the power of termination shall be exercised, or in the case of a power of termination of record, exercised of record, within the earlier of the following times:

(1) The time that would be applicable pursuant to the law in effect immediately prior to the operative date of this chapter.

(2) Five years after the operative date of this chapter.

(c) As used in this section, "operative date" means the operative date of this chapter as enacted or, with respect to any amendment of a section of this chapter, the operative date of the amendment. (Added by Stats.1982, c. 1268, p. 4679, § 1. Amended by Stats.1991, c. 156 (A.B.1577), § 17.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of Section 885.070 makes clear the legislative intent to apply this chapter immediately to existing powers of termination. Section 880.370 provides a five-year grace period for recording a notice of intent to preserve a power of termination that expires by operation of this chapter before, on, or within five years after the operative date of this chapter.

Subdivision (b) provides a five-year grace period to enable enforcement of powers of termination that would be barred upon enactment of this chapter by the absolute limitation period for enforcement provided by Section 885.050 (time for exercise of power) and a shorter grace period for enforcement of powers of termination that would be barred within five years after enactment of this chapter (16 Cal.L.Rev.Comm. Reports 401).

1991 Amendment. Subdivision (c) is added to Section 885.070 to clarify the application of this section to executory interests included within the scope of this chapter by the amendment of Section 885.010. The effect is the same as the effect on powers of termination when this chapter was enacted. See 1982 Cal.Stat. ch. 1268, § 1. [21 Cal.L.Rev.Comm.Reports 53 (1991) ]

1. Governing section Under deed conveying right-of-way to railroad on condition that property would revert to grantors on abandonment, and defining abandonment as discontinuance of "either passenger or freight service," grantors were required to enforce condition within five years of termination of passenger service, rather than within five years of subsequent termination of freight service. Sanders v. East Bay Mun. Utility Dist. (App. 1 Dist. 1993) 20 Cal.Rptr.2d 1, 16 Cal.App.4th 125, rehearing denied and modified.

Under statute requiring suit to enforce power of termination to be commenced within a year after entry is made or within five years from accrual of right to enter, right to reentry accrues upon breach of condition giving rise to power of termination. Sanders v. East Bay Mun. Utility Dist. (App. 1 Dist. 1993) 20 Cal.Rptr.2d 1, 16 Cal.App.4th 125, rehearing denied and modified.

Action to enforce power of termination was based on right of entry, accrued no later than 1975 breach of condition to use land as railroad right-of-way, and was governed by statute of limitations requiring action to be brought within five years from accrual of right to enter [West's Ann.Cal.C.C.P. § 320]. Concord & Bay Point Land Co. v. City of Concord (App. 1 Dist. 1991) 280 Cal.Rptr. 623, 229 Cal.App.3d 289.

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CHAPTER 6. UNPERFORMED CONTRACTS FOR SALE OF REAL PROPERTY

§ 886.010. Definitions

As used in this chapter:

(a) "Contract for sale of real property" means an agreement wherein one party agrees to convey title to real property to another party upon the satisfaction of specified conditions set forth in the contract and which requires conveyance of title within one year from the

date of formation of the contract,1 whether designated in the agreement a "contract for sale of real property," "land sale contract," "deposit receipt," "agreement for sale," "agreement to convey," or otherwise.

(b) "Recorded contract for sale of real property" includes the entire terms of a contract for sale of real property that is recorded in its entirety or is evidenced by a recorded memorandum or short form of the contract. (Added by Stats.1982, c. 1268, p. 4679, § 1.)

LAW REVISION COMMISSION COMMENT. Section 886.010 is drawn from Sections 2985 and 2985.51 and Business and Professions Code Section 10029 (real property sales contracts), but applies only to contracts of a type not

covered by the other sections (contracts to be performed within one year).1 The section also applies to

agreements to convey that are dependent on performance of conditions other than payment of money. Real property sales contracts (not to be performed within one year), popularly called installment land contracts (not to be performed within one year. (16 Cal.L.Rev.Comm. Reports 401).

1. Civil Code § 2985 and Bus. & Prof. § 10029 pertain to agreements to convey title to real property which do not require performance within one year. CER/JQ

§ 886.020. Demand; release of unperformed contract; action to clear title

If the party to whom title to real property is to be conveyed pursuant to a recorded contract for the sale of real property fails to satisfy the specified conditions set forth in the contract and does not seek performance of the contract or restitution of amounts paid under the contract, the party shall, upon demand therefor made after the operative date of this chapter, execute a release of the contract, duly acknowledged for record, to the party who agreed to convey title. Willful violation of this section by the party to whom title is to be conveyed without good cause makes the party liable for the damages the party who agreed to convey title sustains by reason of the violation, including but not limited to court costs and reasonable attorney's fees in an action to clear title to the real property. Nothing in this section makes a release or a demand therefor a condition precedent to an action to clear title to the real property. (Added by Stats.1982, c. 1268, p. 4679, § 1.)

LAW REVISION COMMISSION COMMENT. Section 886.020 is new. Cf. Section 2941 (reconveyance upon termination of a mortgage or deed of trust); Section 1109 (reconveyance of estate on condition that is defeated by nonperformance). Section 886.020 is intended to enhance marketability of title clouded by an unperformed real property sales contract without the need to quiet title or await the lapse of the five-year period provided in Section 886.030 (expiration of record of unperformed contract for sale of real property). (16 Cal.L.Rev.Comm. Reports 401).

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§ 886.030. Expiration date; recorded extension; waiver

(a) Except as otherwise provided in this section, a recorded contract for sale of real property

expires of record at the later of the following times:1

(1) Five years after the date for conveyance of title provided in the contract or, if no date for conveyance of title is provided in the contract, five years after the last date provided in the contract for satisfaction of the specified conditions set forth in the contract.

(2) If there is a recorded extension of the contract within the time prescribed in paragraph (1), five years after the date for conveyance of title provided in the extension or, if no date for conveyance of title is provided in the extension, five years after the last date provided in the extension for satisfaction of the specified conditions set forth in the contract.

(b) The time prescribed in this section may be waived or extended only by an instrument that is

recorded before expiration of the prescribed times.2 (Added by Stats.1982, c. 1268, p. 4680, § 1.)

LAW REVISION COMMISSION COMMENT. Section 886.030 prescribes the maximum duration of a contract for sale of real property of record for purposes of marketability. The maximum duration does not affect the rights and obligations of the parties to the contract but only the effect of the recorded notice of the contract on third parties. See Section 886.040 (effect of expiration). Section 886.030 operates to clear record title of the contract after the time prescribed even though the general statute of limitation to enforce the contract may not have run due to tolling, possession by the purchaser, or for some other cause. The section does not extend the time provided by the general statute of limitation that applies to enforcement of a real property sales contract. See Code Civ.Proc. § 337(1) (four-year limitation period). The cloud on title of an unperformed real property sales contract, whether or not barred by the general statute of limitation, may be removed by judicial action or may be removed by operation of law after passage of the time prescribed in this section. See Section 886.040 (effect of expiration).

Subdivision (a) adopts the five-year period of the Model Act Limiting Encumbrances Arising from Recorded Land Contracts (Simes & Taylor 1960). The effect of subdivision (a) is to prescribe a maximum life for a real property sales contract based exclusively on the record for marketability of title purposes. Subdivision (b) provides that a waiver or extension of the expiration date of a real property sales contract must be recorded to be effective. This accomplishes the purpose of enabling a determination of marketability based on the record alone. [16 Cal.L.Rev.Comm. Reports 401]

1. As already noted above, there is no provision for maintenance of a contract for the sale of real property that is subject to the Act by recording of a notice of intent to preserve it. CER/JQ

2 Here again, we suggest that if “before expiration of the prescribed times” is read to require recording between the occurrence of the limiting condition and expiration of the prescribed times following the occurrence of that condition, you will have a better sense of the intended effect here. CER/JQ

§ 886.040. Effect of expiration of recorded contract Upon the expiration of record of a recorded contract for sale of real property pursuant to this chapter, the contract has no effect, and does not constitute an encumbrance or cloud, on the title to the real property as against a person other than a

party to the contract.1 (Added by Stats.1982, c. 1268, p. 4680, § 1.)

LAW REVISION COMMISSION COMMENT. Section 886.040 is drawn from the Model Act Limiting Encumbrances Arising from Recorded Land Contracts (Simes & Taylor 1960). A contract for sale of real property that has expired of record does not affect third persons but may still affect the parties to the contract. See Section 886.030

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(expiration of record of contract for sale of real property) and Comment thereto. In addition, expiration of record does not affect the interest of a person in possession of the real property. Section 880.240 (interests excepted from title). (16 Cal.L.Rev.Comm. Reports 401).

1 Compare the similar provisions of § 884.020 concerning the effect of expiration of a recorded option to purchase real property, i.e., “ceases to be notice of to put any person on inquiry….” CER/JQ

§ 886.050. Application of chapter; limitation on expiration of recorded contracts

(a) Except as otherwise provided in this section, this chapter applies on the operative date to all recorded contracts for sale of real property, whether recorded before, on, or after the operative date.

(b) This chapter shall not cause a recorded contract for sale of real property to expire of record before the passage of two years after the operative date of this chapter. (Added by Stats.1982, c. 1268, p. 4680, § 1.)

LAW REVISION COMMISSION COMMENT. Section 886.050 makes clear the legislative intent to apply this chapter immediately to existing contracts for sale of real property. It provides a two-year grace period to enable enforcement of contracts that would expire upon enactment of this chapter and a shorter grace period for enforcement of contracts that would expire within two years after enactment of this chapter. The two-year grace period does not operate as an extension of the statute of limitation itself. See Code Civ.Proc. §§ 337(1) (statute of limitation). Notwithstanding the grace period for expiration, a person required to execute a release of the contract pursuant to Section 886.020 (release of unperformed contract for sale of real property) has an immediate duty to do so upon request therefor upon the operative date of this chapter. (16 Cal.L.Rev.Comm. Reports 401).

CHAPTER 7. ABANDONED EASEMENTS

§ 887.010. Definition

As used in this chapter, "easement" means a burden or servitude upon land, whether or not attached to other land as an incident or appurtenance, that [sic: which] allows the holder of the burden or

servitude to do acts upon the land.1 (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Section 887.010 provides a special definition of an easement for the purposes of this chapter. This chapter applies to affirmative easements, whether appurtenant or in gross. Contrast Sections 801 and 803 ("easement" is an appurtenant servitude). Negative easements are not governed by this

chapter.1 [18 Cal.L.Rev.Comm. Reports 257 (1985).]

1. A so-called “viewshed” or “sunlight” easement, is a negative easement even if positively worded. Thus if A, owner of Upacre, grants to B, owner of Downracre, the right to the view and sunlight at their adjoining boundary as of the date of the grant, this effectively prohibits A from taking action on Upacre to alter existing conditions. Does it also obligate A to maintain existing conditions? If so, then it still does not qualify as an easement under this definition, since the person obligation to take action is not the ‘holder’ of the burden, but the holder of the burdened land. Suppose that the grant of “viewshed” or “sunlight” easement also includes a right of the grantee to enter the burdened land and take action to maintain the existing conditions. This would seem be an easement within the definition of the section since it would “allow the holder of the burden or servitude to do acts upon the land.” CER/JQ

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§ 887.020. Application of chapter

This chapter does not apply to an easement that is part of a unified or reciprocal system for the

mutual benefit of multiple parties.1 (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Section 887.020 is intended to exclude planned developments and their sets of interrelated easements and servitudes from the scope of this chapter. Thus condominium covenants, conditions, and restrictions would not be covered, nor would reciprocal easement agreements. Easements held by public entities and conservation easements are not subject to expiration pursuant to this section. See Section 880.240 (interests excepted from title); Section 887.080 (abandoned easement deemed to have expired). [18 Cal.L.Rev.Comm. Reports 257 (1985).]

1. But see § 887.030, immediately below, concerning continued application of “the common law governing abandonment of an easement or any other procedure provided by statute or otherwise for clearing an abandoned easement from title to real property.” CER/JQ

§ 887.030. Common law

This chapter supplements and does not limit or otherwise affect the common law governing abandonment of an easement or any other procedure provided by statute or otherwise for clearing an

abandoned easement from title to real property.1 (Added by Stats.1985, c. 157, § 2.) LAW REVISION COMMISSION COMMENT. Section 887.030 makes clear that although this chapter prescribes a

standard for determining that an easement has been abandoned, it is not intended to limit the common law of abandonment of easements. See discussion in 3 B. Witkin, Summary of California Law Real Property §§ 374-376 (8th ed. 1973); 1 A. Bowman, Ogden's Revised California Real Property Law §§ 13.49-13.50 (1974); 3 H. Miller & M. Starr, Current Law of California Real Estate §§ 18:64-18:66 (rev.1977). [18 Cal.L.Rev.Comm. Reports 257 (1985)].

1 See § 883.130, above, for similar provision concerning the common law rules concerning abandonment of mineral rights. CER/JQ

§ 887.040. Bringing action; venue; procedure

(a) The owner of real property subject to an easement may bring an action to establish the abandonment of the easement and to clear record title of the easement.

(b) The action shall be brought in the superior court of the county in which the real property subject to the easement is located.

(c) The action shall be brought in the same manner and shall be subject to the same procedure as an action to quiet title pursuant to Chapter 4 (commencing with Section 760.010) of Title 10 of Part 2 of the Code of Civil Procedure, to the extent applicable. (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Subdivision (a) of Section 887.040 authorizes an action to establish abandonment of an easement, subject to the limitations and conditions in this chapter. This is consistent with public policy to enable and encourage full use and development of real property. Section 880.020 (declaration of policy and purposes). This is also consistent with the common law rule that easements are subject to abandonment. See Section 887.030 and Comment thereto (common law of abandonment not affected). This chapter supplements common law principles of abandonment by providing a separate and independent basis for determining abandonment of an easement. Subdivisions (b) and (c) incorporate, insofar as applicable, the general

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quiet title procedures for an action pursuant to this chapter. See Code Civ.Proc. §§ 760.010-764.070. [18 Cal.L.Rev.Comm. Reports 257 (1985) ]

§ 887.050. Conditions necessary1

(a) For purposes of this chapter, an easement is abandoned if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to establish abandonment of the easement:

(1) The easement is not used at any time.

(2) No separate property tax assessment is made of the easement or, if made, no taxes are paid on the assessment.

(3) No instrument creating, reserving, transferring, or otherwise evidencing the easement is recorded.

(b) This section applies notwithstanding any provision to the contrary in the instrument creating, reserving, transferring, or otherwise evidencing the easement or in another recorded document, unless the instrument or other document provides an earlier expiration date. (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Section 887.050 provides for expiration of an unused easement after 20 years, notwithstanding a longer or an indefinite period provided in the instrument creating the easement. This reverses prior law that an easement obtained by grant cannot be lost by mere nonuse.

The expiration period can be extended for up to 20 years at a time by recordation of a notice of intent to preserve the easement before the easement expires. See Section 887.060 (preservation of easement). Recordation of a notice of intent to preserve the easement does not necessarily preclude abandonment of the easement pursuant to general principles governing abandonment for nonuse upon a showing of intent to abandon. See Section 880.310 (notice of intent to preserve interest).

For purposes of subdivision (a)(3), in the case of an appurtenant easement, a transfer of the dominant tenement without reference to the easement does not start the 20-year period running anew, even though such a transfer may be effective to convey the easement. Sections 1084, 1104. [18 Cal.L.Rev.Comm. Reports 257 (1985) ].

1 See 883.220, above, for similar provisions concerning the circumstances in which a mineral right is “dormant” under the Act. CER/JQ

§ 887.060. Notice of intent to preserve easement; recording

(a) The owner of an easement may at any time record a notice of intent to preserve the easement.

(b) In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the easement claimed, as otherwise required by paragraph (2) of subdivision (b) of Section 880.330, and in lieu of the legal description of the real property in which the interest is claimed, as otherwise required by paragraph (3) of subdivision (b) of Section 880.330, and notwithstanding the provisions of Section 880.340, or any other provision in this title, a notice of intent to preserve an easement may refer generally and without specificity to any or all easements claimed by the claimant in any

real property situated in the county.1

(c) An easement is not abandoned for purposes of this chapter if either of the following occurs: 2

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(1) A notice of intent to preserve the easement is recorded within 20 years immediately preceding commencement of the action to establish the abandonment of the easement.

(2) A notice of intent to preserve the easement is recorded pursuant to Section 887.070 after commencement of the action to establish the abandonment of the easement

and before judgment is entered in the action.3 (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Section 887.060 makes recording a notice of intent to preserve an easement conclusive evidence of non-abandonment for purposes of this chapter. Recording a notice of intent to preserve also creates a presumption affecting the burden of proof that the claimant has not abandoned the easement for purposes of a determination of abandonment pursuant to common law. Section 880.310 (notice of intent to preserve interest). [18 Cal.L.Rev.Comm. Reports 257 (1985).]

1 As in the case of specific limited provisions concerning notices of intent to preserve mineral rights, there are serious reasons to consider including the detailed specific information along with the general language permitted by this section. CER/JQ

2 See § 883.230(c) for comparable provisions concerning the permissible time for recording a notice of intent to preserve mineral rights. CER/JQ

3 The comparable provision in § 883.230(c)(2) does not expressly require such “late-recorded” notice of intent to be recorded “before judgment is entered in the action,” although that seems implicit. CER/JQ

§ 887.070. Late notice of intent to preserve easement; recording; litigation expenses

In an action to establish the abandonment of an easement pursuant to this chapter, the court shall permit the owner of the easement to record a late notice of intent to preserve the easement as a

condition of dismissal of the action,1 upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the easement or portion thereof as to which the notice is recorded. As used in this section, the term "litigation expenses" means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee. (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Section 887.070 enables the owner of an easement to preserve the easement, after commencement of an action to establish its abandonment and clear title, by filing a late notice of intent to preserve the interest. This authority is conditioned upon payment of the property owner's litigation expenses. Litigation expenses include disbursements made for title reports and other disbursements made in preparation for the litigation as well as court costs and attorney fees incurred in connection with the litigation. [18 Cal.L.Rev.Comm. Reports 257 (1985).] ]

1 This, of course, significantly limits the practical utility of an action to terminate an abandoned easement under the Act—unless there is no chance that any of the defendants will actually be located and appear. CER/JQ

NOTES OF DECISIONS

1. Construction and application Principles of statutory construction require that Court of Appeal interpret language of statute governing late notice of intent to preserve an easement in manner to implement legislative intent; that intent is divined by looking first to words used in statute. Worthington v. Alcala (App. 2 Dist. 1992) 13 Cal.Rptr.2d 374, 10 Cal.App.4th 1404.

2. Litigation expenses

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Easement holders were not required to pay burdened landowners' litigation costs in action to extinguish easement where late notice of intent to preserve the easement failed because the easement was extinguished on theory of prescription. Worthington v. Alcala (App. 2 Dist. 1992) 13 Cal.Rptr.2d 374, 10 Cal.App.4th 1404.

Legislature intended litigation costs to be imposed pursuant to statute governing late notice of intent to preserve easements only where the sole theory of extinguishment of the easement was statutory abandonment or other theories were voluntarily dismissed and application of the statute would therefore result in preserving easement interest. Worthington v. Alcala (App. 2 Dist. 1992) 13 Cal.Rptr.2d 374, 10 Cal.App.4th 1404.

§ 887.080. Effect of Abandonment.

An abandoned easement is unenforceable and is deemed to have expired. A court order establishing abandonment of an easement pursuant to this chapter is equivalent for all purposes to a conveyance of the easement to the owner of the real property. (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Section 887.080 makes clear that establishment of abandonment of an easement has the effect of a reconveyance to the owner of the land. See also Section 887.040 (action authorized) and Code Civ.Proc. §§ 764.010-764.070 (effect of quiet title judgment). [18 Cal.L.Rev.Comm. Reports 257 (1985) ].

§ 887.090. Application of chapter; exceptions

Subject to Sections 880.370 (grace period for recording notice) and 887.020, this chapter applies to all easements, whether executed or recorded before, on, or after January 1, 1986. (Added by Stats.1985, c. 157, § 2.)

LAW REVISION COMMISSION COMMENT. Section 887.090 makes clear the legislative intent to apply this chapter to easements existing on the date this chapter becomes operative (January 1, 1986). Section 880.370 provides a five-year grace period for recording a notice of intent to preserve an easement that would be subject to termination pursuant to this chapter before, on, or within five years after the operative date of this chapter. See Sections 887.060 (preservation of easement) and 880.370 (grace period for recording notice) and Comments thereto. [18 Cal.L.Rev.Comm. Reports 257 (1985) ].

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Part 5. Termination Under the Act of “Abandoned” Easements and “Dormant” Mineral Rights – A Side-by-Side Comparison

Topic Action to Adjudge Mineral Rights “Dormant” Action to Adjudge Easement Rights “Abandoned” (under the Act)

Affected Right/Interest Defined

§ 883.110. Mineral right defined

As used in this chapter, "mineral right" means an interest in minerals, regardless of character, whether fugacious or nonfugacious, organic or inorganic, that is created by grant or reservation, regardless of form, whether a fee or lesser interest, mineral, royalty, or leasehold, absolute or fractional, corporeal or incorporeal, and includes express or implied appurtenant surface rights.

§ 887.010. Definition

As used in this chapter, "easement" means a burden or servitude upon land, whether or not attached to other land as an incident or appurtenance, that [sic: which] allows the holder of the burden or servitude to do acts upon the land.

Certain Exclusions § 883.120. Application of chapter; mineral rights reserved to United States; mineral rights not subject to expiration

(a) This chapter does not apply to a mineral right reserved to the United States (whether in a patent, pursuant to federal law, or otherwise) or to an oil or gas lease, mining claim, or other mineral right of a person entitled pursuant thereto, to the extent provided in Section 880.240.

(b) This chapter does not apply to a mineral right of the state or a local public entity, or of any other person, to the extent provided in Section 880.240.

§ 887.020. Application of chapter This chapter does not apply to an easement that is part of a unified or reciprocal system for the mutual benefit of multiple parties. [LAW REVISION COMMISSION COMMENT. … Easements held by public entities and conservation easements are not subject to expiration pursuant to this section. See Section 880.240 (interests excepted from title: “§ 880.240. Interests not subject to expiration pursuant to title. The following interests are not subject to expiration or expiration of record pursuant to this title: (a) The interest of a person in possession (including use or occupancy) of real property and the interest of a person under whom a person in possession claims, to the extent the possession would have been revealed by reasonable inspection or inquiry. (b) An interest of the United States or pursuant to federal law in real property that is not subjected by federal law to the recording requirements of the state and that has not terminated under federal law. (c) An interest of the state or a local public entity in real property. (d) A conservation easement pursuant to Chapter 4 (commencing with Section 815) of Title 2. ”

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Preservation of the Common Law

§ 883.130. Abandoned mineral rights

Nothing in this chapter limits or affects the common law governing abandonment of a mineral right or any other procedure provided by statute for clearing an abandoned mineral right from title to real property.

§ 887.030. Common law

This chapter supplements and does not limit or otherwise affect the common law governing abandonment of an easement or any other procedure provided by statute or otherwise for clearing an abandoned easement from title to real property.

Notice of Intent and Special Provisions

§ 883.230. Notice of intent to preserve mineral right; effect

(a) An owner of a mineral right may at any time record a notice of intent to preserve the mineral right.

(b) In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the mineral rights claimed as otherwise required by paragraph (2) of subdivision (b) of Section 880.330 and in lieu of the legal description of the real property in which the interest is claimed as otherwise required by paragraph (3) of subdivision (b) of Section 880.330 and notwithstanding the provisions of Section 880.340 or any other provision in this title, a notice of intent to preserve a mineral right may refer generally and without specificity to any or all mineral rights claimed by claimant in any real property situated in the county.

(c) A mineral right is not dormant for the purpose of this article if:

(1) A notice of intent to preserve the mineral right is recorded within 20 years immediately preceding commencement of the action to terminate the mineral right.

(2) A notice of intent to preserve the mineral right is recorded pursuant to Section 883.250 after commencement of the action to terminate the mineral

§ 887.060. Notice of intent to preserve easement; recording

(a) The owner of an easement may at any time record a notice of intent to preserve the easement.

(b) In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the easement claimed, as otherwise required by paragraph (2) of subdivision (b) of Section 880.330, and in lieu of the legal description of the real property in which the interest is claimed, as otherwise required by paragraph (3) of subdivision (b) of Section 880.330, and notwithstanding the provisions of Section 880.340, or any other provision in this title, a notice of intent to preserve an easement may refer generally and without specificity to any or all easements claimed by the claimant in any real property situated in the county.

(c) An easement is not abandoned for purposes of this chapter if either of the following occurs:

(1) A notice of intent to preserve the easement is recorded within 20 years immediately preceding commencement of the action to establish the abandonment of the easement.

(2) A notice of intent to preserve the easement is recorded pursuant to Section 887.070 after commencement of the action to establish the abandonment of the easement and before judgment is entered in the action.

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right.

Prima facie conditions for relief

§ 883.220. Dormant rights; conditions

For the purpose of this article, a mineral right is dormant if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to terminate the mineral right:

(a) There is no production of the minerals and no exploration, drilling, mining, development, or other operations that affect the minerals, whether on or below the surface of the real property or on other property, whether or not unitized or pooled with the real property.

(b) No separate property tax assessment is made of the mineral right or, if made, no taxes are paid on the assessment.

(c) No instrument creating, reserving, transferring, or otherwise evidencing the mineral right is recorded.

§ 887.050. Conditions necessary

(a) For purposes of this chapter, an easement is abandoned if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to establish abandonment of the easement:

(1) The easement is not used at any time.

(2) No separate property tax assessment is made of the easement or, if made, no taxes are paid on the assessment.

(3) No instrument creating, reserving, transferring, or otherwise evidencing the easement is recorded.

(b) This section applies notwithstanding any provision to the contrary in the instrument creating, reserving, transferring, or otherwise evidencing the easement or in another recorded document, unless the instrument or other document provides an earlier expiration date.

Action; Proper Plaintiff(s)

§ 883.210. Action to terminate dormant mineral right

The owner of real property subject to a mineral right may bring an action to terminate the mineral right pursuant to this article if the mineral right is dormant.

§ 887.040. Bringing action; venue; procedure (a) The owner of real property subject to an easement may bring an action to establish the abandonment of the easement and to clear record title of the easement. ….

Place of filing § 883.240. Actions; place; procedure (a) An action to terminate a mineral right pursuant to this

article shall be brought in the superior court of the county in which the real property subject to the mineral right is located. ….

§ 887.040. Bringing action; venue; procedure …. (b) The action shall be brought in the superior court of the

county in which the real property subject to the easement is located. ….

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Procedure § 883.240. Actions; place; procedure …. (b) The action shall be brought in the same manner and shall

be subject to the same procedure as an action to quiet title pursuant to Chapter 4 (commencing with Section 760.010) of Title 10 of Part 2 of the Code of Civil Procedure, to the extent applicable.

§ 887.040. Bringing action; venue; procedure …..

(c) The action shall be brought in the same manner and shall be subject to the same procedure as an action to quiet title pursuant to Chapter 4 (commencing with Section 760.010) of Title 10 of Part 2 of the Code of Civil Procedure, to the extent applicable.

Late-Recording of Notice of Intent

§ 883.230. Notice of intent to preserve mineral right; effect

* * * * * (c) A mineral right is not dormant for the purpose of this article if: …. (2) A notice of intent to preserve the mineral right is recorded pursuant to Section 883.250 after commencement of the action to terminate the mineral right.

§ 883.250. Late notice of intent to preserve mineral right; condition of dismissal of action. In an action to terminate a mineral right pursuant to this article, the court shall permit the owner of the mineral right to record a late notice of intent to preserve the mineral right as a condition of dismissal of the action, upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the mineral right or portion thereof as to which the notice is recorded. As used in this section, the term "litigation expenses" means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee.

§ 887.060. Notice of intent to preserve easement; recording * * * * *

(c) An easement is not abandoned for purposes of this chapter if either of the following occurs: …. (2) A notice of intent to preserve the easement is recorded pursuant to Section 887.070 after commencement of the action to establish the abandonment of the easement and before judgment is entered in the action.

§ 887.070. Late notice of intent to preserve easement; recording; litigation expenses. In an action to establish the abandonment of an easement pursuant to this chapter, the court shall permit the owner of the easement to record a late notice of intent to preserve the easement as a condition of dismissal of the action upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the easement or portion thereof as to which the notice is recorded. As used in this section, the term "litigation expenses" means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee.

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Effect § 883.260. Termination under article; effect

A mineral right terminated pursuant to this article is unenforceable and is deemed to have expired. A court order terminating a mineral right pursuant to this article is equivalent for all purposes to a conveyance of the mineral right to the owner of the real property.

§ 887.080. Court order; enforceability

An abandoned easement is unenforceable and is deemed to have expired. A court order establishing abandonment of an easement pursuant to this chapter is equivalent for all purposes to a conveyance of the easement to the owner of the real property.

Effective as to: § 883.270. Application of article. Subject to Section 880.370 (grace period for recording notice), this article applies to all mineral rights, whether executed or recorded before, on, or after January 1, 1985.

§ 887.090. Application of chapter; exceptions. Subject to Sections 880.370 (grace period for recording notice) and 887.020, this chapter applies to all easements, whether executed or recorded before, on, or after January 1, 1986.

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Part 6. Protecting Easements and Terminating “Abandoned” Easements or Under the Act – The Land Professional’s Role

1. California Civil Code Provisions re: Easements and Notices of Intent to Preserve Easements

Chapter 7 (“Abandoned Easements”) of the Act consists of nine sections in the California Civil Code which address easements and define, and provide an action to terminate, “abandoned easements.” Those code sections are as follows:

§ 887.010. Definition

As used in this chapter, "easement" means a burden or servitude upon land, whether or not attached to other land as an incident or appurtenance, that [sic: which] allows the holder of the burden or servitude to do acts upon the land.

§ 887.020. Application of chapter

This chapter does not apply to an easement that is part of a unified or reciprocal system for the mutual benefit of multiple parties. 11

§ 887.030. Common law

This chapter supplements and does not limit or otherwise affect the common law governing abandonment of an easement or any other procedure provided by statute or otherwise for clearing an abandoned easement from title to real property. 12

§ 887.040. Bringing action; venue; procedure

(a) The owner of real property subject to an easement may bring an action to establish the abandonment of the easement and to clear record title of the easement.

(b) The action shall be brought in the superior court of the county in which the real property subject to the easement is located.

11 § 880.240. Interests not subject to expiration pursuant to title. The following interests are not subject to expiration or expiration of record pursuant to this title: (a) The interest of a person in possession (including use or occupancy) of real property and the interest of a person under whom a person in possession claims, to the extent the possession would have been revealed by reasonable inspection or inquiry. (b) An interest of the United States or pursuant to federal law in real property that is not subjected by federal law to the recording requirements of the state and that has not terminated under federal law. (c) An interest of the state or a local public entity in real property. (d) A conservation easement pursuant to Chapter 4 (commencing with § 815) of Title 2.

12 Per Gerhard v. Stephens (1968) 68 Cal.2d 864, 890, abandonment requires “…nonuse accompanied by unequivocal and decisive acts…clearly showing an intention to abandon." And while nonuser does not extinguish the easement, a long continued nonuser is some evidence of an intent to abandon.” (Id., at p. 891.) “In order to protect the owner of an unlimited profit a prendre or other incorporeal hereditament against ‘involuntary’ abandonment under circumstances in which conflicting inferences may be drawn from his nonuser we hold that the trial court must find either that the owner's future use of the right could result only from a palpably unsound business judgment or that the owner has given a further indication of his intent to abandon.” (Id., at p. 895.)

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(c) The action shall be brought in the same manner and shall be subject to the same procedure as an action to quiet title pursuant to Chapter 4 (commencing with Section 760.010) of Title 10 of Part 2 of the Code of Civil Procedure, to the extent applicable.

§ 887.050. Conditions necessary

(a) For purposes of this chapter, an easement is abandoned if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to establish abandonment of the easement:

(1) The easement is not used at any time.

(2) No separate property tax assessment is made of the easement or, if made, no taxes are paid on the assessment.

(3) No instrument creating, reserving, transferring, or otherwise evidencing the easement is recorded.

(b) This section applies notwithstanding any provision to the contrary in the instrument creating, reserving, transferring, or otherwise evidencing the easement or in another recorded document, unless the instrument or other document provides an earlier expiration date.

§ 887.060. Notice of intent to preserve easement; recording

(a) The owner of an easement may at any time record a notice of intent to preserve the easement.

(b) In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the easement claimed, as otherwise required by paragraph (2) of subdivision (b) of Section 880.330, and in lieu of the legal description of the real property in which the interest is claimed, as otherwise required by paragraph (3) of subdivision (b) of Section 880.330, and notwithstanding the provisions of Section 880.340, or any other provision in this title, a notice of intent to preserve an easement may refer generally and without specificity to any or all easements claimed by the claimant in any real

property situated in the county.13

(c) An easement is not abandoned for purposes of this chapter if either of the following occurs:

(1) A notice of intent to preserve the easement is recorded within 20 years immediately preceding commencement of the action to establish the abandonment of the easement.

13 Section 883.330 provides for the general form of a “notice of intent to preserve an interest in real property,” under the Act, and requires that “Subject to all statutory requirements for recorded documents: (a) A notice of intent to preserve an interest in real property shall be in writing and signed and verified by or on behalf of the claimant. If the notice is made on behalf of a claimant, the notice shall include a statement of the authority of the person making the notice.” Subsection (b) of section 883.330 provides that the notice “shall” contain certain information, including: “(2) A statement of the character of interest claimed [and] … a reference by record location to the recorded document that creates or evidences the interest in the claimant.”

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(2) A notice of intent to preserve the easement is recorded pursuant to Section 887.070 after commencement of the action to establish the abandonment of the easement and before judgment is entered in the action.

§ 887.070. Late notice of intent to preserve easement; recording; litigation expenses

In an action to establish the abandonment of an easement pursuant to this chapter, the court shall permit the owner of the easement to record a late notice of intent to preserve the easement as a condition of dismissal of the action, upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the easement or portion thereof as to which the notice is recorded. As used in this section, the term "litigation expenses" means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee.

§ 887.080. Court order; enforceability

An abandoned easement is unenforceable and is deemed to have expired. A court order establishing abandonment of an easement pursuant to this chapter is equivalent for all purposes to a conveyance of the easement to the owner of the real property.

§ 887.090. Application of chapter; exceptions

Subject to Sections 880.370 (grace period for recording notice) and 887.020, this chapter applies to all easements, whether executed or recorded before, on, or after January 1, 1986.

2. Intended Use and Benefit of Abandoned Easements Provisions and Notice of Intent to Preserve Easements

The goal or intended benefit of the Act—and of its Abandoned Easement provisions—can be readily

inferred from the very first section of the Act—Civil Code section 880.020,14 which provides as follows:

§ 880.020. Legislative declaration and purpose

“(a) The Legislature declares as public policy that:

“(1) Real property is a basic resource of the people of the state and should be made freely alienable and marketable to the extent practicable in order to enable and encourage full use and development of the real property, including both surface and subsurface interests.

“ (2) Interests in real property and defects in titles created at remote times, whether or not of record, often constitute unreasonable restraints on alienation and marketability of real property because the interests are no longer valid or have been abandoned or have otherwise become obsolete.

“(3) Such interests and defects produce litigation to clear and quiet titles, cause delays in real property title transactions, and hinder marketability of real property.

“ (4) Real property title transactions should be possible with economy and expediency. The status and security of recorded real property titles should be determinable to the extent practicable from an examination of recent records only.

“(b) It is the purpose of the Legislature in enacting this title to simplify and facilitate real property title transactions in futherance of public policy by enabling persons to rely on record title

14 It is unclear why there is no section 880.010.

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to the extent provided in this title, with respect to the property interests specified in this title, subject only to the limitations expressly provided in this title and notwithstanding any provision or implication to the contrary in any other statute or in the common law. This title shall be liberally construed to effect the legislative purpose.” [Emphasis added.]

We can infer from this explanation of the Act in § 880.020 at least two objectives or hoped for benefits from the Act’s provisions. The first is to permit reliance exclusively upon matters appearing of record (“enabling persons to rely on record title”), making questions of title, to that extent general and objective, rather than potentially subjective (insofar as the effect of recording is dependent upon the varying subjective knowledge of individual persons) The second is to eliminate so far as practicable any need to identify and address matters of title that were placed in the record at a “remote” time (“recorded real property titles should be determinable to the extent practicable from an examination

of recent records only”).15

Recognizing that the purposes of the Act are mainly to remove from consideration matters that are remote in time (i.e., “stale”) or are only selectively known (i.e., those “outside the record”), the

purposes of the Notice of Intent to Preserve (whether of Easements or of Mineral Rights Interests16 or otherwise) are, first, to provide a limited and specific device to preserve interests or rights that would otherwise be defeated by the Act and, second, to give present, objective “record” notice of the intended continued existence of such interests or rights. These purposes are evident in § 880.310 which makes provision in general for notices of intent to preserve interests and rights under the Act.

§ 880.310. Recordation of notice of intent

“(a) If the time within which an interest in real property expires pursuant to this title depends upon recordation of a notice of intent to preserve the interest, a person may preserve the person's interest from expiration by recording a notice of intent to preserve the interest before the interest expires pursuant to this title. Recordation of a notice of intent to preserve an interest in real property after the interest has expired pursuant to this title does not preserve the interest.

“(b) Recordation of a notice of intent to preserve an interest in real property does not preclude a court from determining that an interest has been abandoned or is otherwise unenforceable pursuant to other law, whether before or after the notice of intent to preserve the interest is recorded, and does not validate or make enforceable a claim or interest that is otherwise invalid or unenforceable. Recordation of a notice of intent to preserve an interest in real property creates a presumption affecting the burden of proof that the person who claims the interest has not abandoned and does not intend to abandon the interest.”

As already noted above, not every right and interest which is subject to the Act may be maintained by recording a notice of intent to preserve it. However, where such recording is effective under the Act to preserve a right or interest, § 880.130(a) makes it clear that to be effective the recording must take place “before the interest expires pursuant to this title,” and, conversely, that any such notice recorded

15 Note, also, § 880.250(a): “The times prescribed in this title for expiration or expiration of record of an interest

in real property or for enforcement, for bringing an action, or for doing any other required act are absolute and apply notwithstanding any disability or lack of knowledge of any person or any provisions for tolling a statute of limitation and notwithstanding any longer time applicable pursuant to any statute of limitation.”

16 Except where it is necessary to distinguish between them by more specific reference, Easements and Mineral Rights Interests are hereinafter referred to collectively as "EMRI."

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“after the interest has expired pursuant to this title does not preserve the interest.” Of course, as we have already seen and will discuss further below, this specific requirement is significantly qualified with respect specifically within the EMRI provisions of the Act.

Section 880.310(b) makes clear that, recording a notice of intent to preserve an EMRI does not prevent a court from finding that the right or interest in question has expired or been abandoned or is otherwise

no longer enforceable under some other provision of law.17 But that limitation is significantly qualified by the further provision of § 880.310(b) that the recording of such a notice “creates a presumption affecting the burden of proof that the person who claims the interest has not abandoned and does not intend to abandon the interest.”

One fairly obvious way to evaluate the EMRI provisions (and Notice of Intent to Preserve ERMRI) is to consider the alternatives that were in effect prior to their enactment – and remain in effect and

available to you today for removing previously-created EMRI from consideration.18 The most obvious such alternative involves an action to quiet title to real property within which either easement rights have been created or mineral rights interests have been have been “severed” and remain separately held. Where the EMRI in question has not been expressly surrendered or terminated, and if the interest either has no express and definite limiting event or condition or, having such express and definite limiting event or condition, the occurrence or satisfaction of such limiting event or condition is not readily susceptible of proof, then success in such a quiet title action, and removing the EMRI from consideration (without resort to the Act) largely depends upon the ability to establish the “abandonment” of the EMRI.

(a) Preliminary Matters of Common Law Abandonment

The pre-existing (and continued) alternative to which we can compare proceedings under the EMRI provisions of the Act, with respect both to elimination of “abandoned” EMRI, on one hand, and to maintaining an “idle” EMRI in force, on the other, is an action to quiet title to real property founded upon the claim that an EMRI either has or has not been abandoned. The practical difficulty for both the land owner, burdened by an EMRI, who wishes to remove the cloud of long-idle EMRI, on one hand, and the EMRI owner who wishes to take action to maintain long idle mineral rights, and prevent them from being lost through a declaration of “abandonment,” on the other, is the absence of clearly stated and definite actions which-- if taken--will definitely preserve such rights and-- if neglected--will definitely justify their termination.

In Gerhard v. Stephens (1968) 68 Cal.2d 864, the Court made explicit what had been implicit in its previous decisions—that oil and gas rights, as a profit a prendre, represent a specific instance of rights in

17 Note, also, § 880.250(b): “Nothing in this title extends the period for enforcement, for bringing an action, or for doing any other required act, or revives an interest in real property that expires and is unenforceable, pursuant to any applicable statute of limitation.”

18 See, also, § 883.130 re mineral rights: “Nothing in this chapter limits or affects the common law governing abandonment of a mineral right or any other procedure provided by statute for clearing an abandoned mineral right from title to real property. To same effect, § 887.030 re easements: “This chapter supplements and does not limit or otherwise affect the common law governing abandonment of an easement or any other procedure provided by statute or otherwise for clearing an abandoned easement from title to real property.”

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real property that are essentially indistinguishable in nature from an easement. (Id., at p. 880.)19 …we cannot differentiate profits a prendre and easements in terms of the legal consequences stemming from ownership.” (Id., at p. 890.) From this, the Court held, it follows that interests in oil and gas rights, as is the case of easements generally, are subject to being abandoned—as distinguished from fee simple interests in real property which under a long standing common law rule cannot be abandoned. The elements needed to establish abandonment of oil and gas rights, as for abandonment of easements generally, are non-use and acts demonstrating an intent to abandon.

“As a general rule, in order to constitute an abandonment of an easement ... there must be a nonuser accompanied by unequivocal and decisive acts on the part of the [dominant tenant], clearly showing an intention to abandon.”

As other cases point out, however, the owner's non-user itself may under some circumstances constitute such an act. Where nonuser is evidence of an abandonment of a

right, the question is one of intention, depending on the circumstances.... [¶] And while nonuser alone does not extinguish the easement, a long continued nonuser is some evidence of an intent to abandon.” (Id., at pp. 890-891.)

* * * * * In order to protect the owner of an unlimited profit a prendre or other incorporeal

hereditament against ‘involuntary’ abandonment under circumstances in which conflicting inferences may be drawn from his nonuser we hold that the trial court must find either that the owner's future use of the right could result only from a palpably unsound business judgment or that the owner has given a further indication of his intent to abandon. “We would be reluctant to assume that an individual abandons his right merely because sound business judgment would call for this action. The intent to abandon is subjective, and we recognize the possibility that personal pride in, and attachment to, property rights may cause an owner to adopt a less functional approach in the management of his possessions. (Id., at p. 895, and fn.33, p. 895.)”

(b) Clearing Title: Compare Common Law and Marketable Record Title “Abandonment”

The common law vehicle for extinguishing an EMRI is an action to quiet title based upon abandonment of that interest. In Gerhard v. Stephens (1968) 68 Cal.2d 864, the Court noted that the interest the owner of an EMRI – whether an easement or mineral rights interest in fugacious substances is classified under California law as “an interest or estate in real property in the nature of a profit a prendre, which is

an incorporeal hereditament.” (Id., at p. 878.)20 Further, the Court held that “[since] we cannot

19 “As we shall point out, for the purposes of the issue now before us, easements and profits a prendre are indistinguishable. ‘[T]he term 'easement’ is so used [in the Restatement of Property] as to include within its meaning the special meaning commonly expressed by the term 'profit.' ... In phrasing the rules applicable to each of these interests it has been found ... that in no case was there a rule applicable to one of these interests which was not also applicable to the other.”

20 Remember that California also recognizes "ownership in place" of hard rock or non-fugacious mineral substances--even recognizing that the same conveyance may grant ownership of hard rock substances in place while also granting a profit a prendre for oil and gas and other fugacious substances. "Our holding that…plaintiffs abandoned their interests in the oil and gas and other fugacious minerals underlying section 31 does not completely dispose of that appeal. The grants,,,included [grantors’]… interest in certain specified hydrocarbon substances other than oil and gas. Although most of these substances are liquid or semiliquid in

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differentiate profits a prendre and easements in terms of the legal consequences stemming from ownership... in determining whether defendants have established an abandonment, we may with propriety consider the cases that discuss abandonment of perpetual easements created by grant.” (Id., at p. 890.) Accordingly, the Court extended to mineral rights interests the general rule that “… in order to constitute an abandonment …there must be a nonuser accompanied by unequivocal and decisive acts on the part of the [mineral rights owner], clearly showing an intention to abandon.” (Ibid.)

Thus, in order to establish common law abandonment of an EMRI, not only must the rights be idle or unused for some unspecified period of time but there must be “decisive acts” on the part of the EMRI

owner “clearly” showing the intent to abandon.21 Thus, the primary difficulty with relying on quiet title proceedings to establish that an EMRI has been abandoned is not merely that a factual showing is required—but that there is no effective way to know until the conclusion of the judicial proceedings whether the particular facts of specific situation are sufficient to establish abandonment. This may require not only a trial, but appellate review and perhaps even a second level of appellate review. For many people, that is just going to be too much time and effort to spend on something so potentially costly and yet uncertain of outcome.

Unfortunately, though, the situation is even more complicated and uncertain that suggested by the foregoing. The Gerhard decision also took note of decisions holding that “the owner's non-user itself may under some circumstances constitute such an [unequivocal and decisive act clearly showing an intention to abandon],” but “Where nonuser is evidence of an abandonment of a right, the question is one of intention, depending on the circumstances ....” and “…while nonuser alone does not extinguish the easement, a long continued nonuser is some evidence of an intent to abandon.” (Id., at pp. 890-891.) Thus,

their natural state, one such substance [asphalt] possesses nonfugacious qualities. We have pointed out, supra, that the partnership's deed purports to convey a complete possessory estate in the specified minerals, but, because of the fugacious nature of oil and gas, our courts could not give effect to a transfer of the latter substances as corporeal real property but would instead treat the deed as conveying ownership of an unlimited profit a prendre in the fugacious minerals. As to any nonfugacious minerals underlying section 31, however, [grantors]…had title to them in place and therefore could convey them as corporeal real property. We have concluded, however, that the grantors, in conveying their rights in the enumerated minerals in a single deed …, did not intend to convey two different types of estate in the same instrument. The grantors had the power and right to convey a profit a prendre in the nonfugacious minerals. In making the conveyance they were primarily concerned with transferring the oil and gas rights to the corporations, as is evidenced by the then extant oil boom in the area and by the names of the corporations [Ashurst Oil, etc .]. (Id., at pp896-897.)

21 The Court also noted in footnote that: “The California courts have held that ‘[A]bandonment will more readily be found in the case of oil and gas leases than in most other instances.’ Such a leasehold interest is an incorporeal hereditament, but leasehold interests in oil and gas are, of course, of limited duration. Moreover, a grantor typically gives the lessee the exclusive right to develop and take the oil and limits himself to a compensation based on the production of the lessee. Thus if a lessee fails to drill, it would be unfair to preclude the owner of the servient estate from making other arrangements to gain the hoped-for benefits.” Although it is not a particular point of focus here, remember that the mineral rights which can be found dormant under the Act include not merely fee mineral rights but “an[y] interest in minerals, regardless of character, whether fugacious or nonfugacious, organic or inorganic, that is created by grant or reservation, regardless of form, whether a fee or lesser interest, mineral, royalty, or leasehold, absolute or fractional, corporeal or incorporeal, and includes express or implied appurtenant surface right.” (Civil Code section 883.110.) (Emphasis added.)

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In some cases extended non-user may be found not to constitute abandonment due to the absence of other “decisive acts” that would be sufficient to “clearly show” an intent to abandon.

Yet in other cases, with perhaps the same or even shorter periods of nonuse, the period of nonuse itself may be held to constitute a sufficiently definite showing of intent to abandon.

You can almost feel the uncertainty here. Whether your client is trying to purchase or sell burdened land—or to develop it for some purpose—if the investment of significant amounts of time and money depends upon confirming to a high degree of certainty that an EMRI either has or has not been abandoned or otherwise terminated, how can either party ever be confident of the result in advance of litigation? They can’t—because it is ultimately a question of intent, a factual issue to be decided by a jury or trial court, and the specific factual showing required for either party to prevail is nowhere clearly stated.

“Although the acts of the owner of the dominant tenement, to prevent him from enjoying an easement acquired by grant, must be of a character so decisive and conclusive as to indicate a clear intent to abandon the easement, the question of abandonment is one for the trier of fact. It is no doubt true, as claimed by appellant, that mere nonuser, not accompanied by an intent to abandon, will not divest the right of the railroad company to the easement. But in this class of cases as in others, the intention with which an act is done is a question of fact, to be determined by the trial court or jury from a consideration of the conduct of the party and the surrounding circumstances. Where the evidence is such that a finding either way might reasonably be made, the conclusion of the trial court must be upheld under the familiar rule protecting from review on appeal findings based on conflicting evidence.” (Id., at pp. 891-892.) (Emphases added; internal citations, italics and editorial marks omitted.)

It would be difficult to overemphasize the fact that adjudication of the abandonment or not of EMRI under the common law depends upon whether the specific facts of a given matter are sufficient in the mind of a jury or trial court to demonstrate both nonuse—for a sufficient but unspecified period of time—and a specific intent to abandon those rights.

-- How the Act changes things! (terminating EMRI)

Ignoring for the moment the very real possibility of a “late filed” notice of intent to preserve EMRI,22 the Act seeks to assist the land owner plaintiff seeking to terminate idle EMRI in his land by identifying four specific categories of acts which, if anyone of them is performed during a rolling period of 20-years, will prevent termination under the act (and potentially create a presumption against termination on any other basis)—but, if LEFT UNDERFORMED for a rolling period of 20-years, may result in termination of the EMRI in question.

In the context of mineral rights interests, three of those categories of inaction are set forth in Civil Code § 883.220, as follows:

§ 883.220. Dormant rights; conditions. “For the purpose of this article, a mineral right is dormant if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to terminate the mineral right:

22 Concerning which, refer to part (d) “Late-Filing” of Notice of Intent, etc., below.

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“(a) There is no production of the minerals and no exploration, drilling, mining, development, or other operations that affect the minerals, whether on or below the surface of the real property or on other property, whether or not unitized or pooled with the real property.

“(b) No separate property tax assessment is made of the mineral right or, if made, no taxes are paid on the assessment.

“(c) No instrument creating, reserving, transferring, or otherwise evidencing the mineral right is recorded.”

Ignoring again the very real possibility of a “late filed” notice of intent, the fourth necessary category of inaction for termination of “Dormant Mineral Rights” is, of course, neglect or failure to timely record a notice of intent to preserve them, as provided in Civil Code §883.230(c)(1):

“(c) A mineral right is not dormant for the purpose of this article if: (1) A notice of intent to preserve the mineral right is recorded within 20 years immediately preceding commencement of the action to terminate the mineral right.”

Similarly, in the context of easements, three of the relevant categories of inaction are set forth in Civil Code § 887.050, as follows:

§ 887.050. Conditions necessary

“(a) For purposes of this chapter, an easement is abandoned if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to establish abandonment of the easement:

“(1) The easement is not used at any time.

“(2) No separate property tax assessment is made of the easement or, if made, no taxes are paid on the assessment.

“(3) No instrument creating, reserving, transferring, or otherwise evidencing the easement is recorded.

And, once again, ignoring again the very real possibility of a “late filed” notice of intent, the fourth necessary category of inaction for termination of “Abandoned Easements” is neglect or failure to timely record a notice of intent to preserve them, as provided in Civil Code §887.060c)(1):

“(c) An easement is not abandoned for purposes of this chapter if either of the following occurs: (1) A notice of intent to preserve the easement is recorded within 20 years immediately preceding commencement of the action to establish the abandonment of the easement.”

The effect of termination of an EMRI under the Act, is also separately stated for easements and for mineral rights interests in differing but practically equivalent language. Civil Code § 883.260 prescribes the effect of a determination that a mineral right interest is dormant, as follows:

§ 883.260. Termination under article; effect. “A mineral right terminated pursuant to this article is unenforceable and is deemed to have expired. A court order terminating a mineral right pursuant to this article is equivalent for all purposes to a conveyance of the mineral right to the owner of the real property.” [Emphasis added.]

Civil Code § 887.080 prescribes the effect of a determination that an easement is abandoned under the Act, as follows:

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§ 887.080. Effect of Abandonment. “An abandoned easement is unenforceable and is deemed to have expired. A court order establishing abandonment of an easement pursuant to this chapter is equivalent for all purposes to a conveyance of the easement to the owner of the real property.” [Emphasis added.]

Thus, in stark contrast to the uncertainty and indefiniteness inherent in the matters required for the determination under the common law that an EMRI has been abandoned, adjudication under the Act either of the dormant character of a mineral rights interest, on one hand, of the abandonment of an easement, on the other, depends upon the continuation for a prescribed period of time of specific and demonstrable inactivity.

(c) Preserving Rights: Abandonment Theory

There is also another side to this story—but one that is frequently overlooked. What about an EMRI owner who, despite extended nonuse of its rights, wishes to preserve them? That EMRI owner also is interested in certainty—but she wants to know with some certainty how to go about preserving those rights—how to avoid abandonment—in that circumstance.

That EMRI owner has a familiar sounding problem. The common law does not provide a clear and definite way to maintain EMRI other than the continuous or at least periodic exercise or use of those rights. So both parties really have the same problem. There is no clear and definite way either for the landowner to know with certainty that his quiet title action will be successful; there is also no clear and definite way for the EMRI owner to take action to prevent such an action from succeeding—so long as the EMRI is idle, inactive, unused or “dormant.”

-- How the Act changes things! (preserving EMRI)

Setting aside, once again, the very real possibility of the “late filed” a notice of intent to

preserve mineral rights,23 the Act also seeks to provide the EMRI owner a means to preserve those rights even though they are unused or idle for a substantial period of time. All such an EMRI owner need do is take any of the specific actions prescribed in Civil Code § 883.220 for mineral rights interests (obtain production, pay a property tax assessment on the rights, or record paper concerning them) or in Civil Code § 887.050 for easements (use its rights, pay a property tax assessment on the rights, or record paper concerning them) or, in either event, record a notice of intent to preserve their rights at no more than 20-year intervals. For most EMRI owners this comes down to nothing more periodic recording of a notice of intent to preserve their interest.

(d) “Late-Filing” of Notice of Intent to Preserve EMRI and The Importance of “Cannot Locate”

Let us suppose that a lawyer’s client landowner has determined that all of the four categories of inactivity required under The Act either for easements or mineral rights interests have been met for the preceding 20 years, and so wants to commence an action to have the relevant EMRI terminated under the Act. Does the lawyer crank out the complaint naming the EMRI owner(s) of record, file it, and get the ball rolling??

WHOA---NOT SO FAST!

23 Concerning which, refer to part (d) “Late-Filing” of Notice of Intent, etc., immediately below.

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First, you want to make a serious and diligent effort to locate not only the current record owner or owners of the ERMRI in question but also any and all present successors in interest. Then, you want to contact any and all such successors that you can and let them know what you are up to. BUT – isn’t that absurd!! The four required categories of inaction are clearly established for the past 20 years. You have them dead to rights!! Why would you ever want to alert them to what you are up to?

The answer is provided by the “late notice” provisions of the Act, and the practical necessity of making certain in advance that you are not going to be reasonably able to locate the persons who are potential defendants in the contemplated quiet title action. As already noted above, the “late notice” provisions of the Act appear in several of its sections. Civil Code § 883.230 (a) provides that “An owner of a mineral right may at any time record a notice of intent to preserve the mineral right.” Similarly, Civil Code § 887.0060(a) provides that “The owner of an easement may at any time record a notice of intent to preserve the easement.” But these provisions merely suggest the possibility that we are concerned with here. The point is far more clearly and directly made in subsection 883.230 (c)(2): “A mineral right is not dormant for the purpose of this article if….(2) A notice of intent to preserve the mineral right is recorded pursuant to Section 883.250 after commencement of the action to terminate the mineral right,” and, similarly, subsection 887.060(c)(2): “An easement is not abandoned for purposes of this chapter if….A notice of intent to preserve the easement is recorded pursuant to Section 887.070 after commencement of the action to establish the abandonment of the easement.” And the point is really hammered home by Civil Code § 883.250, mineral rights interests, and Civil Code § 887.070, easements, as follows:

§ 883.250. Late notice of intent to preserve mineral right; condition of dismissal of action. In an action to terminate a mineral right pursuant to this article, the court shall permit the owner of the mineral right to record a late notice of intent to preserve the mineral right as a condition of dismissal of the action, upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the mineral right or portion thereof as to which the notice is recorded. As used in this section, the term “litigation expenses” means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee.

§ 887.070. Notice to preserve easement as condition of dismissal of action to establish abandonment. In an action to establish the abandonment of an easement pursuant to this chapter, the court shall permit the owner of the easement to record a late notice of intent to preserve the easement as a condition of dismissal of the action, upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the easement or portion thereof as to which the notice is recorded. As used in this section, the term "litigation expenses" means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee.

The first thing you will need to do after filing your complaint for termination of an EMRI under the Act is to attempt to locate all of the named defendants (the owners of the right in question) and serve them with your summons and complaint. If you succeed in locating some or all of them, and if they want to preserve their interest, they are going to prepare and record a notice of intent to preserve that interest.

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At that point, the plaintiff landowner – YOUR CLIENT?-- will be able to recover ONLY the costs of preparing the summons and complaint and a “reasonable attorney fee” (which may or may not be all of the attorney fees paid—but will surely not be any more than that). Then the court must dismiss the action as to those defendants. This leaves the plaintiff landowner – YOUR CLIENT? – in no better position with respect to those defendants than the plaintiff landowner – YOUR CLIENT? -- would have been had you located those persons at the outset, contacted them, and asked if they wanted to preserve their interests and/or sell their rights to your client, or abandon their rights (i.e., let them go).

Likely not a very happy client.

Now let’s suppose that instead you first have made a serious and good faith effort to locate your potential defendants and you are just not able with any reasonably diligent effort to identify and/or locate some of them. You are in a good position with respect to those EMRI owner-defendants not merely to file your action but to prevail against them—because of a little thing called “service by publication.”

As described in Code of Civil Procedure § 415.50(b), when such service is permitted, it is accomplished as follows:

The court shall order the summons to be published in a named newspaper published in this state that is most likely to give actual notice to the party to be served. If the party to be served resides or is located out of this state, the court may also order the summons to be published in a named newspaper outside this state that is most likely to give actual notice to that party. The order shall direct that a copy of the summons, the complaint, and the order for publication be forthwith mailed to the party if his or her address is ascertained before expiration of the time prescribed for publication of the summons. Except as otherwise provided by statute, the publication shall be made [once a week for four successive weeks, with at least five days between publication dates] as provided by Section 6064 of the Government Code unless the court, in its discretion, orders publication for a longer period.

Okay, great! —but when is service by publication permitted? Code of Civil Procedure § 415.50(a) provides for service by publication only “…if upon affidavit it appears to the satisfaction of the court in which the action is pending that the party to be served cannot with reasonable diligence be served in another manner specified in this article….” And there is the rub. In order to prevail against a record mineral rights owner whom you cannot locate, you are going to have to effect service on them by publication. And in order to effect service by publication, you must demonstrate to the court that the party in question “cannot with reasonable diligence be served” in another more conventional manner. You will do that with an affidavit (statement under penalty of perjury) detailing the efforts made to locate and contact them and the failure of those efforts.

How well do you suppose that is going to work out for you and your client if you did not really make a serious effort to locate and contact them in advance of filing the action? Likely NOT WELL at all!! As you will enjoy explaining to the -- plaintiff landowner – YOUR CLIENT?

If you accurately describe your half-hearted pre-filing efforts, the court is going to deny the application for leave to serve by publication and require that you first make and document a serious and good faith effort. Suppose you just falsify what seem to be serious efforts, in your sworn statement, and hope for the best. Of course, you just would not do that on general principles. But beyond that, there are serious constitutional problems that arise from service by publication predicated on perjurious and inflated

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claims about efforts to effect service by other conventional means. Service is required to be by means reasonably calculated to effect actual notice to the defendant. (Olvera v. Olvera (1991) 232 Cal.App.3d 32, 41, and code sections cited.) Accordingly, service by publication is sufficient only when efforts at service by other means fail, making service by publication—despite the limited chance of actual notice to the defendant—more likely than other available means to effect actual notice. (Miller v. Superior Court (1961) 195 Cal.App.2d 779, 785-786.)

But, if the affidavit upon which service by publication is based turns out to be demonstrably false, then the judgment terminating the EMRI in question will be subject to collateral attack and may be set aside. (Olvera v. Olvera, supra, at p. 41.) That is not going to make the plaintiff landowner – YOUR CLIENT?-- very happy!! Accordingly, an action to terminate an EMRI under the Act will likely ONLY be successful and worthwhile if you have made a serious effort to locate the owners and likely successors in interest before filing the action and have been unable to locate the owner and likely successors despite that serious effort.

3. Collateral Uses and Benefits of Filing a Notice of Intent to Preserve Mineral Rights

In addition to the intended purposes for filing a Notice of Intent to Preserve Mineral Rights (i.e., Notice of Intent”), and the sole expressly prohibited use—to slander title—there are other perfectly legitimate collateral uses for or advantages which may be obtained from the filing of a Notice of Intent.

(a) Intended Uses or Purposes

Because the Act speaks of and defines “Dormant Mineral Rights” (§ 883.220) and “Abandoned Easements,” (§ 887.050), and provides for an action to terminate such interests (§ 883.210 and § 887.040), there is a temptation or tendency to think of the Act solely in terms of the termination of such interests. Certainly the Act is intended to make the termination of EMRI more definite, precise and predictable—when EMRI satisfy all of the Act’s requirements for being terminated under the Act. However, as we have seen above, there is another no less worthwhile purpose or goal of the Act, which is to make the maintenance of EMRI also more definite, precise and predictable—when EMRI do not satisfy all of the Act’s requirements for being terminated.

Speaking more generally, the Act is intended to make it more definite, precise and predictable whether EMRI are or are not subject to termination. Even if all of the other requirements for a determination that EMRI are dormant, and subject to termination as such, have been satisfied for any preceding 20-year period, the filing of a notice of intent to preserve those rights during that period conclusively prevents a their termination pursuant to the Act. Conversely, assuming that all of the other requirements for a determination that EMRI are terminable under the Act have been satisfied for any preceding 20-year period, the failure to file a notice of intent to preserve those rights during that period leaves them subject to termination pursuant to the Act.

The important caveat to that last statement, of course, is that the EMRI owner may always respond to an action to terminate their EMRI under the Act by filing a “Late Notice of Intent,” under § 883.250 or § 887.070.

(b) Expressly Prohibited Use—Slander of Title

The only specifically prohibited purpose for filing a Notice of Intent is to slander the title of another person. The specific prohibition is included, along with some related provisions, in section 880.360, as follows:

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§ 880.360. Slandering title; recording notice of intent. A person shall not record a notice of intent to preserve an interest in real property for the purpose of slandering title to the real property. If the court in an action or proceeding to establish or quiet title determines that a person recorded a notice of intent to preserve an interest for the purpose of slandering title, the court shall award against the person the cost of the action or proceeding, including a reasonable attorney's fee, and the damages caused by the recording.

In addition to that specific prohibition, the prescribed form of the notice in § 880.340 (“notice…shall be in substantially the following form”) includes the statement: “I assert under penalty of perjury that this notice is not recorded for the purpose of slandering title to real property and I am informed and believe that the information contained in this notice is true.”

Do not allow the language of this provision to suggest to you that recording a notice of intent to preserve an interest is not slander of title unless you intend that result. Understanding why this is so requires a basic understanding of slander of title. Slander (or disparagement) of title has been said to occur “when a person ‘publishes matter which is untrue and disparaging to another's property ... under such circumstances as would lead a reasonable man to foresee that the conduct of a third person as purchaser or lessee thereof might be determined thereby ....’ ” (Wilton v. Mt. Wood Homeowners Assn.

(1993) 18 Cal.App.4 565, 568.) 24 The publisher of the false and disparaging information is liable for the pecuniary loss to the owner as a result of the publication.

As you can see, it is entirely possible to inadvertently slander or disparage the title of another by publishing false and disparaging information that is believed to be true. While that would be a proper basis for an action for slander of title, it would be contrary to the provisions of the Act only if the false and disparaging information were known to be false or otherwise were published for the purpose of slandering title.

(c) General vs. Specific Description in Notice of Intent

Another point that merits separate discussion, and bears on the subject of legitimate collateral uses and effects of a Notice of Intent, is the alternative form of property description that is permitted for the notice of intent to preserve EMRI.

Section 880.330, describing the required content of a notice of intent to preserve rights in general, and § 880.340, setting forth the statutory form of such a notice of intent to preserve rights, both require such a notice to include “a statement of the character of the interest claimed [and]…the statement shall include a reference by record location to the recorded document that creates or evidences the interest in the claimant.” (§ 880.330(b)(2) and § 880.340.) The same two sections also generally require a notice of intent to preserve an interest under the Act to include “a legal description of the real property in which the interest [in question] is claimed.” (§ 880.330(b)(3) and § 880.340.) Each also provides that

24 Actionable slander of title also requires that the publication of the false and disparaging information be “without a privilege to do so.” (Wilton, supra, at p. 568.) This element seems almost certain never to be lacking in the context of recording a Notice of Intent, since not only is the filing of a Notice of Intent not a privileged act, but there does not seem to be any acceptable basis for a “privileged” inclusion of false information in a Notice of Intent.

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this description “may be the same as in…the recorded document that creates or evidences the interest in…the claimant.” (Ibid.)

However, with respect specifically to a notice of intent to preserve EMRI, § 883.230(b), for mineral rights interests, and § 887.060(b), for easements, provide:

“In lieu of the statement of the character of the interest claimed and the record location of the documents creating or evidencing the mineral rights/easement claimed as otherwise required by … section 880.330(b)(2), and in lieu of the legal description of the real property in which the interest is claimed as otherwise required by…section 880.330(b)(3), and notwithstanding the provisions of Section 880.340 or any other provision in this title, a notice of intent to preserve a mineral right/easement may refer generally and without specificity to any or all mineral rights/easements claimed by claimant in any real property situated in the county.” (Emphasis added.)

These provisions allow—and make effective—a general reference in the Notice of Intent to “any and all EMRI claimed” (i.e., specifying only mineral rights or easements) in the county of recording. Such a reference is permitted as a substitute not merely for the otherwise required specific “legal” property description, but also for the otherwise required recording reference for the document that created or evidences the interest in the claimant.

Of course, § 883.230(b) and § 887.070(b) are each permissive—not mandatory—so you can choose whether to include in a specific Notice of Intent either the general reference to “any and all mineral rights/easements claimed” in the county of recording, or the more specific and detailed information contemplated with respect to the provisions concerning notices of intent to preserve EMRI in general pursuant to § 880.330 and § 880.340.

With the foregoing in mind, we turn next to a discussion of various legitimate collateral uses and effects of the Notice of Intent. Some of those collateral uses and effects may require the use of more specific descriptions, but none of them depends for its effectiveness upon the more general reference to “any and all mineral rights/easements claimed” in the county of recording.

But always keep in mind that there is nothing that says you can’t do both—include specific information for all of the mineral rights/easements that are claimed and are known to you in the county of recording and also a more general reference to “any and all mineral rights/easements claimed” in the county of recording (i.e., specifying whether mineral rights or easements).

(i) Making yourself easier to find; getting into a title plant “Arb” system

Practically speaking, the value of oil and gas rights ownership, and to an admittedly lesser extent ownership of easement rights, may depend upon the ability of persons who are seeking to acquire or terminated those rights to find their owner. This means that they need to know where to find you. Recording a Notice of Intent with your new address or other new contact information is an excellent way to make it easier for people who want to put money in your pocket to find you.

Speaking more specifically to the oil and gas contexts, persons seeking to take an oil and gas lease or seismic permit, or buy-out mineral-related surface rights, are rarely going to run a grantor-grantee index search at the County Recorder’s office. At least that is not the first place they are likely to look. They are likely to begin with review of records at a title plant, and whether they find you in that review may well depend upon whether there is a document reflecting your interest in the list of documents for the “Arb” tract they are interested in. If the deed you claim under is 100 years old, and you (and your predecessors in interest) have recorded 5 Notices of Intent (one every 20 years) with just a general

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reference to “any and all mineral rights claimed” in the county of recording (the most recent of which shows you address 20 years ago), then you are just that much less likely to be found.

(ii) Prior “omnibus” decree or “blanket” deed

Decrees of distribution from decedent’s estates typically include “omnibus” or “residuary” clauses which provide for the distribution, for example, of “all the rest, residue and remainder” of the decedent’s estate. This is a device to provide for distribution of assets of the estate that are not specifically identified and described in the decree. If it turns out that the current EMRI owner has acquired that interest by way of such a provision in a decree of distribution, there will not be any document vesting title in them along with a specific description.

The same basic problem exists with a blanket deed, such as: “Bank of America, NT&SA, to Capitol Company, all of its right, title and interest in and to real property in the County of Kern, State of California.” Such a deed is perfectly valid and effective, but it does not give the grantee a vesting deed with specific property description. In this, or other similar circumstances, such a claim can be placed of record along with a specific property description by means of an appropriately worded notice of intent to preserve the EMRI in question.

(iii) Unrecordable Judgment, Agreement or Other Instrument

Suppose a client presents to you a certified copy of a judgment quieting title to the fee oil and gas rights interest or an easement in specific property. You would assume that you can record that judgment in the appropriate land records (e.g., for the county where the land is located), and “perfect” your clients title under the judgment. You would be correct in that assumption—assuming that (a) the judgment is otherwise recordable and (b) the judgment includes sufficient information to permit a third party to determine from review of the judgment what property is involved.

However, the client has already tried to record this particular judgment only to have it denied recording—because it does not include a legally sufficient description of the real property involved. Trial counsel chose to employ in the judgment shorthand terms of reference that were used in their trial briefs. The judgment refers to the easement in question as “the Easement” in the “Subject Property,” or to the fee oil and gas rights interest in question as being “100% of the fee oil and gas rights interest in and to the Subject Property,” and refers to the rights to enter into, use and improve the surface of real property as affecting “Drillsite 1,” “Drillsite 2,” “Drillsite 3” and “Drillsite 4.” The italicized terms were defined in the plaintiff’s complaint and in the parties’ trial briefs—to which the judgment does not even refer. An interested third party might guess that those terms can be found defined somewhere in the trial court files, and reading through those files from front to back might find them defined. They might even find them defined in a number of different and conflicting ways. The point is that you cannot tell from the face of the judgment what property is involved or where you should look go to find out what property is involved.

One solution might be to request a revised judgment including the precise property descriptions. But in bitterly contested proceedings, the client might not want to re-engage with the other parties in a battle over a revision to the judgment.

This situation has actually been presented to us, which led to the preparation and recording of a notice of intent to preserve the interests and rights in question, including in that notice a description of the judgment quieting title, along with other “vesting” documents, as the source and foundation of the client’s title.

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(iv) Marriage or other name change, corporate merger or other reorganization

This topic involves another part of making sure someone can locate you. If a person who owns EMRI changes their name (marriage or otherwise), recording documentation of that change is not necessarily going to get the information into a title plant’s Arb system for the specific properties involved. A Notice of Intent, reflecting the former name and the new name, and including specific property descriptions should make that happen, also making it easier for someone to find them in a review of official Grantor-Grantee indices. (California Civil Code § 1096 requires that a person who after acquiring title to real estate “shall afterwards, from any cause, have his or her name changed, must, in any conveyance of said estate so held, set forth the same in which he or she derived title to said real estate.” The common form for this is “Jane Doe, who acquired title as Jane Roe.” We suggest you also include a “Special Indexing Request” on your document (right below “Space Above for Recorder’s Use Only”): “Special Indexing Request: Recorder, Please Index as Grantor both “Jane Doe” and “Jane Roe.” But don’t be too surprised if the recorder fails or refuses to honor that request—at least initially.)

The same difficulty, and the same remedial act, apply to any form of reorganization of a business entity—merger, change from corporation to limited liability company, etc. Prepare and file a Notice of Intent reciting the facts, with specific property description.

Part 7. Actions to Terminate “Abandoned” Easements or “Dormant” Mineral Rights Under the Act – The Land Professional’s Role

I. The Problem of the Missing EMRI Owner.

Land professionals are often tasked with locating the owner of and EMRI for a variety of reasons.

The reason for locating the EMRI owner may be to obtain an agreement from that owner to allow another party share the easement rights or to produce the minerals by way of an oil and gas lease between the mineral right owner and an oil and gas producer. In another example, a land professional may be asked by the owner of the fee simple interest (commonly referred to as the “surface owner”) to locate the EMRI owner(s) that pertain to the surface owner's property in order to obtain a waiver or agreement thereby allowing the surface owner to use or sale the “surface” unencumbered of such rights.

When an EMRI owner cannot be located, it can present significant problems for anyone interested in acquiring or developing the property or for the surface owner of the property subject to the EMRI.

As further explained above, the MRTA declares an easement “abandoned” and a mineral right “dormant” if, for a period of 20 years prior to commencement of an action to terminate the EMRI specified acts have not been performed.

The purpose of this paper is to provide the land professional with a general background on an action to terminate a dormant mineral right in California and highlight the critical role of the land professional in reaching a successful conclusion.

An action in quiet title to terminate an EMRI (whether easement or mineral rights interest) must comply with many complicated procedures set forth in different California statutes.

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Since we are focused here narrowly on the procedures which pertain to the role of a land professional, we will not include every California statute or procedure that pertains to a quiet title action to terminate an EMRI. Therefore, this paper should not be considered or relied on as a comprehensive legal guide on an action to terminate an EMRI under the Act.

II. Basic Questions and Answers Regarding Termination of EMRI Under the Act.

Who may bring an action to terminate a mineral right?

“The owner of real property subject to a mineral right may bring an action to terminate the mineral right pursuant to [Civil Code § 883.210, et seq.] if the mineral right is dormant.”

Civil Code § 883.210

“The owner of real property subject to an easement may bring an action to establish the abandonment of the easement [pursuant to Civil Code § 887.010, et seq.] and to clear record title of the easement.”

Civil Code § 887.040(a)

When is a mineral right dormant or easement abandoned under the Act?

“A mineral right is dormant if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to terminate the mineral right: (a) there is no production of the minerals and no exploration, drilling, mining, development, or other operations that affect the minerals, whether on or below the surface of the real property or on other property, whether or not unitized or pooled with the real property; (b) no separate property tax assessment is made of the mineral right or, if made, no taxes are paid on the assessment; and (c) no instrument creating, reserving, transferring, or otherwise evidencing the mineral right is recorded. ”

Civil Code § 883.220

Provided, however, that “a mineral right is not dormant for the purpose of this article if…a notice of intent to preserve the mineral right is recorded within 20 years immediately preceding commencement of the action to terminate the mineral right.”

Civil Code § 883.230(c)(1)

“For purposes of this chapter, an easement is abandoned if all of the following conditions are satisfied for a period of 20 years immediately preceding commencement of the action to establish abandonment of the easement: (1) the easement is not used at any time; (2) no separate property tax assessment is made of the easement or, if made, no taxes are paid on the assessment; and (3) no instrument creating, reserving, transferring, or otherwise evidencing the easement is recorded.”

Civil Code § 887.050

Provided, however, that “an easement is not abandoned for purposes of this chapter if…a notice of intent to preserve the easement is recorded within 20 years immediately preceding commencement of the action to establish the abandonment of the easement.”

Civil Code § 887.060(c)(1)

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What happens to a dormant mineral right or abandoned easement under the Act once it is terminated?

“A mineral right terminated pursuant to [Civil Code section 883.210, et seq.] is unenforceable and is deemed to have expired. A court order terminating a mineral right pursuant to [Civil Code section 883.210, et seq.] is equivalent for all purposes to a conveyance of the mineral right to the owner of the real property.”

Civil Code § 883.260

“An abandoned easement is unenforceable and is deemed to have expired. A court order establishing abandonment of an easement pursuant to this chapter is equivalent for all purposes to a conveyance of the easement to the owner of the real property.”

Civil Code § 887.080

Red Flag: The “Late-Filed” Notice of Intent to Preserve an EMRI.

“(c) A mineral right is not dormant for the purpose of this article if…a notice of intent to preserve the mineral right is recorded … after commencement of the action to terminate the mineral right.”

Civil Code § 883.230(c)(2); emphasis added.

“(c) An easement is not abandoned for purposes of this chapter if…a notice of intent to preserve the easement is recorded…after commencement of the action to establish the abandonment of the easement and before judgment is entered in the action.”

Civil Code § 887.060(c)(2); emphasis added.

What is the effect of a Late-Filed Notice of Intent to Preserve an EMRI?

“In an action to terminate a mineral right pursuant to [Article 2, “Termination of Dormant Mineral Right,” Civil Code section 883.210, et seq.], the court shall permit the owner of the mineral right to record a late notice of intent to preserve the mineral right as a condition of dismissal of the action, upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the mineral right or portion thereof as to which the notice is recorded. As used in this section, the term ‘litigation expenses’ means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee.”

Civil Code § 883.250

“In an action to establish the abandonment of an easement pursuant to this chapter, the court shall permit the owner of the easement to record a late notice of intent to preserve the easement as a condition of dismissal of the action, upon payment into court for the benefit of the owner of the real property the litigation expenses attributable to the easement or portion thereof as to which the notice is recorded. As used in this section, the

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term "litigation expenses" means recoverable costs and expenses reasonably and necessarily incurred in preparation for the action, including a reasonable attorney's fee.

Civil Code § 887.070

III. The Land Professional’s Role in an Action to Terminate an EMRI Under the Act.

A. Recognizing the circumstances that give rise to a claim for an action to terminate an EMRI under the Act.

As stated above, a mineral right is dormant and an easement is abandoned, and subject to termination under the Act, when each of four specified actions have not been performed at any time within the preceding 20 years. Let’s assume a land professional is trying to locate certain EMRI owners in order to purchase their EMRI interests for the benefit of the surface owner, but some or all of the EMRI owners cannot be located or contacted. If the subject EMRI are dormant mineral rights or abandoned easements, then an action to terminate them under the Act, may present the best alternative by which the surface owner can obtain a court order terminating freeing her title of them.

Once a client decides to initiate an action to terminate dormant mineral rights or abandoned easements under the Act, the land professional’s role expands and becomes increasingly critical as the action proceeds.

B. The land professional’s role in obtaining a court order for service by publication.

After a surface owner (the “Plaintiff”) has filed an action against the owner of an EMRI (the “Defendant”) to terminate that EMRI, the Plaintiff must serve the Defendant with a

summons25 along with the complaint and potential other documents. (Cal. Code Civ. Proc., § 412.20(a).) However, whenever an action to terminate an EMRI under the Act is pursued, it should most likely involve a Defendant who cannot be found, making it impossible to serve a summons and associated documents on that Defendant by conventional means.

Where a Defendant cannot be located, and therefore cannot be served with a summons pursuant to statute, California Code of Civil Procedure section 415.50 provides that a summons may be served by publication, i.e., by publishing the summons in a named newspaper according to the applicable sections of the Code of Civil Procedure.

The pertinent part of Code of Civil Procedure section 415.50(a), which relates to our discussion here, provides “[a] summons may be served by publication if upon affidavit it appears to the satisfaction of the court in which the action is pending that the party to be served cannot with reasonable diligence be served in another manner specified in this

article.” (Cal. Code Civ. Proc., § 415.50(a), emphasis added.)26 The term “reasonable

25 “A ‘summons’ is a form of court process issued in the course of a judicial proceeding” which notifies defendants that a “lawsuit is pending against them, that they have a limited period of time within which to file a response, and of the consequences.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2006) ¶4.1; See also Cal. Code Civ. Proc., § 412.20(a).)

26 California Code of Civil Procedure section 415.50 provides in its entirety:

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diligence” has been described as “a thorough systematic investigation and inquiry conducted in good faith by the party or his agent or attorney.” (Watts v. Crawford (1995) 10 Cal.4th 743, 749.) In other words, the Plaintiff must show the Court, to its satisfaction, that the Defendant cannot be served by another means specified in the Code of Civil Procedure, other than by publication.

As you may well know, more often than not the land professional is the individual who has been trying to locate and contact the mineral right owner with no avail. Hence, the land professional is the ideal person to provide a signed declaration explaining to the Court the measures they have taken to locate the Defendant and thus demonstrate to the Court that the Defendant cannot with “reasonable diligence” be served in any other manner besides service by publication.

The following are examples taken from a declaration of a land professional which details the different attempts made by the land professional to locate and contact the Defendant thereby showing that the Defendant cannot with “reasonable diligence” be served in another manner aside from service by publication.

Example 1: Land professional attempted to contact Defendant by mailing a letter to Defendant’s Last Known Address. However, the letter land professional mailed to the Last Known Address was returned to land professional's office by the United States Post Office.

“(a) A summons may be served by publication if upon affidavit it appears to the satisfaction of the court in which the action is pending that the party to be served cannot with reasonable diligence be served in another manner specified in this article and that either:

(1) A cause of action exists against the party upon whom service is to be made or he or she is a necessary or proper party to the action.

(2) The party to be served has or claims an interest in real or personal property in this state that is subject to the jurisdiction of the court or the relief demanded in the action consists wholly or in part in excluding the party from any interest in the property.

(b) The court shall order the summons to be published in a named newspaper, published in this state, that is most likely to give actual notice to the party to be served. If the party to be served resides or is located out of this state, the court may also order the summons to be published in a named newspaper outside this state that is most likely to give actual notice to that party. The order shall direct that a copy of the summons, the complaint, and the order for publication be forthwith mailed to the party if his or her address is ascertained before expiration of the time prescribed for publication of the summons. Except as otherwise provided by statute, the publication shall be made as provided in Government Code §6064 unless the court, in its discretion, orders publication for a longer period.

(c) Service of a summons in this manner is deemed complete as provided in Section 6064 of the Government Code.

(d) Notwithstanding an order for publication of the summons, a summons may be served in another manner authorized by this chapter, in which event the service shall supersede any published summons.

(e) As a condition of establishing that the party to be served cannot with reasonable diligence be served in another manner specified in this article, the court may not require that a search be conducted of public databases where access by a registered process server to residential addresses is prohibited by law or by published policy of the agency providing the database, including, but not limited to, voter registration rolls and records of the Department of Motor Vehicles.” (Cal. Code Civ. Proc., § 415.5)

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Example 2: Land professional also located the telephone number for Defendant’s Last Known Address and contacted a current resident, but land professional was told by the current resident that Defendant did not reside at the address and that the current resident did not know or have any information on Defendant’s whereabouts.

Example 3: Land professional contacted Defendant’s family members and interviewed them. The family members interviewed had not kept in contact with Defendant and could not confirm where Defendant is currently residing.

Example 4: Land professional conducted research on special investigative computer databases, e.g., Link to America, Merlin, which provided phone numbers and residential addresses associated with the Defendant’s name. Land professional made phone calls to the phone numbers provided and mailed letters to the current addresses provided. However, the phone numbers land professional called were either out of service or disconnected and when land professional was able to contact a person the person was not familiar with Defendant. The letters land professional mailed to the current addresses provided were either returned to land professional’s office by the United States Post Office or have not been returned and/or responded to by anyone who is familiar with the Defendant.

Example 5: Land professional reviewed obituaries with the Defendant’s name in the pertinent area, but was not able to locate any obituary for Defendant.

C. Match Point: The land professional’s role in obtaining the default judgment.

Obtaining a judgment entered against a defendant who fails to appear in court when required to do so (a “Default Judgment”), is the remaining critical step that requires the land professional's extensive participation. Before I discuss the land professional's role, I will generally describe the events that occur in between obtaining a court order for service by publication and obtaining the Default Judgment.

As stated above, in many instances the owner of a terminable EMRI under the Act cannot be found. Hence, after a defendant in an action to terminate that ERMRI is served with a summons by publication, there will likely be no response from the defendant. After the time allowed for the defendant to respond to the complaint has expired, and other specific conditions have been met, the court clerk shall enter the default of the defendant. (Code Civ. Proc., § 412.20(a)(3); Code Civ. Proc., § 585(c).) Following the entry of default, the party who requested the entry of default must obtain a Default Judgment against the defaulting party within 45 days after the default was entered, unless the court has granted an extension of time. (Cal. Rules of Court, rule 3.110(h).)

To obtain a Default Judgment in an action to terminate an EMRI, the plaintiff seeking to terminate the right must present evidence to support the judgment requested and,

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therefore, obtain the Default Judgment.27 In lieu of presenting evidence at a hearing, a party may seek a Default Judgment on declaration or other admissible evidence in support of the judgment requested. (Cal. Rules of Court, rule 3.1800(a); Code Civ. Proc., § 585(d).) While a court may require a hearing, it is more cost and time efficient for the Plaintiff to present evidence by declaration and/or other admissible evidence.

The plaintiff must present evidence that the EMRI in question is indeed subject to termination under the Act, which provides the four conditions that must exist throughout 20 years prior to the commencement of the action. The individual most qualified to provide this type of evidence is the land professional. Below are excerpts from a declaration by a land professional providing evidence that the conditions for termination of an EMRI under the Act have been met and which ultimately was successful in obtaining a Default Judgment.

i. The following are examples of evidence by declaration of a land professional that demonstrates the absence of use, taxation (or, if taxed payment, or record notice) during the 20 years prior to commencement of an action.

Example A:

On [date], [land professional] performed a site inspection of the [identified property], visually inspecting the property to determine if any activities or improvements associated with the production of minerals were apparent by visual inspection. [land professional] found there to be no equipment, derricks, tank farms, or other activities or improvements which indicated the production of minerals on the [identified property]. [Land professional] also found no materials suggesting that the production of minerals had ever occurred in the past or could be contemplated to occur in the future.

Example B:

On [date], [land professional] reviewed the records of the [County name] County Recorder’s Office that pertain to the [identified property] for the period from [date] to [date] (i.e., for a period of over twenty years prior to the filing of this action). In reviewing those records for that period, [land professional] found no document which recorded, documented or suggested that the exploration, drilling, mining, development, production or other operation with respect to minerals, either on or below the [identified property], had occurred between [date] and [date]. In addition, [land professional] found no document that recorded, documented or suggested that the exploration, drilling, mining, development, production or other operation with

27 In cases involving service by publication, a party seeking a Default Judgment must present evidence to obtain the Default Judgment. (See Code Civ. Proc., § 585(c).) In addition, an action to terminate a dormant mineral right “shall be brought in the same manner and shall be subject to the same procedure as an action to quiet title. . .” (Civ. Code, § 883.240.) In a quiet title action, the “court shall not enter judgment by default but shall in all cases require evidence of plaintiff’s title and hear such evidence as may be offered respecting the claims of any of the defendants . . . [t]he court shall render judgment in accordance with the evidence and the law.” (Code Civ. Proc., § 764.010)

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respect to minerals, either on or below the [identified property], had occurred on other property either by unitization or pooling within the [identified property]. [Land professional] also found no document which recorded, documented or suggested any production of minerals had occurred between [dates covering a 20 year period prior to commencement of the action] from the [identified property], such as an oil and gas lease, a declaration of pooling, or any other document stating or suggesting that the production of minerals had occurred during that period or might occur in the future on the [identified property]. In addition, [land professional] found no instruments creating, reserving, transferring, or otherwise evidencing any mineral rights interest in the [identified property] that have been recorded between [dates covering a 20 year period].

Example C:

On [date], [land professional] reviewed the records of the Division of Oil and Gas and Geothermal Resources (the “DOGGR”) in [County where property is located] County. Those records did not contain any document which suggested or stated that the production of minerals had ever occurred on the [identified property] (i.e., during a period of twenty years prior to the filing of this action or any other time). The DOGGR records also made no reference to any oil and/or gas wells or any drill sites that have been situated on the [identified property]. Example: Based on my review of the records in the [County where real property is located] County Recorder’s Office, the records of the DOGGR in [County where real property is located] County, the Title Report for the [identified property], and my site inspection of the [identified property], it is my conclusion that between the period of [date] to [date] (i.e., for a period over twenty years prior to the commencement of this action), there had been no production of minerals and no exploration, drilling, mining, development, or other operations with respect to minerals, on, within, or beneath the surface of the [identified property], whether on or below the surface of the [identified property] or other property (whether or not unitized or pooled property).

ii. The following is an example of evidence by declaration of a land professional that demonstrates that no separate property tax assessment is made of the mineral right or, if made, no taxes are paid on the assessment for a period of 20 years immediately preceding commencement of the action.

Example A:

On [date], [land professional] reviewed the records of the [County where real property located] County Assessor’s Office that pertain to the [identified property] for the period from [date] to [date] (i.e., for a period of over twenty years prior to the commencement of this action). According to the records of the [County where real property is located] County Assessor’s Office, throughout that period of time, no separate property tax assessment has been made of any mineral rights interest in the [identified property].

iii. The following is an example of evidence by declaration of a land professional that demonstrates that no instrument creating, reserving, transferring, or otherwise evidencing the mineral right is recorded for a period of 20 years immediately preceding commencement of the action. (Civ. Code, § 883.220(c).)

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Example A:

Based on my review of the records in the Ventura County Recorder’s Office and the Title Report [land professional] prepared for the [identified property], it is my conclusion that between [date] and [date[] (i.e., for a period over twenty years prior to the commencement of this action), no instrument creating, reserving, transferring, or otherwise evidencing the mineral rights interest owned by Defendants in the [identified property] was recorded in the [County where real property is located] County Recorder’s Office.

IV. Conclusion.

In sum, as described above, the role of the land professional is critical in an action to terminate an EMRI under the Act. Hopefully, this paper has provided sufficient background to educate the land professional on their role in assisting their client to the successful prosecution of an action to terminate an EMRI under the Act.

Ms. Cecilia E. Rendon can be reached at crendon@brightandbrown.com Mr. Quirk can be reached at jquirk@brightandbrown.com Cecilia E. Rendon, Esq. Cecilia is a member of the law firm of Bright and Brown. After receiving her law degree from the University of California - Berkeley, Boalt Hall School of Law in 2003, she spent two and a half years in the Los Angeles County Public Defender’s Office, where she tried numerous criminal cases to verdict, before joining Bright and Brown in 2006. Since that time, Cecilia has been involved in complex transactions and civil litigation, assisting clients, including oil companies and public utilities, in a variety of environmental, oil and gas, construction and real property contexts, while also assisting both mineral owner/lessors and mineral lessee/operators in transactions, negotiations and disputes involving oil and gas leases, mineral rights assignments, purchase and sale agreements, and other oil and gas industry contracts and agreements. At the 29th Annual West Coast Landmen’s Institute, Cecilia discussed “Termination of a Dormant Mineral Right in California.” John (“Jack”) QUIRK, Esq. Jack is a member of the law firm of Bright and Brown. He represents both mineral owner/lessors and mineral lessee/operators in the negotiation and performance of oil and gas leases and other agreements unique to the exploration and production phases of the oil and gas industry, and is considered one of the State’s leading practitioners in the area of oil and gas title. Jack is a frequent speaker to oil and gas industry gatherings. He received a “Special Award—Education” at the AAPL’s June 2006 convention. He has discussed the application of the Marketable Record Title Act in varying contexts at the Annual West Coast Land Institute for oil and gas land professionals, and at meetings of both the Los Angeles and Bakersfield Associations of Professional Landmen. At the 30th Annual West Coast Land Institute he presented “A ‘Study’ In Cooperative Subsurface Oil & Gas Development Rights. At the 25th Annual West Coast Landmen’s Institute he devoted an insanely large period of time to discussing “The Rule Against Perpetuities and Fee Simple vs. Surface Title: The Most Painfully Boring Experience of Your Life.”