In its February 2018 unpublished decision of Woodhouse Hunting Club, Inc. v. Hoyt, the Pennsylvania Superior Court upheld yet another challenge to the Commonwealth’s unique, historical concept of “title washing.” Many oil and gas title attorneys are familiar with the concept, whereby reservations of oil and gas underlying “unseated” lands are erased following tax sales. The scheme primarily originated in the timber areas of Pennsylvania, when a lumber company that owned land with a prior oil and gas severance allowed taxes on that land to become delinquent, and then utilized a “straw” purchaser at a tax sale to purchase the land from the county treasurer. Typically, the straw purchaser further failed to record the treasurer’s deed for a period of two years – a time period conveniently coinciding with the expiration of the statutory tax redemption period. This title washing merged the subsurface estate into the surface estate and divested the prior subsurface owners of their oil and gas reservation. This contrivance was given the imprimatur of the courts, which implicitly justified their holdings based upon the failure to alert the tax assessor of the severance and the failure to pay taxes on the oil and gas estates. That same judicial holding was contemporarily affirmed by the Pennsylvania Supreme Court in its 2016 decision of Herder Spring Hunting Club v. Keller, 143 A.3d 358.
Although a bit dated, the following article published in the January 2013 edition of the Pennsylvania Bar Association Quarterly covers title washing and two other unique title issues of which oil and gas title attorneys should be aware:
Title Washing and Other Unique Pennsylvania Title Matters.