Oil and gas operators may hand over royalties to the state if they can’t locate the mineral owner. Do you have unclaimed mineral rights or thousands of dollars in royalties that you don’t know about? Read (or listen below) to learn how to find out!
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How do people usually find out if they have unclaimed royalties?
Some people find out about unclaimed royalties that were originally owned by a relative when they get a letter from a stranger making them aware of the situation and offering to help them claim it in exchange for a fee. These people that search for unclaimed property and assist people in claiming it are called a finder or locator.
The other way is by doing the research on your own on any state unclaimed property websites in the states where the person lived.
Beware of unsolicited letters offering to help you claim the property. You don’t know who these people are and if they are legit, it could be that they are looking to take advantage of you or at the very least will charge you a large fee for work that you can easily do on your own. It is like those letters you get when you register an LLC and they offer a service to help you file periodic reports for like 10x what it cost you to go on the secretary of state website to do it yourself. Many states have laws that protect consumers that decide to use a third party to assist them in claiming property.
For example, in Colorado, any contract between the owner or heir and the finder is required to state that the owner may file a claim with the state on their own without being charged a fee. Also, the law stipulates that compensation cannot exceed 30% of the market value of the recoverable property. If you do decide to go this route, and there is a significant amount of property at stake, I would strongly recommend hiring an attorney to help. Frankly, they can assist you through the process in a much more trusted relationship and probably at a lower cost, as crazy as that sounds.
Before we dive into the details of the steps you need to follow to find out if you have any unclaimed property out there, let’s define some terms.
What is Unclaimed Property?
Unclaimed property is just what it sounds like. It is tangible or intangible property the most common being financial assets like bank accounts, unclaimed dividends, life insurance policies, royalty payments, unpaid wages. It can also include the contents of expired safe deposit boxes. So, this is not just related to oil & gas royalties, it is any type of payment where the company could not locate the payee and after a time they hand it over to the state where the person lived to administer going forward.
The process of turning over unclaimed property to the state is called “escheatment”. The more common term is unclaimed property.
Unclaimed property laws in the United States started out to help protect consumers and has evolved to also helping these peoples heirs as well. The typical process that most states follow is the company that has the original obligation to pay an individual is required to make every effort to contact the owner to fulfill that obligation If they are unsuccessful after a certain period of time, they report it to the state of the owner’s last known address.
This allows the company to transfer this liability to the state and get it off their books. Going forward, the state is responsible for managing this property.
The state treasurer or comptroller’s office is usually the agency that is responsible for managing the unclaimed property.
Is turning property over to the state treasury good for royalty owners?
Your first response to this question may be “no”. Actually, it can be a good thing because if the original company goes bankrupt or ceases to exist, that asset doesn’t vanish into thin air. Instead, by transferring to the state, the state guarantees that the claimants who can properly prove ownership of the property will receive it back. Also, as far as I know, there is no statute of limitations that applies to dormant accounts. So there usually is not a time limit or charge for claiming your property so several years can go by and you can still claim any lost or forgotten property for you or your relatives that you might have inherited it from. Check the state in question for more information in your specific case.
Who should consider searching for unclaimed property?
Everyone. I did a quick search preparing for this episode and was surprised to find out that the state of Colorado owed me some money. Now, it is less than $50 so not a big deal but it just goes to show that you might be surprised what you find out. Now, this brings up the question as to how hard the state actually tried to contact me to pay me because presumably they know where I live because I file taxes every year but that is another story.
I will also add from a mineral and royalty owner perspective, if you find out that you are the heir to mineral or royalty interests then you definitely need to perform a search.
How to perform a search for unclaimed minerals or royalties
Go to MissingMoney.com which is a central website where you can search across multiple states. Also, go to the website for the state or states where your relative lived and also perform the search there.
The only information you need to start the search is the person’s full name. If they had a common name like John Smith, having the middle initial or full middle name is helpful in narrowing down any possible hits. Also knowing what city or county they lived in is helpful as that can help you further narrow it down to the assets your relative actually owned.
How do I claim money turned over to the state?
Each state will list the requirements as to what information they need. They may have an online form that you fill out or downloadable forms that you need to fill in and include with the required documentation.
Keep in mind that many states have very thorough documentation requirements to help prevent identity theft so don’t be surprised if you need to provide a certified copy of a death certificate or certified court order for the relative. Also, in some states like Oklahoma, if the escheated funds are in excess of $10,000 then the unclaimed property division may require a probate or additional records showing that your relative held an interest in the property.
Also expect that you will need to submit copies of government issued photo ID and possibly also copies of social security cards.
How long does it take to get my unclaimed royalties or other property?
The short answer is: a long time. While the state is tasked with returning the property to the rightful owner by law they are also tasked with preventing identity theft so be prepared for a long and involved process for claiming the property. If the amount is large enough then it will be worth it in the end. The exact time varies from case to case depending on the level of complexity but just be prepared for it to take some time.
Resources Mentioned in This Episode
Here are a few state unclaimed property sites where you can search to see if you or any of your relatives may have unclaimed property (e.g. oil and gas royalties):
- Texas Unclaimed Property Website
- Oklahoma Unclaimed Property Website
- Colorado Unclaimed Property Website
Other episodes we mentioned:
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