Judge says bankruptcy trustee may sell debtors’ oil and gas mineral rights

An Ohio federal bankruptcy judge recently granted a bankruptcy trustee’s motion seeking to sell a debtor couple’s oil and gas mineral rights on grounds that the rights are property of the bankruptcy estate and not protected under homestead exemption provisions. The case, In Re: Helen Way, et. al, No. 12-60209, N.D. Ohio Bkcy.; 2014 Bankr., involves two Carroll County parcels of land owned by Helen and David Way, who had filed for Chapter 7 bankruptcy in 2012. Judge Russ Kendig ruled that Ohio’s homestead exemption covers the surface rights to the parcels because the “debtors use both legal parcels as a residence.”  However, Judge Kendig held that the landowners’ oil and gas interests “below their homestead” do “not qualify for homestead protection,” noting that “mineral rights do not contribute to a debtor’s use of land as a residence.”
 

Ohio, Oil & Gas Litigation