No Title Insurance Product

No title insurance product exists for mineral & royalty interests located in the United States.  Title insurance is not offered by any title company due to the complexities and idiosyncrasies of mineral interest title.  This means that title has to be independently verified by the purchaser of any mineral property at the time of acquisition — a process which involves specialized contractors, called “landmen”, to verify record title at the courthouse, tracing ownership of the property from owner to owner over time.  Neither landmen nor any title or real estate attorney offers title insurance guaranteeing the accuracy of their work, however, meaning that the purchaser ultimately takes all of the risk of title failure on their purchased property.

The risk & inefficiency associated with this process and the potential for the blockchain to solve it is one of the major reasons for the establishment of Mineral Vault in the first place — read more on our blog post Why Tokenize Mineral Interests?.

Despite all of the above, we have solved the title problem for our token holders…

Mineral Vault Title Verification & Guarantee

Does the lack of a title insurance product mean that the risk of title failure on a property in a Mineral Vault offering is ultimately borne by the token holder?

Importantly, NO — all properties included in any Mineral Vault offering are title guaranteed for the full offering duration.  If a property experiences a title failure which causes token holders to no longer receive royalty income on one or more wells existing on that property, a make-whole amount will be issued to the SPV, as a lump sum, by the entity that last performed the title verification before the asset was included in the tokenized SPV initially.  The amount will be the full value assigned to the property at the time of initial offering, less any payments received by token holders to date.

In the case of Mineral Vault I, our flagship token, the entity that performed the title verification was Allegiance Capital Fund I LP, a Texas limited partnership owned by the same principals that own Mineral Vault.  Record title had to be verified by Allegiance for each of over 350 individual transactions that sourced the properties now included in Mineral Vault I, and if any title failure occurs as a result of faulty work, token holders will not be held financially liable for this failure.

Additional detail on the title indemnification offered as well as the make-whole amount derivation can be found in the token offering documentation.