Owner Number Records: Maintaining Accuracy and Consistency
One owner should have one owner number account, ideally. Not all systems today accommodate that suggestion, but certainly the most popular ones do. The vast majority, if not all, of the popular land databases allow for one owner number to use more than one mailing address. Still, too often a company’s database will contain more than one owner number assigned to the same owner.
One common cause is variation on the name, with one variation having a Tax ID in the record setup, the other variation not having one. The one with no Tax ID can occur, for instance, when a new division order title opinion (DOTO) lists the owner’s name as slightly different from the existing owner number. The analyst quickly looks to see if the lands covered by the DOTO are the same as, or adjacent to, the lands included in an existing well setup containing the owner number with the Tax ID. Finding no resolution, the analyst cross-checks the lease number credited to this “new” owner in the DOTO to see if it’s the same lease from which this owner’s interest is derived in the existing well. Still finding no resolution, the analyst can contact the landman for help, but if time is an issue, the analyst must make a decision. Erring on the side of caution, the analyst often will request a new owner number be set up, and use this new owner number in the division of interest (DOI) being created from the new DOTO. The owner is placed in suspense for questionable title and the analyst will wait for a signed IRS W9 form and/or signed division order to verify if this is a new owner, or the same owner if the Tax IDs match. If the Tax IDs match, the analyst will do a quick transfer in the now active DOI from the new owner number to the existing owner number and request that the new owner number be updated to use some form of “do not use” indicator. This will prevent future use of the duplicate owner number.
An owner number can never be deleted once it is used in an activated DOI—a universal rule across all land databases, for legal reasons involving financial audits.
Another common cause for multiple variations on the same owner’s name point to acquisitions and mergers. Usually, care is taken to eliminate downloading duplicate owner setups from the seller’s database to the buyer’s database (or from the non-survivor’s database to the surviving company’s database in a merger). That care, however, focuses on disallowing duplicate Tax ID records from being downloaded. For the conversion, the download file will “mapped” from the seller’s owner number to the buyer’s owner number—any duplicates will be mapped to the same buyer’s owner number, but only when the Tax IDs match. The scheme usually works unless the seller’s owner number Tax ID has dashes and the buyer’s Tax ID in the record doesn’t—or vice versa. Any variation from the mapping instruction (such as dashes vs. no dashes) and the computer will allow the seller’s duplicate owner number to be imported and given a new buyer’s owner number. This, and a laundry list of other conversion malfunctions are what make post-conversion cleanups expedient.
Looking at the issue from another angle, if a name is too long for the available spaces in the record’s name field, abbreviations are necessary. A company is wise to devise a list of standard abbreviations and include them in the owner number setup instructions. For example, Company=CO, Trustee=TTEE, Investment=INV, etc.
Many problems arise when one owner has more than one owner number set up, especially when the multiple owner numbers are scattered in multiple active DOIs. Each owner number account must reach the minimum balance threshold before issuing multiple checks, to name one. For another, if one owner number is in suspense, the funds eventually could be escheated, even if the other owner number(s) are being issued checks that are being cashed. A cashed check is proof of contact with an owner, so none of the owner’s suspended funds are escheatable.
Aside from a massive cleanup project to locate and eliminate duplicate owner number use throughout a company’s land records database, there is one going-forward procedure that can drastically reduce ongoing use of duplicate owner numbers. That tactic involves receipt of a signed division order or IRS W9 from any one of the duplicate owner numbers. Routinely, when either of these documents are received, the D.O. technician or associate analyst will pre-process the document before handing it off to the division order analyst who will do the transfer in the database. If the technician or associate will do a system search on the owner name to see how many owner numbers come up, then compare the Tax ID in each one to the Tax ID shown in the document received, duplicate owner numbers can be identified. If any are found, the technician or associate hands off that information to the division order analyst along with the document, and the division order analyst can decide if any of the duplicates also should be transferred and the old number be updated to “do not use.”
Most modern databases will allow this action as a simple screen search, but the company’s IT Department should be able to create what is called a “canned report” for searching the database for Tax ID duplicates, being a report that can be used over and over without additional programming.
With oil having passed the $90/bbl mark as of this writing, maximizing company profits by minimizing waste will continue to be as important as ever.
Next week’s blog will be “Division of Interest Spreadsheet Mania:What Format Is Best?”