Understanding Mineral Rights in Real Estate

Acquiring a clean title of land property does not always mean that you own the resources beneath the land surface. In this article, we will walk you through the fundamentals of mineral rights in real estate.

Frequently Asked Questions About Mineral Rights on Property

As a landowner or a prospective real estate investor, it is important to understand that buying a piece of land does not end in signing contracts. This could be shocking, especially when you suddenly receive a notice of drilling and land extraction on your property only to find out a covenant called “mineral rights.”

Below are the FAQs about mineral rights every landowner should know:

What are Mineral Rights?

Mineral rights refer to the ownership rights to exploit the minerals under the surface of a land area for development, extraction, or exploration. The minerals may refer to underground resources such as mineable rocks, metals and ores, and fluid materials like oil and natural gas.

In most countries, the government holds title to the natural resources found beneath privately owned lands. However, in the United States, the surface estate and the natural estate may not be owned by the same person. This circumstance is referred to as “split estate.” Therefore, it is necessary to reach a surface agreement with the mineral rights owner to utilize the valuable rocks, oil, and gas resources.

According to the Landman’s Legal Handbook, an agreement with the surface owner is unnecessary if the company does not need surface access to develop the minerals.

What are Mineral Royalties?

Mineral royalties are the compensation to either the mineral rights owner or the state for the acquisition of mineral resources. For example, mining companies pay royalties for the non-renewable resources exploited from the land. Oil and mineral royalties are taxable, just like other forms of income.

Which States Have Mineral Rights?

Mineral rights often exist in states where oils and minerals are severed. According to a Reuters article, there are 25 states practicing mineral rights, including Texas, Oklahoma, Pennsylvania, Louisiana, Colorado, New Mexico, and other states where oil and gas have been produced for decades.

How to Search for Mineral Rights Records?

Here are the common ways to search for records if you are concerned about mineral rights on properties:

  • Review your deed or get a copy from the county’s records and tax assessor.
  • Track loan default and foreclosures
  • Consider tracing the royalty deeds
  • Hire a professional title company

In Oklahoma, a way to know the mineral ownership rights is by doing title research through a manual search of the deed books and property records at the courthouse where the property is. Hiring a title attorney, a local handyman, or an abstractor are the other viable options to ease the process.

Should I Buy Land With Mineral Rights?

Mineral estate owners can significantly impact your land when you own the land property, but not its non-renewable resources.

Purchasing a surface estate and natural estate with mineral rights provides security that your property is yours and yours only. It gives you the liberty to develop your land or acquire the resources as you please.

In addition, land with mineral rights can be a good investment. If you buy land with mineral rights, you can be a royalty owner. When done correctly, it can be a source of passive income that pays for its cost.

If your goal is to monetize the natural estate, it is essential to know if your piece of land has mineral rights. This hiring professionals to track the property rights in case your county does not have a record. To assess our land’s potential market value, you will need experts who are seasoned in the process. The rules differ in every state and are governed by specific regulations.

Are you thinking about selling your land, oil & gas mineral rights? Our experienced and dedicated staff at Wiggins Auctioneers creates accelerated marketing plans that result in success records through the auction method. Get in touch with us to know more.

Share this post:

Recent Posts