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Old Jun 21, 2013, 09:14 PM   #1
samiwas
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Developer retaining mineral rights on your property

Does a developer's sale of mineral rights to an energy company foreshadow fracking?

Has anyone heard about this or had any experience with this? Just read about this yesterday after being linked to it elsewhere. This sounds really sketchy to me, and I'd be surprised that anyone would sign it. I would tell them to shove their contract up their pie-hole.

Basically, it sounds like the homebuilder, DR Horton, who owns their own energy company, retains the rights to all minerals (oil, natural gas, etc) under the land that you buy and sells them to their energy company. So, if one day it was found that oil was under your house, you get no part of it, and they come and dig under your house to get to it. So, basically, they have access to land for free that you pay for.

Now, I know that some would say "let the market sort it out". But, not everyone would be intelligent enough to even know what this means, and it could mean some real problems in the future. I could only hope they would have a good closing attorney.
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Old Jun 21, 2013, 09:44 PM   #2
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I think its complete BS. Your property should mean just that, "your property" not "You get to live here until we find something.".
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Old Jun 21, 2013, 09:47 PM   #3
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Laws regarding mineral rights can vary by state, and some separate ownership of the surface and mineral estates.
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Old Jun 22, 2013, 07:52 AM   #4
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Now, I know that some would say "let the market sort it out". But, not everyone would be intelligent enough to even know what this means, and it could mean some real problems in the future. I could only hope they would have a good closing attorney.
Certainly in the UK every house purchase involves a lawyer - and this sounds like something they should/would ask about if they were remotely competent.
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Old Jun 22, 2013, 09:00 AM   #5
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Certainly in the UK every house purchase involves a lawyer - and this sounds like something they should/would ask about if they were remotely competent.
Because all lawyers are honest and never take anything under the table
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Old Jun 22, 2013, 09:39 AM   #6
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Because all lawyers are honest and never take anything under the table
With pretty comprehensive land registration in the UK it would be tricky for a lawyer to do something like that being found out later. Besides the vast majority of lawyers are honest - the public perception is just based on ignorance. Fortunately I am training in an area of law that doesn't require me to deal with the general public, one of the reasons I would never want to be a residential property lawyer!
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Old Jun 22, 2013, 09:40 AM   #7
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Because all lawyers are honest and never take anything under the table
Then you can sue them.
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Old Jun 22, 2013, 10:14 AM   #8
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My property rights do not include mineral rights, which is fairly common in the UK when land was being sold during coal mining. Mind you, I'd like to see them try to enforce their mineral rights....
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Old Jun 22, 2013, 10:41 PM   #9
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Laws regarding mineral rights can vary by state, and some separate ownership of the surface and mineral estates.
Yes, that's perfectly normal in TX. People sell their homes, but retain the mineral rights.

-t
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Old Jun 23, 2013, 08:54 AM   #10
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Yes, that's perfectly normal in TX. People sell their homes, but retain the mineral rights.

-t
Which s no surprise that DR Horton is based in Texas.

This whole idea just seems weird to me. So I own a home with land. I sell it to someone else who now owns the home and land. But I can still come back with a drill rig and start tearing up their yard, with the owner getting nothing in return, even though they own the house and land? Or does it only work if you can somehow get under their land without touching their surface land?

Either way, this is just wacky.
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Old Jun 23, 2013, 08:57 AM   #11
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No, you just sell the mineral rights to someone else, and leave it to them to drive the occupants off their property.
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Old Jun 23, 2013, 01:08 PM   #12
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Or does it only work if you can somehow get under their land without touching their surface land?
I'd have thought so - otherwise that'd be weird.
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Old Jun 23, 2013, 02:48 PM   #13
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I'd have thought so - otherwise that'd be weird.
Psst, I think you got the wrong person in the quotes :P
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Old Jun 23, 2013, 02:49 PM   #14
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Psst, I think you got the wrong person in the quotes :P
Fixed!
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Old Jun 23, 2013, 03:02 PM   #15
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.... Or does it only work if you can somehow get under their land without touching their surface land?
The article you linked to says;

Quote:
...the deed specifies that the drilling or mining would originate from land other than the homeowner's property, the activities and equipment, which could include tunnels and shafts, would occur beneath it....
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Old Jun 23, 2013, 03:36 PM   #16
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... This whole idea just seems weird to me. So I own a home with land. I sell it to someone else who now owns the home and land. But I can still come back with a drill rig and start tearing up their yard, with the owner getting nothing in return, even though they own the house and land? Or does it only work if you can somehow get under their land without touching their surface land?

Either way, this is just wacky.
I'm actually surprised more Americans aren't aware of how mineral rights and surface rights work in the U.S. I believe the system has been in place since the U.S. was established.

Here in Central Appalachia, the subject was brought up in the classrooms by various teachers when I was in jr. high and high school. But then Central Appalachia was one of the most productive coal fields in the country, and extraction/mining of natural gas, crude oil, and even clay was also common (and profitable).

George Washington, who worked for and later became a stockholder in the "Ohio Company" (formed in 1748), was involved in many land deals in Central Appalachia that involved the purchase and sale of large tracts of land, much of which was later split into separate surface and mineral tracts. The goal was to sell surface rights to settlers/farmers while the company retained the mineral rights for later exploitation.

Many of the large tracts of land in this region can be traced back to land grants awarded by the government at the end of the American Revolution. Companies soon were formed that bought up the mineral rights to said land, caring little about the surface rights. Land companies had great success buying mineral rights from early settlers/farmers, who, having difficulty paying taxes on their land, happily sold their mineral rights for some quick cash.

By the time the (U.S.) Industrial Revolution got into full swing (after the Civil War), huge tracts of land (some of them covering several counties of 100,000 acres or more in size), were controlled by a few land holding companies that had managed to acquire almost all of the valuable coal fields of the region.

Not a single home owner in the small town I currently live in owns mineral rights to their property. Coal mining began here in the 1890s and continued through the 1970s. The land beneath the town has been extensively mined and natural gas extracted in small quantities.
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Old Jun 23, 2013, 05:36 PM   #17
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Or does it only work if you can somehow get under their land without touching their surface land?
Exactly. Neither oil nor gas (even unconventional gas through horizontal fracking) require drill rigs on every property.

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Old Jun 23, 2013, 10:26 PM   #18
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The article you linked to says;
Yes...I knew that's what their deed said, but wasn't sure of how it worked in other areas.

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Originally Posted by turtle777 View Post
Exactly. Neither oil nor gas (even unconventional gas through horizontal fracking) require drill rigs on every property.

-t
True. Just wondering if they could, or if they have to come in from outside. If they don't have surface rights, then I guess they couldn't just come dig up your yard, right?


Also, do the companies who own the mineral rights pay any property taxes?
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Old Jun 24, 2013, 12:42 AM   #19
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Yes...I knew that's what their deed said, but wasn't sure of how it worked in other areas.

True. Just wondering if they could, or if they have to come in from outside. If they don't have surface rights, then I guess they couldn't just come dig up your yard, right?
According to that wikithing, mineral rights normally include "the right to use as much of the surface as is reasonably necessary to access the minerals". So, basically, if a person holds unqualified mineral rights to your property and the only "reasonable" way for them to obtain your underlying copper is to strip mine the whole property, I am not really clear on how you could prevent that from happening.
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Old Jun 24, 2013, 03:41 AM   #20
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According to that wikithing, mineral rights normally include "the right to use as much of the surface as is reasonably necessary to access the minerals". So, basically, if a person holds unqualified mineral rights to your property and the only "reasonable" way for them to obtain your underlying copper is to strip mine the whole property, I am not really clear on how you could prevent that from happening.
The actual laws regarding this subject seems extremely complex these days. I don't think it's as simple as the Wiki article implies. But of course the first logical step anyone wanting to play the mineral rights game would be to secure expert legal advice. Otherwise, you'd probably end up get totally @%$%#^#*!

Back a 100 or more years ago, the courts (and the laws) seemed to favor the rights of the mineral owner. Apparently, "the needs of the many outweigh the needs of the few" was the type of thinking in vogue during the nation's great industrial awakening. In other words, the population of the entire country needs iron, coal, copper, oil, gas, etc. so the surface land owner were expected to put up with any "minor inconveniences" that might take place on their (surface) land while the exaction of the minerals took place.

But in recent times, it seems that most states have given the surface owner some additional "rights" via various court decisions and new state laws, etc. In actual practice these days, I get the impression that the company owning the mineral rights usually tries to negotiate a contract with the surface owner that involves some sort of monetary compensation and spells out specifics of the deal.

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... Also, do the companies who own the mineral rights pay any property taxes?
In the state where I live they pay taxes to the county tax dept. where the land is located.
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Old Jun 24, 2013, 06:07 AM   #21
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My property rights do not include mineral rights, which is fairly common in the UK ....
This retention of rights doesn't surprise me. It's also quite possible here to buy land but not have the sporting rights included. In other words someone else has the rights to go fishing and shooting on your land even though you 'own' it.
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Old Jun 24, 2013, 09:12 AM   #22
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This retention of rights doesn't surprise me. It's also quite possible here to buy land but not have the sporting rights included.
Dont you mean the killing rights? Not much sport involved.
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Old Jun 24, 2013, 09:15 AM   #23
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Laws regarding mineral rights can vary by state, and some separate ownership of the surface and mineral estates.
This is incredibly common.

(edit) If you don't believe me, try to put an oil well on the land you think you own, and watch how quickly you are sued.
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Old Jun 24, 2013, 09:48 AM   #24
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Dont you mean the killing rights? Not much sport involved.
No, I don't... that's actually what they're called.

I simply mention them as they're an example of people not having the rights they might assume / think they might have / if they buy some land.

Whether it's ethical to enjoy a spot of fishing etc is, I think, a different thread.
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Old Jun 24, 2013, 12:12 PM   #25
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No, I don't... that's actually what they're called.

I simply mention them as they're an example of people not having the rights they might assume / think they might have / if they buy some land.

Whether it's ethical to enjoy a spot of fishing etc is, I think, a different thread.
You are correct, of course.

More on-topic, though, aren't there places (NYC possibly among others) where you can sell the space above your property separately too?
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