Mineral Rights Property Law

Minerals come in all shapes, sizes, colors and states of matter.

Mineral rights are all about who owns the valuable mineral deposits, including oil and gas, lying underground. In the United States, unlike most other countries, the mineral rights originally go with the ownership of the land over them. But they can be bought and sold separately, so they do not necessarily not belong to the current property owner. Under U.S. law, the property owner has to give the owner of the mineral rights access to get their minerals out of the ground, even if that means digging a quarry.

Complete Ownership

You can own the land, but not the rights to the minerals lying under it.

Ownership of all the rights connected with a piece of property is known as a "fee simple estate." The owner controls the surface, the subsurface and the air above a property. The government, in most countries in the world, owns all the mineral rights. Almost all of the states have laws covering the transfer of mineral rights and regulations to control mining and drilling activity, which vary from one state to another.

Buying Mineral Rights

Property owners need to let the owners of the mineral rights to get at their oil.

When someone buys the mineral rights from the fee-simple owner, she is also buying the right to exploit the property, almost always at some future time. The company that plans to mine the land may be planning years ahead or even want the mineral rights to keep in reserve. The right to remove the resource is an essential part of the deal. The buyer could be planning to resell the rights. Or, the mining company might purchase the property to hold in reserve for years or even decades.

Mineral Leases

Sometimes, instead of buying the mineral rights outright, a company will lease some or all of the mineral rights; they might be uncertain of the quality or quantity of minerals it will find there. The lease gives the mining company the right to enter the property and conduct tests to see what is there. In return, the owner gets a check when the lease is signed. Most of the time, if the mine is profitable, the landowner is paid a "royalty payment," set in the lease agreement.

Oil and Gas Rights

Oil and gas rights can be sold or leased independent of other mineral rights--leasing is the more common practice. Along with the signing bonus, the typical oil or gas lease agreements call for royalties of 12.5 percent--1/8 of the value of the oil or gas at the wellhead. Some states set that as a minimum. However, shrewd negotiators can get 15 percent to 25 percent or more. Royalty payments over the years can add up to far more than the signing bonus.

Surface damage

Damage to the surface from drilling and mining may not show up for years. The ground can settle, or there can be underground subsidence, sometimes decades after the miners are gone. Then, cracks and settlement start showing up. If the property owners rely on water wells for the production of their water, subsidence of the mine could damage the aquifer, resulting in a temporary or permanent loss of water. Even if repairing the damage was written into the lease the company that caused the problem may not even exist anymore.

References

• Geology.com
• Minerals & Mining Law by Jeanine Feriancek

Resources

• Mineral Rights Forum