How to Fight for Your Mineral Rights on Your Property
If there are minerals such as coal, oil or natural gas beneath your property, you may be approached by a company wishing to purchase or lease the right to extract these minerals. Be very careful when negotiating with such a company, because the mineral rights business has its own quirks you need to know before you can negotiate a fair deal. In addition, state law will almost always play a major role in the deal.
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Instructions
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Find out if you own the minerals underneath your property. Check your real estate deed to verify that your title is held in "fee simple" or "fee simple absolute". If not, you may need to perform a title search at the county land records office to determine if a previous owner sold the mineral rights to someone else.
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Find out if the mineral extraction company has approached any of your neighbors. Oil and natural gas can seep across underground property lines, particularly when minerals are being extracted next door. If your neighbor allows extraction and you don't, the extraction company could clean out the minerals underneath your property by drilling on your neighbor's property, without paying you a dime in royalties.
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Check the laws of your state pertaining to mineral rights. In particular, see if your state has set a minimum royalty payment applicable to lessors of mineral rights (many states do). Also check to see if the state has laws on mineral rights unitization, which will mandate a fair sharing of royalties if drilling on your neighbor's land depletes your property of its minerals.
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Determine whether your prefer a lease or an outright sale of mineral rights. Most extraction companies will want a lease at first to conduct preliminary exploration. After that, they may want to you to sell your mineral rights. The advantage of a sale is a large lump-sum payment, while the advantage of a lease is continuing long-term royalties.
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Negotiate the extent to which the extraction company is allowed to disturb your possession of the surface through its extraction activities. At their worst, drilling or mining activities can be so intrusive that they can make it impossible to live on the surface. Although you should limit these activities, you should also require a minimum of extraction activities if you decide to lease your rights, so that the extraction company can't simply hold the lease for years waiting for mineral prices to rise, and deprive you of royalties.
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Determine the amount of royalty payments. The generally accepted minimum royalty is 12.5% of the value of the minerals extracted, although some owners receive as much as double that. If you settle for low royalties, demand an initial lump sum payment.
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Tips & Warnings
If the prices of the minerals under your property are volatile, consider stabilizing your income by negotiating a royalty based on the volume of minerals extracted rather than their value.
Check the zoning and nuisance laws of your locality if you lease your mineral rights rather than sell them. If extraction activities fill your neighborhood with coal dust, for example, you could be liable if you are still the legal owner of the property.
