Land can have many uses and can give us many things. When you buy or sell land, there are some uses and benefits or rights to these potential uses and benefits that can be bought and sold separately from the land itself. In places where valuable minerals are known to exist in the area, the rights to what is beneath the surface of the land can be sold.
Something important to know when buying land are which rights and options are being included in the sale, which are owned separately, or even which rights and options you could potentially sell.
What is a Mineral Deed?
A mineral deed is a legal form that transfers ownership of part or all the minerals, gas, or water on or under the land. The owner of the mineral deed typically owns the option to extract minerals, but does not have any right to the surface of the land, or any buildings on it.
This raises obvious questions about how the owner of a mineral deed can extract anything from beneath the surface of a piece of land they don’t own. Most mineral deeds will include provisions giving the owner of the mineral deed reasonable access to the property and improve a specified portion of the land to extract minerals.
This is a term you might also come across. Briefly, a royalty deed only confers a portion of the royalties earned by extracting minerals from the land, but not the rights to extract those minerals. For example, a landowner, or the owner of a mineral deed, might sell a royalty deed to an entity to raise funds to start mining operations. The funds raised from selling a royalty deed can be used to purchase equipment to start mining operations. In exchange, the owner of the royalty deed will get a percentage of the profits from future mining operations. You might consider when selling the mineral deed for your land, that you retain a royalty deed as part of the deal. In this way, you can benefit from the sale of the mineral deed and future mineral extraction.
Get legal advice!
If you are buying land in Texas and it excludes mineral rights because they are already owned separately by another entity, you must carefully review the mineral deed to understand what that means for you as a landowner. Can the owner of the mineral deed set up noisy mining operations on your land in the future? Will unsightly mining operations on your land reduce the value of your land?
If you own land and are considering selling the mineral rights on your land because some valuable minerals have recently been found in the area, it could be very lucrative. However, you need specialist legal advice to ensure you are not taken advantage of and that your peaceful enjoyment of the property will not be impacted.
Besides noise or unsightly mining operations, you also need to consider possible contamination of your soil or underground water. Will digging up minerals, or fracking for gas, cause instability or subsidence of the ground on which you live? These are all very important questions, and it’s highly recommended that you consult a lawyer before signing any documents.
Ultimately, this is just one factor of many when buying land and it likely won’t make or break your deal. You should still be aware of this and know what it means and ask some questions about it to ensure that you are getting the best deal on land for sale in Texas!