Mineral rights are the rights of ownership, conveyed by deed, of water, gas, oil, coal, minerals and other precious resources naturally occurring on or beneath the surface of a designated tract of land. Mineral rights give the owner of the rights the ability to lease, sell, pass by inheritance or receive financial benefit from the mining, excavation and sale of natural resources located on the property.

Title Opinion

In the United States, mineral rights are commonly the property of the surface owner unless sold, leased or disposed of separately. If you are purchasing mineral rights, determine if the seller is legally entitled to convey the mineral rights and that the seller, regardless of what the deed or transfer instrument reads, actually owns the mineral rights at the present time of sale. If you are the seller, review all documentation and correct any flaws in the title by legal remedy. Make sure that the title has been properly recorded in your state and with any governing state or federal agencies. Determine if their are any previously granted royalties or overriding royalties conveyed to others. Contact an attorney experience in minerals, mining claims or oil and gas leases to do a complete review and title opinion on the property.

Impact On the Land

Mineral exploration may cause drastic, damaging changes to the integrity of the land and having a long-term environmental impact. Mineral rights are conveyed to the buyer. The new buyer and all future mineral rights owners will have a right to explore and exploit the property to extract the resource they seek to produce. Consider the changes this will bring to your property including excavation, access roads, utility lines, noise or chemical pollution and increased traffic. Royalties, monetary fees for damages to your property or crops, designated easements and roads and any other legal restrictions or regulations should be outlined in the sales agreement. Commonly mineral or oil and gas extraction will occur at some unspecified date in the future. Exploration companies often schedule their research, funding, equipment and employees several years in advance. If part of the compensation for selling the property is that you are to receive a royalty on future production, this royalty will not be paid until the resource has been produced and sold. A buyer may not have present plans for development but rather might be purchasing the property as a future "reserve" or marketable investment.

Value of Mineral Rights

Contact a professional oil and gas leasing agent or commercial mining real estate appraiser to review the property and prepare an estimation of value based on comparisons of sales in your area and the market predictions of the minerals you are conveying. During this period of economic volatility the value of various minerals and oil and gas are in a state of constant flux. Consult your investment adviser to determine if this is an appropriate time to sell your mineral rights. Consider the tax consequences of the sale.

Expert Opinion

Selling your mineral rights can be a rich financial reward or a total disaster. Unfortunately, there are many fraudulent and unscrupulous buyers and sellers of mineral rights. Work with a professional real estate broker or oil and gas lease agent with a reputation of equitable and profitable transactions. Paying a fee for these services is a small price to pay for receiving a fair price and productive negotiated royalties or fees.

Source:

Geology.com: Mineral, Surface, Oil and Gas Rights

BLM.gov: Renewable Energy

U.S. Department of the Interior

Resource:

FI.edu: Oil Basics

MMS.gov: Minerals Management Service