Who Owns the Mineral Rights on Your Property in Texas?
For most of the country, prospective property owners are usually concerned with square footage, acreage, bathrooms, bedrooms, and quality school systems. In Texas, however, there is something else landowners need to think about—is there any oil or other minerals on my property that I should know about?
If you are a Texas homeowner or rancher, you may need to know about any natural resources and other minerals on your property and what rights you have to them. A clear understanding of these rights will help you to avoid future conflicts or disputes. The following are Texas mineral rights basics that you should be aware of.
What Are Mineral Rights in Texas and Who Has Them?
Mineral rights are property rights that the holder has for exploiting an area for its minerals. These rights can be distinct from property ownership and can refer to sedentary minerals that do not move below the Earth’s surface or fluid minerals, such as natural gas or oil.
Mineral rights are the rights to minerals and natural resources that are under the surface of a piece of property. Usually, the owner of the surface estate owns the mineral rights under the property. However, under Texas law, those rights can be sold or leased to another party. Therefore, it is important to have clarity on who has the rights to the minerals below the surface. It can be done with a legally binding Lease Agreement Texas.
When establishing who has the mineral rights of a property, it may be a good idea to consult with a lawyer who specializes in the practice areas of mineral rights and natural resources law. It is extremely important that the mineral rights being sold with the property are actually owned by the person selling the surface estate. That person must own those rights outright in order to transfer them with the sale of the surface estate.
The Difference Between the Mineral Estate and the Surface Estate
The difference between the mineral estate and the surface estate seems simple in theory, but understanding what it means in practice is crucial to understanding what mineral rights you may have. Under Texas law, a mineral estate and a surface estate are two separate legal interests in the land. So one party can own the surface estate, and another party can own the mineral estate underneath the land.
What Is the Mineral Estate?
Mineral estate refers to all oil, gas, and other minerals in or under a property. It also includes royalties under any existing or future lease covering any part of a property, surface rights—including rights of egress and ingress—drilling and production rights, lease payments, and all related benefits.
Since the mineral estate includes any minerals within the land, under the surface, the mineral estate owner is the only one with rights to any and all minerals there. When not specifically retained, mineral estates normally pass to the owner of the surface estate in a sale.
If so inclined, an owner of the mineral estate can choose to lease his or her rights to companies that extract minerals from below the surface. Sometimes, the process of extracting the minerals will require access to the surface estate.
What Is the Surface Estate?
Surface estate refers to the land visible at the surface of the property. This means simply that the owner of the surface estate has the right to use and access the surface of the land. Therefore, the mineral owner has no rights to the land on the surface of the property, and the surface owner has no rights to the minerals beneath the property. A landowner can sell the surface estate to someone else but keep the mineral estate. If the mineral estate is not clearly and specifically reserved, it will pass to the buyer when the property is sold.
How Do I Know Who Owns Mineral Rights on My Property?
Do you own the mineral rights on your property? When a person decides to ask this question, the answer is often not so easy to find. However, do not assume that you are automatically buying mineral rights when you purchase a property. Even when mineral rights are included in a sale, they might not have been correctly conveyed to the seller in the first place. A previous owner could have held back the transfer of a parcel’s mineral rights, and the deed could fail to include this information.
Unfortunately, it is not uncommon for deeds to contain incorrect information or to leave out information altogether. Adding to the complexity of this issue is the federal General Mining Law, which allows mineral rights to be sold separately to individuals or corporations. Apparently, the law was enacted in the hopes that it would encourage settlers to move out west in the late 1800s. The law is still in effect. In Texas today, it is common to have a situation where a previous surface owner reserved the mineral rights in an earlier sale of the property.
If you aren’t experienced in property research, going through the county records can be brutal. The land records in Texas are not easy to navigate, especially for land located farther out in the backcountry. Texas has “grantor/grantee” indexes that a person must review to find the correct deed. Once the person finds one correct deed, he or she has to go back to the index to find the next correct deed—and so on and so on. Each deed has to be reviewed to see the exact rights that were granted.
To be certain of your rights, you will need to carefully research historical deeds and property records. The process can be complicated and overwhelming, so it’s probably wise to hire someone who knows the public land records system well. This person can then “run the title” and determine who actually owns the mineral rights to your land.
Who Owns the Mineral Rights on Your Property in Texas?
Generally, mineral rights are granted when a property is sold unless they are specifically not included in the property’s chain of title. The chain of title is a document that records the history of a property’s transfers. This history includes the current owner all the way back to the original owner of the property.
For those who are wondering how to get mineral rights to your property, this is a matter that should be taken very seriously. Figuring out Texas mineral rights when it comes to land ownership can be an extremely complicated endeavor. Hiring an experienced legal professional can be beneficial.
How To Make Money from Mineral Rights on Your Property
Owning your land’s mineral rights and gas mineral rights could potentially be very lucrative for you and your family. Having control over minerals and oil and gas on your property can provide many financing options, including:
- Leasing the minerals rights and earning royalties;
- Selling all or a portion of the minerals rights;
- Participating in the development of the minerals;
- Royalty deeds; and
- Bonus payments.
Bonus payments are one-time payments made to the mineral rights owner when an oil and gas lease is signed with a gas company. Royalty deeds give the holder of the deed the right to receive a percentage of the profits from the sale of minerals when they are actually extracted and produced.
Before you explore these options, consider consulting with an experienced oil and gas attorney to find out the value of your mineral rights. Not surprisingly, mineral rights valuation can be a complicated procedure. The value can depend on:
- Where the property is located;
- The kind of minerals under the surface;
- How easy the property is to access; and
- How close the property is to other resources.
If you sell or lease the mineral rights to your property, make sure the contract addresses the way the resources can be accessed and how much disruption to the surface estate will be allowed. An accommodation doctrine can apply in these situations. This doctrine allows the mineral estate owner to use the surface estate to the extent that is reasonably necessary for the exploration, development, and production of the minerals beneath the surface.
The contract should also state who will pay for any additional or unexpected surface damage while digging for any potential mineral resources. It is important to also make sure that you are aware of the extraction process and that you research the companies you are working with to make sure they are worth doing business with.
For Texas landowners, owning the mineral rights on your property can potentially be very lucrative. Establishing whether you have the mineral rights can, however, be a complicated and time-consuming process. To make sure that your rights are clear and uncontested, it may be helpful to consult with an attorney who is experienced in helping clients to avoid unnecessary conflict and disputes when it comes to their property rights.