Mineral Rights

14 Replies

Gotta love going to mailbox and receiving an unexpected check.  This is why it is so important to reserve minerals on any property you are selling.  This is also why I believe certain areas of Texas are better than others for acquiring properties.  I flipped this property back in 2011. 

Bill P. 

We all make our own luck.  Just have to want it bad enough.

yeah, I disagree. I do not sell mineral rights on my properties in DFW.

I would retread the contract the oil companies are making you sign.  They are unconscionable and one sided, giving them the right to drive out onto your property at any time to start drilling under the house/apartment your tenants ate in.  If you were the tenant , would you enjoy that?  Not a good business decision.

I feel sorry for the sucker that bought your property without the mineral rights.  Buyer beware.

@Account Closed  

Your way off.  Oil/Gas companies use directional drilling to drill 1,000's of feet under surface.  Many rigs are 1/4 mile to even 1 mile from homes.  These are standard subdivisions usually on 1/4 acre to 1/2 acre lots.  Surface rights are never interfered with. 

FYI - I have received multiple checks on my own home and have never seen rig site

Are there properties in your area that still have mineral rights attached? One of my farms is one of the biggest oil producing counties in the US.   I've bought over a hundred properties and looked at hundreds more.  I never see mineral rights still attached. The closest I ever came to mineral rights was on a property that still had 1/4 of interest attached due to a title flaw.  

There were no mineral rights still attached to any of the real estate transactions I have been involved in.

Rocky,

Yes, I know they can still this way.  But read the contracts, including all fine print.

In my opinion, it's not worth the risk if it was my property and the families of my tenants occupy it.

Kristine Marie Poe undefined You kind of hit the nail on the head.  Most properties in our area  already have the mineral rights stripped out. Moreover, it's a custom in our area that if they are still attached, the seller reserves them.  The result is that very rarely can you buy a property in Tarrant County (which is where Arlington is) with mineral rights still attached.  That doesn't mean you shouldn't buy property without mineral rights (your pool of properties would be pretty limited), and it's so prevalent that I don't believe it impacts market value.  It's just sort of par for the course, and it definitely does not make you a "sucker" if you buy a property without mineral rights,  as someone else suggested.

Rocky,

I have several properties in Arlington and have reviewed Chesapeake's one-sided contracts.  I also went to law school and am very experienced at reviewing contracts.

All I can say, is that's my view based on my experience.

Best,

Jon

Originally posted by @John Chapman:

@K. Marie Poe undefined You kind of hit the nail on the head.  Most properties in our area  already have the mineral rights stripped out. Moreover, it's a custom in our area that if they are still attached, the seller reserves them.  The result is that very rarely can you buy a property in Tarrant County (which is where Arlington is) with mineral rights still attached.  That doesn't mean you shouldn't buy property without mineral rights (your pool of properties would be pretty limited), and it's so prevalent that I don't believe it impacts market value.  It's just sort of par for the course, and it definitely does not make you a "sucker" if you buy a property without mineral rights,  as someone else suggested.

I'm interested in title, so I always look to see if there is anything still there.  But I never see anything that wasn't stripped pre-1950 in any CA or NV county.  If I ever managed to find some, of course I would keep it when I sold it.  Every seller who has rights (usually inherited) where there is even potential oil action lets me know they won't be selling the rights.  Duh.

I don't understand how anyone could be actively buying in Texas and be buying rights attached, except on rare occasion.

@Rocky V.  

I am curious how many properties you have purchased that included the mineral rights?

Be careful, a lease agreement doesn't mean the rights are devoid of the property. In Texas, in order to separate minerals from real property, it requires a deed to be issued. Most investors will sign mineral leases thinking it locks the rights to them. However, this is not true. If you sell a property and do not Explicitly state that you reserve the mineral rights, you just as well have said; "Here have free money!" 

I have seen many property investors lose their rights this way. Another way investors lose their mineral rights is through tax deed sales. Those big checks come with big property tax bills. Yes, I said property taxes. In Texas, mineral rights that are in production are "REAL" property and are taxed accordingly. Don't pay those tax bills, or don't know about them, then the checks will stop coming fast!

I currently purchase mineral rights at tax deed sales, why? The same reason everyone else does, the checks. Worst case scenario, the properties are redeemed for 25 or 50% of my costs. Best case is I start getting the checks.

If a property is sold at the tax deed sale, and the mineral taxes are current, the rights go with the property, unless deeded to someone else. The best advice I ever got when I first started, form a LLC just for your royalty holdings. Then immediately deed the rights to the entity once you bought them.

When we buy property, especially from homeowners in Tarrant county, it's pretty rare that we get mineral rights.  

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