Seller refuses to give up the mineral rights??

Question

Hello! So my wife and I are buy and hold investors in Shreveport, LA. We just recently put offers in on 2 different houses within the last 2 weeks. On both offers, the sellers countered saying that they would accept the purchase price, but would not give up the mineral rights. One of these houses was a single family home on 1.3 acres. There is active drilling within a mile of the house. I am unsure if the seller was already receiving any royalties, but he would not back down on maintaining the rights, so we never came to a deal.

The second deal was a town home on very little land near the lake. The seller again agreed to our purchase price offer, but refused to give up mineral rights, so rejected us after we said it was non-negotiable.

It was never made clear that the mineral rights were not included in the sale until after we had made our offers and were denied when we said we wanted the all rights transferred. I have read that there can be negative effects for future resale if a property and the mineral rights become disassociated. I am not concerned about the actual monetary amount of the royalties, but losing control of a property I am trying to own does not sound like the smart move...How often have you guys seen this happen? Is it common for sellers to refuse to give up mineral rights when selling a property?

Michael King · Answer

Reminds me of the movie, "There Will Be Blood". Where he was talking about using a big straw to drink the oil from underneath that preacher's land.

Jay Hinrichs · Answer

Wayne out here in the West  the US govmit retains mineral rights on millions upon millions of acres of private lands.. as do many others.

for small parcels its a non issue.. I mean the banks will make the loan that means they have no fear of value being lowered becasue of a mineral right not running with the land.

And its SOOOOO hard to get rights to surface mining in MOST areas these days.. out west you need to be a mutli national company to afford the process..  MOOT point.. in my mind.

what could and does happen though is slant drilling.. and we have seen some negative effects in OKC with teh fracking stuff causing temblors but for these types of resi props I dont see it.  Of course this stuff is all regional so do check with those in the know in your area.. my comments are general in nature.

Justin Tahilramani · Answer

Are you sure that the current owners actually even retain the mineral rights themselves? In my opinion - you probably had a point on the land with 1.3 acres, but the town house? That's a little silly for you (or any future buyer) to expect to benefit from mineral rights on a town home lot. Again - that is just my opinion, which is worth about as much as you paid for it....

Wayne Brooks · Answer

As long as the mineral rights don’t grant any kind of physical access to the property, it wouldn’t concern me at all..  I agree that likely the current owners don’t have the mineral rights to transfer..

Clint Galliano · Answer

@Ryan Steven Taylor I would have to say your experience is the exception. Most properties in Louisiana sell without the mineral rights & the sellers, at least the ones that haven't had the property in the family for 80+ years or so, usually don't have them either.

And especially around the Shreveport/Bossier City area, I would not expect anyone to sell the mineral rights if they have them due to the proximity to the Haynesville Shale.

This will not lead to drilling on your property, but they could easily drill a well 3, 4, 5 miles away and access gas a couple of miles below your property.

You may have missed out on a deal, unless your specific purpose was to acquire mineral rights.

Ryan Taylor · Answer

Thanks for the responses! Very interesting to see the differences around the country. As far as I know, a lot of property owners here in Louisiana DO own mineral rights for their properties, except for the newer developments. In these cases, the developer maintains the mineral rights.

Alyssa Dyer · Answer

@Ryan Steven Taylor just wanted to chime in that in my experience in Oklahoma it's super common for mineral rights not to be transferred!

Ryan Taylor · Answer

I’m not at all interested in the royalties - my concern is whether resale value and interest is affected by the property when mineral rights are no longer a part of the sale.

Seller refuses to give up the mineral rights??

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