Waiving Mineral Rights

[Axel Norvell]

I'm reading an Addendum to the Purchase and Sale Agreement for a wholesale deal and I came across this item in the contract:

1. When you guys purchase properties, do you typically waive the Mineral Rights in your contracts? Is this a typical clause that wholesalers will include in their Addendums?

2. Do you guys typically hire a real estate attorney before purchasing a deal either through a wholesaler, or through any other means?

[Bruce Lynn]

Alex....you should have a contract expert on your team...or two or three if you are not an expert on the contracts.  That could be a realtor or could be an attorney.   Mineral just like other items in the contract is a negotiable item....one trick though is you may not know and the seller may not know if they own the minerals, so you could be negotiating nothing.   It is also interesting to see this in Travis county to me which has not traditionally been a hotbed of oil and gas activity.  I would expect to see these more in hot oil and gas areas.  For example in DFW area, we rarely see anyone negotiate these mineral reservations in Dallas County where there traditionally has not been drilling or production activity for the most part.  However in Denton and Tarrant County it is not uncommon to see these.  

I think you also have to think about picking your battles.  If you are trying to buy a wholesale deal where there is competition and you plan on flipping it and you are talking about small 1/10 or 1/20 acre lot sizes...you do what you have to do to get the deal....or negotiate that out....and move on.

If you are talking about acreage deals in producing areas...then maybe you negotiate harder.