Say you want to purchase some wooded property, but the seller insists on keeping mineral rights. Your concern is that at a later date, the mineral rights owner might come in and say "I'm going to take the gravel off of twenty acres." As the land owner, what protection do you have against your property being defaced or made unusual for the purpose you originally intended? Do mineral rights take your rights away as a land owner? Must you at least be compensated for the actions taken to remove the mineral?
I've heard horror stories of land owners who had to practicallly get out of the way fo drilling companies who came to drill for oil. I don't think I would buy any land that didn't come with All rights. Why find youself in a position just holding the land for someone who wants to use it later?
Here in the Great White North the Govm'nt owns all the oils and minerals.They sell it to Big Business for a pittance. Then Big Business goes to the Landowner and strikes a deal for rental of the surface acres they need to access their treasure. You can dicker and deal all you want, Big Business gets what they want in the end.
Its not all bad, a poor dirt farmer can eat good on oil royalties if he's lucky :)
As they say, you can write anything into a contract as long as the other party signs it. There have been oil/gas leases that specify the "horizon" in which they can seek their oil, in other words how far down they can go and where they must stop. So, if the other party will sign then you can spell it out. Perhaps you give them access to the gravel on a certain percentage of the land (and where), also specify that you get the timber and how it is cut, and by whom ,and who pays for this (you don't want guys in dozers "cutting" your logs down and piling them in the mud).
Sounds like it may be time for a "consult" by professional Jeff
Ironwood
I wouldn't touch it with a ten foot pole. I am a potential buyer of your property ;) Even if he does nothing your potential market in the future is real slim. I have built over gold rights and the client was ok with it if they came in and bought the house later. They had bought and moved a good bit of the nearby town when the lead (~leed~) went that way. They oopsed the mall and bought it too from my understanding :D.
You need a good lawyer.
The antique engine and tractor show that I go to is on land they own, but not the mineral rights. Owner of mineral rights came in one day and said in five years there will be a hole 200 feet deep right here. :o Something must have happened, as there is no hole, yet.
Dave
Jeff, I you do not own the rights then the owner call sell them to anyone. You will be given what they feel is fair for the damages to the surface but you will probably not be happy with it.
Is this a property in the UP? Does the owner actually own the rights or have they been stripped before he bought it?
Its not my property in the U.P., its a property I am looking at if I can sell my house down here. I own the rights on my 20. The current owner has the mineral rights and maintains they will not give them up in a sale. The realtor says they come from a part of the state that has gas and oil reserves, where you never give up the rights once you have them. They have owned the property for about 3 years.
Are the rights ussually still with the land in the area?
I think land without mineral rights should be worth a considerable amount less than comparable land with all rights intact. So talk cheap. Jim
I know people buy and sell land all the time without exchanging mineral rights, but I can't help but think I would develop a case of heartburn if someone showed up on my land wanting to dig or drill.
Jeff, that would be a deal breaker for me. It is kinda obvious from where I sit that the seller bought it with the mind of having someone else pay for his gravel pit. If I buy a piece of land, the seller is just like any other trespasser, once closing day has passed.
I hope you aren't dealing with the same realtor that listed the property for the seller! :o If so, you are entirely without representation in the matter. The realtor is working for the seller. I got caught in the reverse of that scenario one time. I listed my house for sale, but when an offer was presented, the agent that listed it had moved on. The buyer just called the number on the sign, so he was represented by another agent in the firm, but I was left without anyone that had my interest in his interest. I came out ok, but that was only because I knew enough to keep them from talking me into all kinds of "concessions."
If that's the only kind of "deal" you can get in the youpee these days, just sell your house and build a new one on the 20 acres you have. Pick out the ugliest spot on the whole property and put the house there. Here again, you can take a lesson from ol' DanG. I picked the prettiest spot on my place to put the house, and that left me looking at the ugly part for the rest of my life. :-\ :D :D :D
That's a tough question. I think it can only be answered by a local attorney familiar with land transactions, and oil and mineral prospects in your area. I know some years ago there was some company that came thru here and offered very small amounts for oil, gas, and mineral rights and a lot of people took their money and laughed at the "fools" but you never know what it could cost you later.
If you you do go thru with the purchase, a good attorney can insert protections in the deed to prevent them from destroying your property.
On the other side of this. My uncle leased the titanium rights to his farm 25 or 30 years ago. They make a moving lake and dredge/ pump and replace. They never used their option. They have now approached my cousin and want to do it again. He's thinking, hurt me again ;D. I do worry that the soil structure will be shot if they do it, but then that was all under an ocean some time ago. I'm not perzactly sure where I end and the chinaman begins now that we're talking about it.
This is all new to me.What if you did not buy,whatever will happen to the mineral rights will still happen.But if you bought it,you could use it the way you want to until the rights come due.No neigbors for a while.But if I owned it,I would hate to have someone come in and turn it into a gravel pit.I live about a mile from a pit.I can hear a some noise from the beeper of the loader backing up.Not real load.Does not bother me none.If you did not own it,you would still have the noise no matter what.If I was to buy it,what about the trees on it and the top soil.Do you get a cut on anything being hauled off "your" land.I woulds get it in writing what mineral rights they want too.
If you do not have any interest in the mineral rights then there is no cut. The only recourse is a possible payment for surface distrubance. And that is not really required. It would be ashame too spend 20 years taking care of the place only to have them come in and bulldoze the woods for the minerals with little money from it. :(
i got to agree, i would have no piece of mind in waiting for the gravel guys t oshow up one day and ruin my hard work. We signed a short term lease for oil/ gas, we'll see what happens.
Ironwood
Hypothetically,
If someone offered to sell me their truck but the engine and transmission wouldn't be mine and I couldn't remove them, I wouldn't buy it.
Jeff, what are other seller's in the area offering on their land? If this is the common practice than you might be over a barrel. But if it isn't than make an offer just the way you want to purchase and see if they bite. If property sales are slow in the area than they may change their mind and sell. In our area it is definitely a buyer's market.
For the most part, The state owns the mineral rights in much of that area with scattered ownership by private landowners.
Jeff,
What is the under lay made up of?
If bedrock is down 5-10 feet. Not much concern with some one taking the surface aggregate.
My thoughts would be to make the sale contingent on them running test cores all the way to bedrock on their own dime. See what is there before the purchase. When they see the quote/bill for test cores it may change their mind on keeping the rights.
In the central and western UP the mines have all the mineral rights. Very uncommon to have them for sale.
They say they simply wont sell without the mineral rights, however its starting to look like they are concerned about gas and oil, not aggregate. We will see...
In Michigan, if the state owns the mineral rights, sand and gravel included is a mineral on state lands.
In private land transactions there are often Severence Deeds where the mineral interests are retained upon sale of the land through language in the deed of conveyance reserving specific mineral rights by the Seller. Ownership of severed minerals has often become very obscure and franctionalized, so the Buyer needs to know specificly what minerals are severed and by what rights the Seller retained. This needs to be spelled out specifically and clearly in the deed.
A severence is a seperation of the ownership of the minerals from the ownership of the surface of the land. Mineral rights are retained by the Seller through "outstanding rights" or "reserved rights".
"Outstanding rights" would be the worst case for the Buyer and best case for the Seller whereby the mineral owner can go after the mineral in any way shape or fashion without their rights to the mineral being hindered. Yes, they may drill in your front yard, driveway, run dozers across your lawn, etc. if that is where they need to seek their minerals.
"Reserved Rights" are a little better depending upon what the reservations in the deed say. Here, there may be some restrictions and best management practices that must be followed if spelled out in the deed. Michigan also has some good environmental laws controlling the mineral development within reason for reserved mineral rights.
Property without ownership of the mineral rights is of less value than property with ownership of the mineral rights. However, land is often purchased without the mineral rights due to the lower cost, but the surface landlowner may have a rude awakening in the future when the mineral owner wishes to exercise their rights to their minerals.
Mineral owners will often lease their minerals to oil & gass companies, mineral developers, and speculators who the surface owner then has to deal with.
The best case is to own both the surface and the mineral rights to the property, and always seek out a good "lands attorney" to review the transaction.
Jeff, maybe it is time to tell them that you simply won't buy without those rights, see what happens. Time to play poker. Thank them for their time and walk off, don't flinch when they hollar at you just before you go out of sight.
Wouldn't first time I was wrong either.
In today's economy, and yesterday's land dealing. Don't be anxious, you would suprised what will become available in a short period of time. You don't have to look too hard, it will come to you. Just don't seem anxious.
That's the decision we have come to. At first this place seemed perfect, but the mineral rights thing made it something far less then that. There are lots of places for sale and going up for sale in the area we want to be. We can wait. Besides, we cant do nada unless this place sells. I've been working on a companion website to go with the Realtor's site to help market the place. Its not done, but its growing close.
https://forestryforum.com/ourhome
I also listed the place on craigs list today.
Jeff,
I think you did well not to buy the property without the mineral rights. I wonder how much other property that they may have bought and are trying to sell without the mineral rights.
Ron
Quote from: Jeff on July 21, 2008, 10:49:40 PM
.........The realtor says they come from a part of the state that has gas and oil reserves, where you never give up the rights once you have them. They have owned the property for about 3 years.
Jeff
This indicates the present owners apparently did manage to get the mineral rights just three years ago. If so, that is likely recorded in the deed of the property, and one could learn the extent of those rights and how they currently are assigned to the property.
Yeah, The realtor's "NEVER" was evidentally , just three years ago, when someone else did give them up!. While you are looking up the deed, also look up what they paid for the place (also public info ususally found in the same office or nearly so).
Ironwood
If you ever buy a place without all mineral rights it is recorded on the deed and many times you can never get a mortgage on the place. I recently attended a meeting sponsored by co-op ext about gas mining and leases. They warned that if any surface was tied up in the agreement then a bank will not give a mortgage. My understanding was that if only sub surface rights were tied up a mortgage could be gotten. They were talking to farmers who were being approached by gas mining companies, and some signed only to have there mortgage called in. Be careful, very careful. Before ever entertaining such an idea hire an attorney who specializes in gas and oil leases to be sure you are protected, even if it means two lawyers, one about underground rights and one for the real estate transaction.
Dave