In most countries, mineral rights belong to the government. In the United States, however, mineral rights, including rights to underground oil deposits, generally belong to whoever owns the surface of the land. Mineral rights can be severed -- in other words, a landowner may sell or lease mineral rights while retaining ownership and possession of the surface. Ownership of mineral rights, like other real estate interests, is represented by a title deed. If you are an executor of an estate from which an heir is inheriting mineral rights, you must transfer title to the mineral rights from the decedent's estate to the heir.
Locate the current mineral deed. If the mineral rights to the land have never been sold separately from the surface, however, there will be no mineral rights deed. In this case, the decedent's real estate deed represents ownership of both the surface and any oil deposits underneath.
Read More: How to Transfer Mineral Rights
Execute a title search at the local land recorder's office to confirm that the current landowner actually owns the oil rights he is purporting to convey, and to confirm that they are not subject to any encumbrance such as a lease, a mortgage or a tax lien. Title searches are performed at the county land records office, usually by property attorneys or title insurance companies. The expenses of a title search count as estate administration expenses and should be paid for by the estate.
Draft a mineral deed. The deed should name the decedent's estate as the grantor and the heir as the grantee. It should also contain a legal description of the oil rights to be transferred. This description should include a description of the surface land -- typically contained in the current real estate deed or mineral deed -- along with a specific description of the rights to be transferred. It should also grant the mineral rights owner the right to enter onto the land and perform whatever acts may be necessary to extract the oil underneath. This will give the heir the right to enter the land and operate the oil well on the surface. The signature line should identify you by name and by title as executor of the decedent's estate.
Prepare the deed in duplicate. Sign and date both copies in the presence of a notary public, and give one copy to the heir.
File the second copy of the deed with the local land recorder's office. If there is a filing fee, pay it out of estate funds and record it as an estate administrative expense.
Minerals, particularly liquids and gasses, do not recognize property boundaries. An oil deposit may extend past property lines under two separate properties. If your neighbor is extracting oil from underneath his property and you are not, he may empty the deposit entirely, including oil that was once underneath your property, before you get a chance to extract it. Depending on state law, this may leave you with nothing.
If the heir inherited an interest in an oil lease instead of outright ownership of the oil, you must draft an assignment of the lease to the heir and file it with the county land recorder's office, instead of drafting a mineral deed.
David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.