How to Transfer Mineral Rights

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The steps for transferring mineral rights depend on how you wish to transfer them, who you wish to transfer them to and which state you call home. States control laws regarding mineral rights. Most have similar rules and regulations, but there’s enough variation to require careful research of the laws pertaining to your particular slice of land when you’re considering transferring mineral rights.

The Basics

Mineral rights pertain to the rocks, minerals, oil and gas beneath the surface of a property. Most landowners aren’t sitting on an undiscovered vein of gold or pool of oil. A good number, however, have bought or inherited property with potential or existing value deep underground. A property owner can maintain title to the surface land but sell or lease, essentially transfer, rights to companies or individuals equipped to explore and possibly extract the minerals.

Arguably, the most important benefit of these legal rights is the cash those minerals could produce. Even when a company has leased the mineral rights to a piece of land, property owners may receive a percentage of the profits through royalties. Mineral rights often become a valuable asset to an estate and may be passed to heirs through wills and trusts.

Beginning the Process

The first step in transferring your mineral rights is to ensure that you actually own the rights. It’s possible the rights were transferred in the past and whoever holds that lease or mineral deed may still control your property’s mineral rights. You’ll first need to contact a local title company to run a chain of title search on your deed. This is the same type of search done when you’re buying a home to ensure the deed to the property is clear of liens or other issues.

When you contact the title company, make sure the staff there understands you’re searching only for deeds that convey mineral rights, and that they’re willing to search the entire history of your property. Some title companies trace only the past 40 years, but it’s possible your mineral rights were sold long before that.

At this point, you may want to consider hiring an attorney, since some states have laws that create “marketable record title” which could negate prior ownership interests. These laws are complex and generally require an attorney’s guidance to navigate. Contact your state’s bar association for a referral to an experienced mineral rights attorney.

Transferring Mineral Rights

There are three ways to transfer your mineral rights. You can:

  • Sell your rights to an individual or corporation by creating a mineral deed and having it recorded
  • Bequeath the rights to your heirs through your will
  • Lease your mineral rights to a third party via a contract

Leases for mineral rights are often long-term, 20 years or more, and typically include royalty payments on the profits earned from the minerals extracted. State laws vary regarding the language used in documents regarding transfer of mineral rights. North Dakota, for instance, won’t accept a general statement on a lease indicating the lessee obtains rights to “all minerals found” on the designated property. Rather, each mineral covered under the agreement must be named specifically.

Because of the complex nature of the laws surrounding mineral rights transfers, as well as the possibility of significant monetary gain by all involved parties, it’s strongly recommended that you hire an attorney to manage this process. She can ensure you reap the benefits you should gain from transferring your mineral rights to another individual.

Read More:Mineral Rights & Taxes

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