Understanding the rights that you have to a property is crucial, which is why you want to be fully aware of what mineral and surface rights are.
There is a lot to take in when assessing a property, as there are so many variables that can affect how you can use your land. Depending on your property intentions, overlooking your mineral and surface rights to a parcel can result in serious complications down the line.
Your mineral rights are essentially your legal ownership of everything on your property that is beneath the surface such as resources. Whereas your surface rights pertain to your legal ownership of everything on your property that is above the ground such as developments and natural features.
It is very common for people to overlook the rights that they have to their land. This is particularly the case with mineral and surface rights, as most people do not buy their land with the mindset of utilizing it or exploiting it for anything that is beneath the surface. The average American tends to focus on buying a piece of land for establishing a business or developing a private residence, which is why land rights like these tend to get ignored. For most common land transactions, these rights are not going to be a major issue - especially if you reside in an urban area. However, if you plan on utilizing your land in more ways than one, you are going to want to make sure that you are in your full legal mineral and surface rights before you commit to any parcel. To help you understand this further, we are going to take you through our guide to understanding mineral and surface rights in more detail.
After extensively researching mineral and surface rights, I have gathered enough information to create a guide to understanding them. My research has taught me that if you want to retain your mineral and surface rights when acquiring land, you must ensure that they are both attached to the property you are reviewing.
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Understanding Mineral & Surface Rights
Land parcels can be incredibly dynamic when you put them under a microscope. There are a lot of different variables attached to a property and some of them can come with serious complications, as well as highly-advantageous perks. You will find that there are a number of ways that you can profit from your land and it is really up to you how you do it, so long as you are in your full legal rights to the property. That is why you want to handle real estate transactions with careful consideration so that you know exactly what you are getting into.
Mineral and surface rights are going to be a fundamental aspect of acquiring real estate. Depending on your land objectives, you are going to want to have as much legal right to your property as possible so that you can call the shots on how the parcel is used. When assessing a property that you are considering, make sure that you confirm with the owner what the mineral and surface rights of the land are. This is a very important question to ask, as there is a chance that the owner of the land may only have partial rights to it.
It is quite common for landowners to sell the mineral rights to their property while holding onto the surface rights. If that is the case, then anyone who purchases the land after that will also only have the legal right to whatever lies on the surface of the parcel. This can be very problematic for the new owner for a number of reasons - especially if they acquired the parcel unknowingly of the fact. In this situation, you may deal with complications from the mineral rights owner utilizing the property in certain ways for their own gains.
This would also entail that you are not allowed to have access to the mineral rights of the land, which can be very frustrating if those happened to be your intentions. The reason for this is that mineral extraction can result in damage occurring to the surface of the land - in addition to other complications. To prevent this from happening, you should always have a clear legal understanding of what your rights are to the property. Keep reading to learn more about mineral and surface rights.
Given that mineral rights are essentially the ownership of everything that is beneath the surface of a property, you are allowed to utilize your land for mining, as well as mineral and resource extraction.
Having the mineral rights to a piece of real estate can come with a lot of opportunities and financial gains. If you are the owner of the mineral rights of a property, you can exploit and utilize the land to extract resources to earn income. Here are some examples of minerals and resources that you can extract from a piece of land by owning mineral rights:
- Natural Gas
- Other precious metals
Now, in order to do this without running into issues - you want to cover all of your bases to ensure that you do not run into any legal trouble. Owning the mineral rights gets you most of the way there, but if you want to seal the deal, it would be wise to conduct an Environmental Impact Report.
You will find that each state has its own laws on environmental protection - with some having very strict laws and others being quite lenient. Before you begin any kind of drilling or extraction, you are going to want to confirm that the process is not going to violate any of the laws of your local area. If the Environmental Impact Report comes back in order, then you should have the go-ahead to begin operations.
With that being said, owning mineral rights does not mean that you can only profit from resource extraction. It is quite common for landowners to want nothing to do with the mineral rights of their property, which is why some people prefer to sell them off to someone else. If you are a landowner in this position, you can get yourself a nice payday by selling your mineral rights to an organization such as an oil company. In general, mineral rights in the United States tend to be sold for roughly $1,000 per acre.
If you have got a substantial amount of unused land, this could come to a huge figure. However, if you are able to confirm that your land does have valuable resources or minerals, then you could find that the mineral rights are worth considerably more than this. If you want to sweeten the deal of your mineral rights sale, you can always hire a geologist to come to inspect the property to see if there are any valuable minerals or resources.
However, you should note that if you do decide to sell the mineral rights to your property, the land value will have taken a hit.
Your surface rights are your legal ownership of everything that is above ground on your property. This is the way that most people tend to perceive the rights that they have to their land - especially for those seeking to pursue standard developments.
If you are the owner of surface rights to a land parcel, you have got quite a bit of dynamic control over the property. You can essentially utilize it any way that you want so long as you do not extract resources and are within your zoning rights as a landowner. Here are the most common ways that people use their surface rights.
The way that most people tend to approach the surface rights of their property is to build a development project.
These can also vary greatly and they may be bound to certain zonings rights. If your property is located in an urban area, then your surface and building rights may be restricted to what kind of development you can establish based on its location. Here are some examples:
These are the most common kinds of developments that we see and although most are in urban areas, they can also be found in the countryside. Zoning laws will often classify the surface rights of a parcel to be used for a specific type of development. This is done to keep order when urban planning, which is why we see certain types of developments clustered together such as homes in neighborhoods and commercial businesses in city centers.
Some landowners are conflicted about whether they have agricultural restrictions within their surface rights. In general, the right to pursue agricultural operations is within the surface rights of a landowner.
If you have the surface rights to a property, you can technically grow crops or raise livestock on the land. Although soil is technically a resource that is below the ground, legally speaking, this is still part of the surface of a property.
The only times that agricultural rights come into question in this regard are if the land use classification of the parcel dictates that the property cannot be used for farming. This is a common occurrence in urban environments, which is why we tend to see most agricultural operations in rural areas.
Factors To Consider
When dealing with real estate transactions it is always best to be as thorough as possible with your analysis of the property,
There are a lot of factors tied to property acquisitions and if you want to come out ahead, you do not want to overlook anything - especially your legal entitlement to the mineral and surface rights. To help prevent this from happening, we are going to highlight some additional factors that you should be aware of when assessing the mineral and surface rights of a land parcel.
Leasing Mineral Rights
If the surface rights of a property are being leased, then it is normally quite evident - otherwise, the land in question would probably not be on the market. However, this is not always the case for leasing mineral rights.
If you have acquired a property, it is not uncommon for the previous landowner to retain mineral rights that they are still leasing to a mining or oil company. This is not a position that you want to find yourself in.
However, if you are the owner of the mineral rights of a property, you may be able to utilize leasing for your benefit. In this situation, you can lease the mineral rights to an organization and make a profit off of the land beneath the surface - while still holding onto the ownership of the parcel.
If you are interested in dealing with surface and mineral rights transactions but are on the fence about committing to giving up your legal obligation to your land, a good way to approach this would be to divide your property.
Through property division, you can separate your land into various sections and then allocate each one for a specific type of use or transaction. This is especially useful if you own a huge estate.
Once divided, you can then dictate the terms of each section and sell off mineral rights or surface rights as you please! However, if you are purchasing land, you also want to ensure that the current landowner has made you aware of any property division that has occurred on the parcel.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling