Mineral rights

Mineral rights

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Mineral estate

Ownership of mineral rights (more properly "mineral interest") is an estate in real property. Technically it is known as a mineral estate and often referred to as mineral rights. It is the right of the owner to exploit, mine, and/or produce any or all of the minerals lying below the surface of the property.

The mineral estate of the land includes all unusual organic and inorganic substances forming a part of the soil which possess a useful property giving them special value. An exception would be sand, gravel, limestone, subsurface water, etc. which are normally considered part of the surface estate.

Mineral rights can be severed

Mineral estates are often severed from the surface estate. Such severance is accomplished with a conveyance or reservation of the minerals in a conveyance. This conveyance or reservation includes minerals or such substances considered as minerals. This is to include such things as natural gas, as it has been often asked by bemused geologists, “Is natural gas a mineral?”

Further, this conveyance or reservation includes royalties, bonuses, and rentals.

Five elements of mineral rights

The five elements of a mineral right are:

  1. the right to use as much of the surface as is reasonably necessary to access the minerals,
  2. the right to execute any conveyances of mineral rights,
  3. the right to receive bonus consideration,
  4. the right to receive delay rentals and
  5. the right to receive royalties.

The owner of a mineral interest may separately convey any or all of the above-listed interests, if the rights are the owner's to convey. Minerals may be possessed as a life estate, which does not permit a person to sell them, but merely that they can own the minerals so long as they live. After this, the mineral rights revert to a predesignated entity, such as a specific organization or person.

It is possible for the mineral right owners to sever and sell off the oil and gas royalties from oil and gas wells, while keeping the mineral rights. This conveys to the royalty buyer the rights to the revenue stream from the oil and gas production for a specific lease, but retains the mineral rights. In such case, if the oil lease expires, the royalty owner will have nothing and the mineral owner still owns the minerals.

Freehold and non-freehold ownership

The nature of the status of the land is fixed by law, and is distinguished as being either a freehold estate or a non-freehold estate. Freehold means ownership in perpetuity. Non-freehold would be like farmer John who bought timber rights, that only last 25 years.

See also

External links



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