“I`ll pay you $100,000 for the coal under your property!” This type of transaction has happened several times before. The simple owner may not have the interest or ability to produce the coal under his ownership, but a coal company does. In the United States and some other countries, ownership of mineral resources was originally granted to individuals or organizations that owned the surface. These landowners had both “surface rights” and “mineral rights.” This complete private property is called “Fee Simple Estate”. But wait until the dollar signs start flashing before your eyes, you need to determine if you actually own these mineral rights. A holder of land or mining rights may grant a licence to a third party to extract and remove reserves from a property. The licensee shall not have property rights exceeding the contractually agreed amount of the reserves to which he is entitled. A lot of money can be at stake. The mineral rights were sold for up to $40,000 per acre (investopedia.com). When buyers and sellers of mineral rights do their due diligence, both parties can negotiate the best mineral rights agreement and avoid future legal problems.
Even when a mineral rights contract seems like an iron fist, overlapping and conflicting laws can create loopholes. This gives surface owners the opportunity to claim greater compensation for damages and other damages caused by mining operations. Mining lawyers typically have generations of direct experience buying and selling mineral rights and deep contacts in the “old boys” network. 2) Surface owner has rights: In general, the purpose of a lease or purchase agreement is to transfer exploration and production rights to a mining development company. However, the interface owner also has certain rights. The fundamental rights of the surface owner are provided for by the laws of the States; However, each surface owner must decide whether stricter protective measures are needed. The only way to preserve them is to ensure that the contract contains appropriate language to protect grain, livestock, buildings, personal property, access and other desires during the term of a lease or permanently in the event of a sale. Renters often accept significant changes to what is included in their standard lease or purchase agreement. However, you are not obliged to comply with your requests. You can walk away.
If someone has a royalty on oil or gas, they own part of a resource or are entitled to a portion of the revenue that the resource produces. A royalty fee means that an investor holds oil and gas licensing rights and receives royalties. Since the minerals are extracted from the leased property, the owner receives a portion of the revenue generated. In other words, royalties retain a portion of a property`s output when a mine-interest owner enters into a lease. However, unlike a mining owner, a royalty owner has no executive rights. It is also possible that the new owner of the ore has no intention of production. You simply buy the property as an investment. Their goal is to sell the mining rights to a mining company that will take over the production tasks. Speculators who do not intend to exploit many mineral properties. They simply try to be “middlemen” who acquire valuable goods from individual owners and negotiate those properties with mining companies at higher prices. Buyers of real estate should ask the seller to indicate what rights will be transferred and ask a lawyer to confirm that the seller owns what is being sold.
In many areas, the sale of mineral rights is recorded in government records in a different deed book or database than the sale of surface properties. This means that the surface deed cannot mention the mineral rights that have been sold. In areas with historical or potential mining activity, the buyer of a property should hire a lawyer who can do this research and confirm what is being purchased. This can prevent future surprises and problems. Sometimes a mining company does not want to buy land because it is not sure of the type, quantity or quality of the minerals present there. In such cases, the mining company will lease all or part of the mining rights. • Mining is often not profitable for a landowner after making the necessary capital investments in exploration and extraction equipment. By selling the mineral rights to a miner, they can still take advantage of the reserves by receiving a lease, royalties and other forms of fees. Whether you`re in the market to buy or sell mineral rights, we`re here to provide you with the information you need to maximize opportunities and mitigate risks in the U.S. mineral rights market. Some states require surface owners and mineral owners to enter into a “surface use agreement” that sets out the rights and responsibilities of each party with respect to surface use.
The parties may also voluntarily choose to enter into such agreements. Pavement agreements may, for example, include a provision requiring the lessee to return the surface to its natural state at the end of the operation, or a provision for the mutual use of roads. Clearly drafted and negotiated surface use agreements can reduce changes in disputes between parties. Any mining broker can also help you sell mining rights. When choosing a specialist in the sale of mineral rights, ask yourself the following questions: As mentioned earlier, even if the mineral rights to your property have already been sold, you can currently hold the rights, so it is important to exercise due diligence. In the case of the Cole family of Virginia, rights to a mother cargo of uranium – the largest uranium deposit in the United States – were restored when uranium miners abandoned their reserves when uranium prices plummeted and let leases expire. The family farm and farm, established in 1785, rests on 119 million tons of uranium, which is currently valued at $6 billion (virginiauranium.com). • A mining company will buy many mining rights, even if the extraction of the reserves is not currently profitable. An inexpensive and unproductive mine site may become profitable in the future due to advances in mining technology.
Underground coal mine: If the coal is too deep to reach the surface, a mining company builds an underground mine. You can tunnel into the coal seam or drill a large shaft to the mining level. These shafts are large enough to lower mining equipment and workers in the mine and extract coal. Additional shafts must be constructed to ventilate the mine. Underground mining can damage the surface because spaces and passageways typically close over time due to collapse or colonization. Sometimes damage occurs after the death of those responsible and the disappearance of mining companies. Thus, no one can sue. Or the contract that transferred the mining rights granted immunity to the mining company. Office for Land Management Image. Three things are required to complete a successful mineral rights transaction: 1) knowledge, 2) skills, and 3) patience.
If your skills fail in one of the three, you can lose a lot of money. In a mining law transaction, you are dealing with a professional negotiator with in-depth knowledge. If you don`t have all three skills, find a good lawyer or other mining real estate professional. Their help usually doesn`t cost much, but the difference they can make in the transaction can be huge. • Do they have experience with the minerals you sell? As this guide has shown, oil and gas rights apply very different ownership structures (leases) and rules than, for example, copper or titanium deposits. Like land, mineral rights are transferred by a deed that transfers ownership to the buyer. Although title deed at the time of separation of land and mineral rights refers to the transfer of mineral rights, this will not be the case with subsequent land sales. In the case of oil and gas, a lease agreement is concluded between the lessor (holder of the mining rights, owner or not of the land) and the lessee.
1) Get professional support: Mining rights and leases involve large sums of money and are very complex. This article is nothing more than a brief introduction. If you are contacted about leasing or selling your mineral rights, you should promptly seek advice from an attorney who has experience in mining transactions and your state`s laws. If you do not have a lawyer, you can contact the local bar association. Mining rights are property rights over underground resources such as fossil fuels (oil, natural gas, coal, etc.), metals and minerals, and mineable rocks such as limestone and salt.