For most of the country, prospective property owners are usually concerned with square footage, acreage, bathrooms, bedrooms, and quality school systems. In Texas, however, there is something else landowners need to think about—is there any oil or other minerals on my property that I should know about?
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If you are a Texas homeowner or rancher, you may need to know about any natural resources and other minerals on your property and what rights you have to them. A clear understanding of these rights will help you to avoid future conflicts or disputes. The following are Texas mineral rights basics that you should be aware of.
What Are Mineral Rights in Texas and Who Has Them?
Mineral rights are property rights that the holder has for exploiting an area for its minerals. These rights can be distinct from property ownership and can refer to sedentary minerals that do not move below the Earth’s surface or fluid minerals, such as natural gas or oil.
Mineral rights are the rights to minerals and natural resources that are under the surface of a piece of property. Usually, the owner of the surface estate owns the mineral rights under the property. However, under Texas law, those rights can be sold or leased to another party. Therefore, it is important to have clarity on who has the rights to the mineralsbelow the surface. It can be done with a legally binding Lease Agreement Texas.
When establishing who has the mineral rights of a property, it may be a good idea to consult with a lawyer who specializes in the practice areas of mineral rights and natural resources law. It is extremely important that the mineral rights being sold with the property are actually owned by the person selling the surface estate. That person must own those rights outright in order to transfer them with the sale of the surface estate.
The Difference Between the Mineral Estate and the Surface Estate
The difference between the mineral estate and the surface estate seems simple in theory, but understanding what it means in practice is crucial to understanding what mineral rights you may have. Under Texas law, a mineral estate and a surface estate are two separate legal interests in the land. So one party can own the surface estate, and another party can own the mineral estate underneath the land.
What Is the Mineral Estate?
Mineral estate refers to all oil, gas, and other minerals in or under a property. It also includes royalties under any existing or future lease covering any part of a property, surface rights—including rights of egress and ingress—drilling and production rights, lease payments, and all related benefits.
Since the mineral estate includes any minerals within the land, under the surface, the mineral estate owner is the only one with rights to any and all minerals there. When not specifically retained, mineral estates normally pass to the owner of the surface estate in a sale.
If so inclined, an owner of the mineral estate can choose to lease his or her rights to companies that extract minerals from below the surface. Sometimes, the process of extracting the minerals will require access to the surface estate.
What Is the Surface Estate?
Surface estate refers to the land visible at the surface of the property. This means simply that the owner of the surface estate has the right to use and access the surface of the land. Therefore, the mineral owner has no rights to the land on the surface of the property, and the surface owner has no rights to the minerals beneath the property. A landowner can sell the surface estate to someone else but keep the mineral estate. If the mineral estate is not clearly and specifically reserved, it will pass to the buyer when the property is sold.
How Do I Know Who Owns Mineral Rights on My Property?
Do you own the mineral rights on your property? When a person decides to ask this question, the answer is often not so easy to find. However, do not assume that you are automatically buying mineral rights when you purchase a property. Even when mineral rights are included in a sale, they might not have been correctly conveyed to the seller in the first place. A previous owner could have held back the transfer of a parcel’s mineral rights, and the deed could fail to include this information.
Unfortunately, it is not uncommon for deeds to contain incorrect information or to leave out information altogether. Adding to the complexity of this issue is the federal General Mining Law, which allows mineral rights to be sold separately to individuals or corporations. Apparently, the law was enacted in the hopes that it would encourage settlers to move out west in the late 1800s. The law is still in effect. In Texas today, it is common to have a situation where a previous surface owner reserved the mineral rights in an earlier sale of the property.
If you aren’t experienced in property research, going through the county records can be brutal. The land records in Texas are not easy to navigate, especially for land located farther out in the backcountry. Texas has “grantor/grantee” indexes that a person must review to find the correct deed. Once the person finds one correct deed, he or she has to go back to the index to find the next correct deed—and so on and so on. Each deed has to be reviewed to see the exact rights that were granted.
To be certain of your rights, you will need to carefully research historical deeds and property records. The process can be complicated and overwhelming, so it’s probably wise to hire someone who knows the public land records system well. This person can then “run the title” and determine who actually owns the mineral rights to your land.
Who Owns the Mineral Rights on Your Property in Texas?
Generally, mineral rights are granted when a property is sold unless they are specifically not included in the property’s chain of title. The chain of title is a document that records the history of a property’s transfers. This history includes the current owner all the way back to the original owner of the property.
For those who are wondering how to get mineral rights to your property, this is a matter that should be taken very seriously. Figuring out Texas mineral rights when it comes to land ownership can be an extremely complicated endeavor. Hiring an experienced legal professional can be beneficial.
How To Make Money from Mineral Rights on Your Property
Owning your land’s mineral rights and gas mineral rights could potentially be very lucrative for you and your family. Having control over minerals and oil and gas on your property can provide many financing options, including:
- Leasing the minerals rights and earning royalties;
- Selling all or a portion of the minerals rights;
- Participating in the development of the minerals;
- Royalty deeds; and
- Bonus payments.
Bonus payments are one-time payments made to the mineral rights owner when an oil and gas lease is signed with a gas company. Royalty deeds give the holder of the deed the right to receive a percentage of the profits from the sale of minerals when they are actually extracted and produced.
Before you explore these options, consider consulting with an experienced oil and gas attorney to find out the value of your mineral rights. Not surprisingly, mineral rights valuation can be a complicated procedure. The value can depend on:
- Where the property is located;
- The kind of minerals under the surface;
- How easy the property is to access; and
- How close the property is to other resources.
If you sell or lease the mineral rights to your property, make sure the contract addresses the way the resources can be accessed and how much disruption to the surface estate will be allowed. An accommodation doctrine can apply in these situations. This doctrine allows the mineral estate owner to use the surface estate to the extent that is reasonably necessary for the exploration, development, and production of the minerals beneath the surface.
The contract should also state who will pay for any additional or unexpected surface damage while digging for any potential mineral resources. It is important to also make sure that you are aware of the extraction process and that you research the companies you are working with to make sure they are worth doing business with.
Conclusion
For Texas landowners, owning the mineral rights on your property can potentially be very lucrative. Establishing whether you have the mineral rights can, however, be a complicated and time-consuming process. To make sure that your rights are clear and uncontested, it may be helpful to consult with an attorney who is experienced in helping clients to avoid unnecessary conflict and disputes when it comes to their property rights.
FAQs
Who owns the mineral rights to my property in Texas? ›
Mineral rights in Texas are the rights to mineral deposits that exist under the surface of a parcel of property. This right normally belongs to the owner of the surface estate; however, in Texas those rights can be transferred through sale or lease to a second party.
Who owns mineral rights? ›Generally minerals are held in private ownership, and information on mineral rights, where available, is held by the Land Registry together with details of land surface ownership.
What are mineral rights on property in Texas? ›Owning a property's “mineral rights” refers to ownership of the mineral deposits under the surface of a piece of land. The rights to the minerals usually belong to the owner of the surface property, or surface estate. In Texas, though, those rights can be transferred to another party.
How long do mineral rights last in Texas? ›(a) All mineral proceeds that are held or owing by the holder and that have remained unclaimed by the owner for longer than three years after they became payable or distributable and the owner's underlying right to receive those mineral proceeds are presumed abandoned.
How do I know if I own the mineral rights to my property Texas? ›The only way to determine your rights is to conduct a search of the public land records in the county where the property is located. All the deeds conveying the property must be reviewed. This is known as reviewing the property's Chain of Title.
Do most people own the mineral rights of their property? ›In the United States, landowners possess both surface and mineral rights unless they choose to sell the mineral rights to someone else.
How much are mineral rights worth in Texas? ›Mineral rights that are not producing or leased often come with little or no value; typically, valued at $1,000 per acre or less. In Texas, the mineral rights value often falls within the range of $0 to $250. However, producing minerals can be priced as high as $25,000 per acre if they generate revenue.
Do mineral rights ever expire? ›Every mineral rights agreement is different. However, most mineral rights agreements can last anywhere from 2 to 20 years. There is typically a primary, and sometimes a secondary, term for mineral rights leases that determines mineral rights expiring, depending on if any drilling has occurred.
Does a landowner own the minerals under the surface? ›While the government grants mineral rights to a company to explore for and produce oil and natural gas, mineral rights do not include access to the surface land – surface access is granted by the landowner.
What is the difference between property rights and mineral rights? ›Surface rights are what you own on the surface of the property. These include the space, the buildings and the landscaping. Mineral rights, on the other hand, cover the specific resources beneath the surface.
Who has mineral rights on land? ›
The Supreme Court, in 2013, conferred rights to mineral wealth on owners of surface rights rather than vesting them in the state. The Supreme Court, however, is yet to rule on certain aspects of ownership of minerals such as the liability of private owners to pay royalties to the state.
How do you retain mineral rights in Texas? ›The owner may convey the land but retain the mineral rights through a statement in the deed transferring the land that reserves all mineral rights to the seller. The owner may convey the mineral rights while retaining the land, by which case the seller issues a separate mineral deed to the buyer of the mineral rights.
What happens if you don't own mineral rights Texas? ›But the bottom line is: if you do not have the mineral rights to a parcel of land, then you do not have the legal ability to explore, extract, or sell the naturally occurring deposits below.
Do you have to pay property taxes on mineral rights in Texas? ›Mineral interests are defined by the Texas Property Tax Code as real property and are subject to taxes the same as all other real property.
Do mineral rights include water in Texas? ›Many landowners are surprised to know that groundwater is considered part of the surface estate, and not part of the mineral estate. Under Texas law, unless specified otherwise, the mineral estate consists only of oil, gas, uranium, sulfur and salt.
What is the difference between surface rights and mineral rights in Texas? ›In Texas, the mineral estate is considered separate and distinct from the surface estate. This means that the mineral estate can be bought and sold separately from the surface estate. The mineral estate owner has exclusive rights to any and all minerals located beneath the land's surface.
Can you sell mineral rights in Texas? ›Sell Your Texas Mineral Rights & Royalties
Currently, two-thirds of the 254 counties in the state produce mineral royalties for property owners. Mineral rights are included in the state constitution, and under Texas law mineral rights and surface, rights can be severed and sold separately.
A Texas mineral deed with general warranty, used to convey all of the grantor's oil, gas, and other minerals under real property. This Standard Document has integrated notes with explanations and drafting tips.
Can you get rich off mineral rights? ›Mineral rights can be a very valuable – and profitable – property interest if you know how to utilize them. Mineral rights can refer to oil and gas, but can include other valuable substances like gold, silver, coal, and even sand, gravel and clays.
Are mineral rights worth money? ›Mineral rights have sold for as high as $40,000 per acre, and usually, the average price can be between $250 and $9,000. If mineral rights buyers and sellers conduct proper due diligence, both parties can negotiate the best mining rights deal and avoid future legal quagmires.
Are mineral rights worth anything? ›
The value of mineral rights depends on various factors, including the mineral, the location, whether the right is producing, and more. The rule of thumb is widely accepted as a multiple of three to five times the income the right is currently producing, which doesn't apply to non-producing rights.
How much are mineral rights per acre in Texas? ›As a general rule of thumb, the value for non-producing mineral rights will nearly always be less than $1,000/acre. In most cases, the mineral rights value in Texas for non-producing minerals will be $0 to $250, but producing minerals – $25,000+ per acre is not unusual.
What is the rule of thumb for mineral rights value? ›One quick and dirty approach is the “rule of thumb.” Those following the rule of thumb say that mineral rights are worth a multiple of three to five times the yearly income produced. For example, a mineral right that produces $1,000 a year in royalties would be worth between $3,000 and $5,000 under the rule of thumb.
Where are mineral rights recorded in Texas? ›If you're interested in who owns your Texas Mineral Rights located below your property, the best place to start is your local County Clerk's Office–not only is this a free resource; they typically have some of the most up-to-date information you can find.
How do you know if you have oil on your land? ›Experts believe the presence of certain rock types can indicate oil in an area. Oil is formed through decayed organic materials caught in areas of sedimentary reservoir rocks, and so inspecting rock types found within your property may help identify the existence of oil.
How are mineral rights secured? ›The easiest way to buy mineral rights is through a reputable auction house. The quality and price of mineral rights sold at auctions vary widely. You will find rip-offs with a 60-year return on investments (ROIs) as well as high-quality assets at a reasonable market price.
How long does a mineral claim last? ›The 60-day period may be extended by BLM if necessary to comply with other applicable requirements of law.
Can I drill for oil on my land in Texas? ›Land Rights in Texas
Landowners with mineral and surface rights to their land can extract unlimited minerals, gas, or oil from the land. Owners with dual ownership can sell, lease, and profit from underground resources on their land.
“Surface rights” refers to the right to control the surface of the land. Existing structures are included under this umbrella. Typically, when property is purchased, the transaction includes the surface and mineral rights.
Can you drill for oil in your backyard? ›Mineral Rights
If you own land, you have property rights. This means you can harvest anything that grows from your land, or build whatever you want on your land. To own oil or any other mineral coming from your land, you must have mineral rights in addition to your property rights.
What are the three types of property rights? ›
What are the types of property rights? The main types of property rights include private property, common property, and public property.
What are the advantages of owning mineral rights? ›After all, simply owning mineral rights costs you nothing. There are no liability risks, and in most cases, taxes are assessed only on properties that are actively producing oil or gas. (In contrast, owning undeveloped real estate has carrying costs like insurance premiums and taxes.)
Does most land come with mineral rights? ›Mineral rights are automatically included as a part of the land in a property conveyance, unless and until the ownership gets separated at some point by an owner/seller. An owner can separate the mineral rights from land by: Conveying (selling or otherwise transferring) the land but retaining the mineral rights.
Do mineral rights include rocks? ›"Mineral rights" entitle a person or organization to explore and produce the rocks, minerals, oil and gas found at or below the surface of a tract of land. The owner of mineral rights can sell, lease, gift or bequest them to others individually or entirely.
What are the different types of mineral rights? ›There are 6 types of mineral rights, including mineral interest (MI), royalty interest (RI), overriding royalty interest (ORRI), working Interest (WI), non-operated working interest, and net profits interest.
Can mining rights be transferred? ›A mining right or prospecting right or any interest in such a right or a controlling interest (directly or indirectly) in a company that holds a mining or prospecting right may not be transferred, ceded, let, sublet, assigned, alienated or otherwise disposed of without the written consent of the minister.
How do I transfer inherited mineral rights? ›The most common way is through a will or estate plan. When the mineral rights owner dies, their heirs will become the new owners. Another way to transfer mineral rights is through a lease. If the mineral rights are leased to a third party, the new owner will need approval from the current lessee to claim them.
Is it possible in the state of Texas for one person to own the mineral rights and another person own the surface rights? ›In Texas, and most other states, the ownership of the mineral estate can be separated (severed) from the surface estate. Put another way, one person may own the rights to use the surface of a piece of property while another person has the right to use the minerals underneath the property.
When did mineral rights start in Texas? ›In 1912, the Texas Supreme Court ruled that this relinquishment was retroactive. The effect was to release minerals which the State had granted in prior years. In 1907, the first statutes providing for the surface to be sold and mineral rights reserved were enacted.
How do you transfer mineral rights after death in Texas? ›After Death
Mineral rights may be transferred by deed (from the estate) or court order (probate) after the death of a mineral owner.
Who owns surface water in Texas? ›
Surface water in Texas is owned by the state and held in trust for the citizens of the state. The state grants the right to use this water to different people, such as farmers or ranchers, cities, industries, business, and other public and private interests.
Are mineral rights real or personal property in Texas? ›Mineral rights are a form of real property, and they are governed by the same principles of marital property law as other real estate. If the mineral rights were owned before marriage, they are separate property.
What property is exempt in Texas? ›Real Property Exemptions: Chapter 41 of the Property Code
Texas exempts only two types of real property: (1) one or more cemetery plots: and (2) a homestead. Texas Property Code § 41.001(a). Either families or single adults may claim homesteads. The homestead may be either rural or urban.
To qualify for the general residence homestead exemption an individual must have an ownership interest in the property and use the property as the individual's principal residence. An applicant is required to state that he or she does not claim an exemption on another residence homestead in or outside of Texas.
What does it mean to own mineral rights in Texas? ›Owning a property's “mineral rights” refers to ownership of the mineral deposits under the surface of a piece of land. The rights to the minerals usually belong to the owner of the surface property, or surface estate. In Texas, though, those rights can be transferred to another party.
How much is an acre of mineral rights worth in Texas? ›As a general rule of thumb, the value for non-producing mineral rights will nearly always be less than $1,000/acre. In most cases, the mineral rights value in Texas for non-producing minerals will be $0 to $250, but producing minerals – $25,000+ per acre is not unusual.
How do I track my mineral rights in Texas? ›If you're interested in who owns your Texas Mineral Rights located below your property, the best place to start is your local County Clerk's Office–not only is this a free resource; they typically have some of the most up-to-date information you can find.
How do you determine the value of mineral rights? ›As a mineral rights value rule of thumb, the 3X cash flow method is often used. To calculate mineral rights value, multiply the 12-month trailing cash flow by 3. For a property with royalty rights, a 5X multiple provides a more accurate valuation (stout.com).
Why you shouldn't sell your mineral rights? ›When it comes to mineral rights, the standard admonition has long been consistent and emphatic: Avoid selling them. After all, simply owning mineral rights costs you nothing. There are no liability risks, and in most cases, taxes are assessed only on properties that are actively producing oil or gas.