Mineral rights allow for the retention, sale, or exploitation of minerals beneath a parcel of land. The US offers various options for mineral rights ownership, including fee simple and leasing. Landowners may sell a portion of mineral rights and receive royalties based on ore mined. Adverse effects on neighboring properties may occur, and legal consultation is recommended.
Mineral rights are defined as the right to retain, sell or exploit any mineral beneath the surface of a particular parcel of land. Examples of minerals include gold, silver, coal, petroleum and natural gas. While most countries do not allow people to own mineral rights under their ownership, the United States has a range of mineral rights options. Many of these options vary from state to state.
The simplest mineral rights situation is called a fee simple. The simple or full ownership option of the tax gives the landowner rights to anything on or under the surface of his property. The landowner can keep all rights and sell them intact to someone else; he may also sell, transfer, exchange or give the mining interest to another party. The sale of mineral rights to a particular piece of land separates those rights from land surface rights. Whoever buys the next property will no longer be in a simple payment situation as the minerals will belong to a separate entity.
In some cases, a landowner may sell a portion of the mineral rights, such as the rights to coal under the land, but retain the rights to all other minerals. The transfer of these rights typically entitles the new owner to an easement: the right to enter the property and dig, drill, or otherwise access the minerals. If the mining company isn’t sure how much ore it wants to extract, it may choose to lease the rights instead of buying them outright.
Leasing these rights is a common practice for oil and gas companies. If a piece of property looks suitable for oil and gas production, the drilling company can pay the landowner a down payment to allow for underground mineral exploration. If the desired minerals are found in adequate quantities, mining usually begins. The landowner typically receives a royalty based on a percentage that depends on the amount of ore mined. If an inadequate amount is discovered, the lease typically expires, but the landowner often keeps the signing bonus along with the mining interest.
In some areas of the United States, neighboring properties could be adversely affected by a transfer of rights. Oil can easily cross property lines if drilling is at a certain level or angle. Some states regulate this by requiring mineral extraction companies to pay for mineral pooling, but many others have no restrictions. Landowners involved in purchases of personal or neighboring mining interests typically consult attorneys and negotiators who specialize in mineral rights law.
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