How Are Mineral Rights Passed Down?
Have you recently received a call from a mining company intending to buy your mineral rights, but you never even knew you owned some? You might have mineral rights passed down from a relative.
Yes, mineral rights can be sold, used, and even inherited like any other property. However, there are many complexities regarding the subject which vary according to your country and state.
Typically, mineral rights are either combined or severed from an estate. Your ownership extent determines the value of your inherited estate. Similarly, if you already own mineral rights but are wondering how they are passed down, this discourse might help you.
Can You Inherit Mineral Rights?
In most countries, property rights are limited to the land surface and the structures above it. However, in the US, property owners also have rights to the surface and the minerals beneath it in most states.
Mineral rights can be sold on their own or with the estate, meaning it is possible to have mineral rights without owning the surface. Mainly, mineral rights give the owner the power to extract, use, or sell the minerals beneath the surface in any way they like for any duration.
Similarly, the owner can lease these rights to companies or present them as gifts. Most importantly, like any other property, mineral rights can also be passed down as an inheritance.
If you own mineral rights to a property, you can hand them down to your descendants after your will is probated. But how are mineral rights passed down, and is the procedure different from other properties?
How Are Mineral Rights Passed Down?
If you’ve bestowed your property to a loved one in your will, it will be passed down to them after your death. To use the mineral rights as they wish, they must complete a property transfer process overseen by an attorney.
After that, the person who has inherited the mineral rights will now be their owner and have the right to mine the resources, sell the rights, or lease them to other companies. During the transfer process, the attorney will verify your mineral rights to see whether you owned them in the first place.
This process will confirm the extent of the original owner’s rights to the property and specify it for the inheritor. After that, a detailed mineral deed will be crafted for the inheritor bearing all the crucial information regarding their rights to the resources beneath the surface.
For instance, if the property is currently on lease, the legal process will transfer the interest payments to the inheritor’s name. This way, they can legally receive any interest payments paid by the company holding the mineral rights on the lease and retain the ownership after the lease expires.
What Does A Mineral Rights Inheritance Entail?
Mineral rights ownership can be quite complex. It is probably more complicated if mineral rights are passed down to you.
You see, mineral rights are a valuable commodity, so they can be passed down combined or severed from the surface rights. Moreover, some owners further fragment their mineral rights when formulating their will so that each of their children can benefit from the royalty payments.
Besides family, mineral rights fragments or the entire ownership can be passed down to you from someone outside your bloodline. If you know you have inherited mineral rights, you should get a title search done to see whether or how much of it you own after the owner’s death.
If the mineral rights you have inherited are already leased, you might even get a call from an oil and gas company asking to sign a lease. Before you do, getting some legal help and finding out how much of the property you own before signing any papers is essential.
Similarly, the extent of your ownership will dictate which rights you can exercise on the property. So, if you own the exclusive mineral rights to a property through inheritance, you can make decisions regarding the extraction and use of the resources.
How Can You Prove Mineral Rights Inheritance?
If you know that you have inherited mineral rights and want to exercise your rights on the property, you won’t be able to do it immediately. That’s because, most of the time, mineral rights are not mentioned on a property deed.
You will first have to prove whether you inherited the rights and other parts of the property. Even if mineral rights are mentioned on the property deed passed down to you, previous mineral rights transfers or leases can override the clauses on that deed.
That’s why you will have to conduct a title trace of the property to prove your inherited mineral rights and specify their extent. This will identify the extent and type of the previous owners’ ownership and help you understand your rights.
Furthermore, to determine the extent of your rights on an inherited mineral rights property, you should know the following details.
- Did your deceased relative have fee simple ownership of the property?
- Did they hold both surface and mineral rights?
- Were they titled as the sole owners, or did they inherit it too?
- Are there any current leases on the mineral rights passed down to you?
Once you find the information to answer these questions, you can easily prove your rights to the property and exercise them in any way you want. Sometimes, the required data needs to be included or clarified. In such cases, the abstractors can help trace the information, and if the property is on a lease, the company itself might help you pay the expenses to renew the deed.
Selling Inherited Mineral Rights
When mineral rights are passed down, most new owners either don’t know what to do with them or plan to sell them immediately. However, with each mineral rights ownership being different, you need to know how much your ownership is worth before making the sale.
Before you make an offer, conduct thorough research regarding the property’s current value. In the case of inheritance, most people make the mistake of taking whatever they get for something they didn’t initially have in the first place. That’s the biggest mistake you can make.
Oil and gas companies always look for the best deals on mineral rights, so make sure you make the most out of your inheritance. You might generate a steady royalty mineral income for yourself and your family.
Mineral rights are passed down like any other property, with the inheritor becoming the new owner. However, mineral rights are complex. They might be combined or severed from the entire estate or fragmented between multiple owners. Similarly, the mineral rights you inherit might already be leased to a company.
That’s why it is crucial to know the nature of your ownership if mineral rights are passed down to you before you make any critical decisions. If you’re not well-read on the subject, getting some legal help to make the most out of your ownership is a good idea.