If you are a landowner or planning to buy a property, it is imperative that you have a clear picture of your legal ownership. It is because some sales contain surface rights only while others have mineral rights.
Most landowners often fail to differentiate between the two which often leads to making decisions that the owners regret later.
For instance, at times, the owners get to know quite late that they have no right to participate in their land’s oil and gas lease. It is usually because their purchase only has surface rights.
To save yourself from making similar mistakes, you should adequately search on what mineral and surface rights include.
In this article, we have covered everything regarding these concepts. Please read to learn and implement.
Surface Rights Explained
These rights allow the owner to have ownership of visible elements found on a property. For instance, surface rights include control of water, trees, plants, and physical structures.
Simply put, these rights give the owner the ability to have complete control over the land’s surface. So, if a person owns a piece of land with surface rights, they can build structures on it, put it on lease, plant different crops and sell them and use the water of the surface as they like.
In a few states of America, surface rights allow you to own a certain depth of soil. So, for instance, you might be allowed to plant trees but may have no right to drill the land for gas or oil.
Some states like Texas, Colorado, New Mexico, and Louisiana split the owner’s rights between mineral and surface rights. The land is sold to include surface rights only. It means that the landowner can’t control the possible oil or gas (minerals) present under their land.
Moreover, if the land is approached by a gas or oil firm for extraction, the owner will have zero legal ownership over whatever comes out on the surface.
So, to legally manage and own oil, gas, or minerals present beneath the land, one should also have all the mineral rights.
Mineral Rights Explained
People who own land with mineral rights have ownership of oil, gas, silver, gold, iron or copper, or any other mineral present under the landl. Moreover, the owners can also sell or lease the mineral rights to private or government entities and earn a profit.
Many owners often sell the property to gas or oil companies and collect a particular portion of profit earned every year. Thus, mineral rights are a way to earn valuable income, and those owners who fail to purchase these miss out on significant earnings.
Mineral or Surface Rights – Which One is Powerful?
States that offer split land ownership make it clear that mineral rights are more powerful than surface rights. It implies that a person with mineral rights can easily excavate the land owned by a party with only surface rights.
The former won’t have to take permission from the latter to perform this action. This act can be pretty frustrating and a true nightmare for people with surface rights.
As mentioned earlier, Texas practices split ownership rights, but it considers both mineral and surface rights as two different estates.
For instance, people with surface mineral rights can extract as much gas, oil, or minerals as possible. Besides, individuals with dual ownership can lease, sell or profit from the resources present under their land.
This clearly states that without mineral rights, a person with surface rights can do nothing with the treasure hidden beneath the soil.
Are There Any Rights for People Who Have Surface Ownership Only?
According to Texas law, there is a doctrine that secures the people with surface rights only. So, for instance, if a landowner with mineral rights plans to take over land with surface rights, they should limit the exploration process if the plan conflicts with the current use of the surface.
Moreover, if that land is located in a busy metropolitan area, there might be some restrictions on extractions and exploration procedures. All these things are often present in the sales contract or property transfer documents.
Damage Caused by the Third Party
Sometimes, the mineral rights owner is separate from the surface rights one. So, in that case, there are often some clauses involved that compensate the latter for any surface damage caused during extraction. While these damages and their degree can vary, contracts contain certain clauses that help limit the painful effects that a surface rights landowner may suffer from.
Here are a few examples of such clauses:
Restrictions On Certain Surface Operations
A landowner with surface rights can have some clauses in their contract to limit certain operations. For instance, they can restrict or limit operations that might involve roads, pipelines, or oil wells for a particular part or all of their land.
Payment Paid On Surface Damage
If the land is already being used to earn money through agriculture, livestock, or logging, a sudden disruption to the property may result in a loss of income. However, according to this clause, any earning lost is then compensated by the third party.
Compensation for Water Use
Water is an essential requirement during gas and oil extraction. So, in that case, most companies utilize the water sources present on that land that’s being drilled.
But in that case, these companies have to compensate the surface landowner for the water lost. Moreover, the firm should pay for any damages to water sources.
Limitations on Drilling
A landowner with surface rights can also request a clause on drilling limitations in the purchasing contract. For example, it may include a certain degree of restriction on drilling in specific areas of the land.
Before you buy a property, you should be aware of your rights. Surface rights include just basic ownership, so it is vital to have mineral rights too to have complete control over the land.
Giving the third party your mineral rights can leave your land vulnerable. Thus, for the sake of your legal and financial position, it’s best to buy both mineral and surface rights.