Help: Mineral Rights

CoryChen · Post by **CoryChen** » Tue Feb 07, 2006 12:41 pm

I just found out that I inherited the mineral rights of some land in eastern Montana near Ingomar from a distant uncle (my great grandmother's brother).

I am absolutely clueless about what to do with them. If possible, I'd obviously like to make a little money off of them, but I'm not really sure where to start.

Anyone have any experience with this?

Post by **SonomaCat** » Tue Feb 07, 2006 12:51 pm

I assume you didn't get the actual land, but only a part of the mineral rights?

I'm no expert, but my parents had some people looking to do natural gas exploration on their place, and the mineral rights have been split among past generations of owners. It is my understanding that the only real way you could make money off of it is if the current owners chose to take part in natural resource extraction on the land. You would then automatically get your cut of the royalties.

You can probably sell the rights to whomever you want, as well, assuming you can find anyone who might be interested in speculating. Unless the area is currently being mined/drilled or is rumored to be in the near future, it might be hard to sell the rights.

Hope that helps ... and I hope someone else knows a lot more than I do and will add more to this thread.

Ponycat · Post by **Ponycat** » Tue Feb 07, 2006 1:15 pm

Bay Area Cat wrote:I assume you didn't get the actual land, but only a part of the mineral rights?

I'm no expert, but my parents had some people looking to do natural gas exploration on their place, and the mineral rights have been split among past generations of owners. It is my understanding that the only real way you could make money off of it is if the current owners chose to take part in natural resource extraction on the land. You would then automatically get your cut of the royalties.

You can probably sell the rights to whomever you want, as well, assuming you can find anyone who might be interested in speculating. Unless the area is currently being mined/drilled or is rumored to be in the near future, it might be hard to sell the rights.

Hope that helps ... and I hope someone else knows a lot more than I do and will add more to this thread.

I could be wrong but I believe if he has mineral rights he can use them regardless if the land owner agrees or not. I know this is a big deal with the coal bed methane issue.

Post by **SonomaCat** » Tue Feb 07, 2006 1:23 pm

Ponycat wrote:
Bay Area Cat wrote:I assume you didn't get the actual land, but only a part of the mineral rights?

I'm no expert, but my parents had some people looking to do natural gas exploration on their place, and the mineral rights have been split among past generations of owners. It is my understanding that the only real way you could make money off of it is if the current owners chose to take part in natural resource extraction on the land. You would then automatically get your cut of the royalties.

You can probably sell the rights to whomever you want, as well, assuming you can find anyone who might be interested in speculating. Unless the area is currently being mined/drilled or is rumored to be in the near future, it might be hard to sell the rights.

Hope that helps ... and I hope someone else knows a lot more than I do and will add more to this thread.
I could be wrong but I believe if he has mineral rights he can use them regardless if the land owner agrees or not. I know this is a big deal with the coal bed methane issue.

Really? I wasn't aware of that. Wouldn't the landowner need to grant permission to allow the machinery on the place (which in my mind was what would prevent anything from happening unless the landowner was involved)? Or could the mineral rights owner perhaps access their mineral rights by drilling at an angle down under the property from directly adjacent to the property?

Ponycat · Post by **Ponycat** » Tue Feb 07, 2006 1:33 pm

I don't know the complete ins and outs but my understanding is that the mineral owners have a lot of rights that don't seem fair and trump the land owner.

I have a buddy who works for the Norhtern Plains resource counsel who deals with this a lot with coal bed methane. I'll ask him if he can give any insight.

GOKATS · Post by **GOKATS** » Tue Feb 07, 2006 3:10 pm

I don't know a whole lot about it, but I think there are few restrictions on the owner of mineral rights ability to mine what minerals are present. Zoning can place restrictions on how the activity takes place, but cannot deny the ability to abstract what minerals are there.

What happened in the Bozeman Pass scenario is that numerous folks bought varying sizes of property, generally for residential or ag purposes, but did not acquire the mineral rights, which would have been disclosed in the title insurance policy. Along comes a big corporation who has acquired the mineral rights and says "There's a vast supply of coal bed methane down there and we're going to get it".

The $hit hits the fan, and the lawsuits are filed.

A couple examples of how mineral rights are separated from surface rights:

1. It may go all the way back to the original patent from the U.S. Gov't. The patent may have conveyed all rights to the property, but in many cases the government conveyed only the surface rights and reserved the mineral rights. In this case the mineral rights are open and anyone can file an unpatented mining claim on those mineral rights. The government could also convey the mineral rights, yet reserve the surface rights.

2. The original patent may have conveyed all rights to the property, but a subsequent conveyance may have tranferred only the surface rights and the grantor reserved title to the mineral rights which could be conveyed to a separate party.

Back to the original question of the thread. Virtually all lands patented by the federal government have mineral rights, whether they conveyed with the original patent or were reserved by the government. Just because there are mineral rights does not mean that there are any minerals. My first endeavor would be to try to get some evaluation of what minerals might be beneath the surface to determine if the mineral rights actually have any worth.

If it is likely that they have a value, I would contact a mineral landsman to determine the best course of action.

There is abviously a lot more to it than this, but maybe it'll help. Good luck! (and please don't forget my standard 15%

)

briannell · Post by **briannell** » Tue Feb 07, 2006 3:15 pm

with our property in Lincoln although my grandparents owned the land, a cousin owned the mineral rights. when they were looking to put a mine in Lincoln the mine was able to explore our property becasue george anderson sold them the mineral rights. that's all I know on the subject. so if there is gold or coal or whatever on the land YOU have access to dig it up.

Grizlaw · Post by **Grizlaw** » Tue Feb 07, 2006 3:36 pm

Standard (CMA) disclaimer: this isn't legal advice, so don't rely on it. Talk to a lawyer who specializes in this sort of thing. Yada yada yada...

That said, as a mineral rights owner, you have an ownership interest in the property. That ownership interest gives you certain rights -- and also imposes certain obligations on you -- vis a vis the surface owner. I learned about this way back in my second year of law school (and have barely thought about it since), so it's been a few years...but as I recall, you have the right to explore for minerals (with or without the surface owner's consent), and you have a right to access the surface of the land to the extent necessary to extract any minerals that are there. You also have an obligation to extract the minerals in a manner that minimizes the impact on the surface owner's use of the land, and I believe you also have an obligation to restore the land to its original state after you are finished.

Again, this is all very basic, and the rules are probably much more nuanced than this. The last time I thought about any of this was law school, so don't hold me to it.

Bleedinbluengold · Post by **Bleedinbluengold** » Tue Feb 07, 2006 4:46 pm

CChen - you can also lease the mineral rights. Our family has done that in the past. My advice would be to never sell those rights, because they cost you nothing, and they might be worth something someday. In the latter case, as I said, just lease the rights to whomever.

GOKATS · Post by **GOKATS** » Tue Feb 07, 2006 8:35 pm

Bleedinbluengold wrote:CChen - you can also lease the mineral rights. Our family has done that in the past. My advice would be to never sell those rights, because they cost you nothing, and they might be worth something someday. In the latter case, as I said, just lease the rights to whomever.

Good advice if you own 'all rights to your property' and there is a potentialvalue as to any mineral assets. Collect an annual lease fee, but keep your options open (ie. no long term lease without a fixed % of future royalties).

Back to CChens' post, it didn't appear that he inherited any land, but has a vested interest in the 'mineral rights', which goes back to my previous post.

I'd suggest a good attorney (I know, oxymoron). You may have inherited a 'gold mine' or 'oil field'. When I earlier mentioned the 'mineral landsman' I should have mentioned that you first contact an attorney (can you smell a snake? You're gonna get bit on one end or the other').

briannell · Post by **briannell** » Tue Feb 07, 2006 9:25 pm

mineral rights can be good. I know when our family member sold his land in Lincoln to someone who wanted to build a steakhouse and golf course they not only had to pay him for the land, but when they tore it up for the golf course he was paid everytime they dug the land up. George is sly as a fox!

Bleedinbluengold · Post by **Bleedinbluengold** » Wed Feb 08, 2006 8:49 am

GOKATS wrote:
Bleedinbluengold wrote:CChen - you can also lease the mineral rights. Our family has done that in the past. My advice would be to never sell those rights, because they cost you nothing, and they might be worth something someday. In the latter case, as I said, just lease the rights to whomever.
Good advice if you own 'all rights to your property' and there is a potentialvalue as to any mineral assets. Collect an annual lease fee, but keep your options open (ie. no long term lease without a fixed % of future royalties).

Back to CChens' post, it didn't appear that he inherited any land, but has a vested interest in the 'mineral rights', which goes back to my previous post.

I'd suggest a good attorney (I know, oxymoron). You may have inherited a 'gold mine' or 'oil field'. When I earlier mentioned the 'mineral landsman' I should have mentioned that you first contact an attorney (can you smell a snake? You're gonna get bit on one end or the other').

You don't have own the surface rights to lease the mineral rights. We did not own the surface rights.

GOKATS · Post by **GOKATS** » Wed Feb 08, 2006 10:04 am

Bleedinbluengold wrote:
GOKATS wrote:
Bleedinbluengold wrote:CChen - you can also lease the mineral rights. Our family has done that in the past. My advice would be to never sell those rights, because they cost you nothing, and they might be worth something someday. In the latter case, as I said, just lease the rights to whomever.
Good advice if you own 'all rights to your property' and there is a potentialvalue as to any mineral assets. Collect an annual lease fee, but keep your options open (ie. no long term lease without a fixed % of future royalties).

Back to CChens' post, it didn't appear that he inherited any land, but has a vested interest in the 'mineral rights', which goes back to my previous post.

I'd suggest a good attorney (I know, oxymoron). You may have inherited a 'gold mine' or 'oil field'. When I earlier mentioned the 'mineral landsman' I should have mentioned that you first contact an attorney (can you smell a snake? You're gonna get bit on one end or the other').
You don't have own the surface rights to lease the mineral rights. We did not own the surface rights.

Quite true, sorry I wasn't clear on that.

CoryChen · Post by **CoryChen** » Fri Feb 10, 2006 9:32 am

Thanks for all of the info...you guys have been a lot of help!