View Full Version : Mineral Rights Question?
As many of you know we're still working on our offer for a house in Elizabeth (on 10 acres).
I wouldn't have even thought about it but the fact the seller wants this specifically added to the contract makes me nervous, is this anything to be concerned with our is it pretty standard?
"EXCEPT OIL AND GAS AND ALL OTHER MINERALS AND MINERAL INTEREST, EXECUTIVE RIGHTS, BONUSES, DELAY RENTALS, SHUT IN GAS ROYALTIES, OIL AND GAS LEASEHOLD INTERESTS, ROYALTY INTERESTS, OVERRIDING ROYALTY INTERESTS, PRODUCTION PAYMENTS, AND ANY AND ALL OTHER INTERESTS OF ANY KIND OR NATURE WHATSOEVER IN THE MINERAL ESTATE"
I think it is common for people to hold onto mineral rights now a days. If you can get them, that would be fantastic, but I wouldn't count on it. Someone with more first hand knowledge should chime in. You are getting any water rights though right?
I think it is common for people to hold onto mineral rights now a days. If you can get them, that would be fantastic, but I wouldn't count on it. Someone with more first hand knowledge should chime in. You are getting any water rights though right?
I don't believe there are any specific water rights but again I've never dealt with a property like this. There is a residential well that was installed at the time the house was built and per the permit it allows, 1 single family house, 7000 sq feet of irrigation and 4 large animals.
Is there something else I should be looking for on the water side?
thvigil11
05-05-2015, 12:43
It could be that the seller does not own the mineral rights and the contract is specifically stating as such. Very common for mineral rights to be owned by a seperate entity. Either sold off by previous owner when things were tough or kept when property was originally deeded. Around here in NM, most of the land was a part of an original land grant from the King of Spain. As a result, many such rights were split off and now under different ownership. More info should be available at the County Clerks Office.
thvigil11
05-05-2015, 12:47
I don't believe there are any specific water rights but again I've never dealt with a property like this. There is a residential well that was installed at the time the house was built and per the permit it allows, 1 single family house, 7000 sq feet of irrigation and 4 large animals.
Is there something else I should be looking for on the water side?
Some property may have additional water rights, in general surface water. Check to see if the property is a part of any local irrigation district.
Some property may have additional water rights, in general surface water. Check to see if the property is a part of any local irrigation district.
Do you know how I'd go about checking to see if it's part of an irrigation district?
There is a small 'drainage' pond on the property but according to the builder and people who have livered there for 8 years, it has never been empty. I'm trying to figure out how to get more info on that as well.
Unfortunately, I only have until 11pm tonight to respond to the counter offer. :)
57913
thvigil11
05-05-2015, 12:59
Assessors office and Clerks office should have that info.
thvigil11
05-05-2015, 13:04
Just looked and Elbert Co, does have an online property search.
http://elbertco.tyler-esubmittal.com/assessor/web/
Local State Engineers office could help as well.
Just looked and Elbert Co, does have an online property search.
http://elbertco.tyler-esubmittal.com/assessor/web/
Local State Engineers office could help as well.
I've pulled it up on the assessor page but there doesn't seem to be any useful info there for what I'm trying to find. It could be that I'm just missing it. As soon as I'm off this conference call I'm going to make a couple of calls.
james_bond_007
05-05-2015, 13:20
Correct me if I am wrong, but even if you don't own the mineral rights, you would still own the property.
Thus a 3rd party owning the mineral rights would have to lease/buy permission from you (the property owner) for egress/ingress, equipment storage (oil derrick, etc. ) , and anything else they needed that required access to your property so they could extract their minerals located under your property.
So if oil was found on your property, you could likely work out a deal for you to lease them access to your property, let them deal with extracting the oil, and perhaps require a royalty per barrel.
In a way, they do all the work, and you collect a check.
However, if they had access to the bordering property, I think they could drill from there, at an angle, and extract oil from under your property.
(I ask that someone with more first hand experience please comment on this...I don't want to mislead the OP.)
Thats the short version. I wouldn't let the property go becuase of mineral rights they probably don't own.
Water rights are a pain in the ass in co
Going in from the side is no issue, and actually preferred. You could probably get something for an easement if they need access to your plot, but it is a drop in the bucket compared to any royalties from the actual oil. I've seen $1,000 an acre with an additional $5,000 for road building, maintenance, and clean up after. That was for a 3 year lease with option to extend two more years. None of that includes any of the royalty percentage per barrel, which I can't remember at the moment.
What Wolfe said. If there was an issue with water rights, you'd consider walking, but not mineral rights.
thvigil11
05-05-2015, 13:44
All that's been said about access is true, as far as I know. But considering it's 10 acres, I'd say there's not much chance of this ever happening. If something were discovered under the property, most likely a larger tract near by would be aquired in order to access whatever it is.
I had the same reservations years ago when the wife and I left CO for the NM frontier. We had the same issue with our property. Mineral rights are owned by a company back east. We did have an existing (grandfathered) hand dug well with water at 20 feet. We are a part of the local irrigation district and have shares and are meter owner with the local domestic water district. So we did pretty well as far as H20 is concerned. It bugged me not owned the mineral rights, but once I learned practically everyone else in the county was in the same boat, I figured "what the hell".
I wouldn't bat an eye over mineral rights for only 10 acres. If there were oil or natural gas, chances are whatever pocket they were after would be larger than the surface land anyway.
As always, thanks for all the great advice.
I hope I didn't just open a can of worms (like the constant ATF letters). I called assessor and was referred a couple of times and now the Colorado department of water resources is trying to figure out exactly what that pond is. This could get interesting.
Zundfolge
05-05-2015, 14:28
Correct me if I am wrong, but even if you don't own the mineral rights, you would still own the property.
Thus a 3rd party owning the mineral rights would have to lease/buy permission from you (the property owner) for egress/ingress, equipment storage (oil derrick, etc. ) , and anything else they needed that required access to your property so they could extract their minerals located under your property.
So if oil was found on your property, you could likely work out a deal for you to lease them access to your property, let them deal with extracting the oil, and perhaps require a royalty per barrel.
In a way, they do all the work, and you collect a check.
However, if they had access to the bordering property, I think they could drill from there, at an angle, and extract oil from under your property.
(I ask that someone with more first hand experience please comment on this...I don't want to mislead the OP.)
I'm not sure that's correct. If someone else owns mineral rights to your property you may not be allowed by law to block their access to those minerals (much like if someone owns a piece of property that is surrounded by other people's property, you have to allow them to access their property even if that means crossing your property to get there ... I believe it's called "Easement" or "Right of way" or something like that) I don't know if this counts for mineral rights.
thvigil11
05-05-2015, 14:35
As always, thanks for all the great advice.
I hope I didn't just open a can of worms (like the constant ATF letters). I called assessor and was referred a couple of times and now the Colorado department of water resources is trying to figure out exactly what that pond is. This could get interesting.
Better to get that sorted out now at least. Water issues suck in this part of the world. Been fighting wars over it for a long time.
A friend of mine just sold his place in Weld county and retained the mineral rights. If the oil company ever does come in to that property, the new owner will receive a check ONLY for any access from the surface, while my friend will get royalties for any mineral that come from under ground. Like stated before, I wouldn't bat an eye over mineral rights these days. Make sure the water situation is covered above all else. Good luck with the purchase.
This is what I was going to comment on. I was looking to buy 40acres out east . It came with both water and mineral so I had many of the same questions. I would not buy any land that did not come with them explicitly once I found out what it really meant. Not a lawyer so all comments should be taken as such. If you don't own mineral rights they can park a well 50yds off your back door and you can't do squat about it. Complete with a fire tube if required. I had nightmares about hearing the 'squeak' .... 'Squeak' every night as some jerk drives on my property at 2AM to check the damn thing. As for water, if you have well water, my understanding is, you have to have the water rights or you will be paying whom ever does. Even if you don't have them, if you want a well in the future... It also makes sense just from a "you own you home" standpoint.
I'm not sure that's correct. If someone else owns mineral rights to your property you may not be allowed by law to block their access to those minerals (much like if someone owns a piece of property that is surrounded by other people's property, you have to allow them to access their property even if that means crossing your property to get there ... I believe it's called "Easement" or "Right of way" or something like that) I don't know if this counts for mineral rights.
Martinjmpr
05-05-2015, 15:19
Correct me if I am wrong, but even if you don't own the mineral rights, you would still own the property.
Thus a 3rd party owning the mineral rights would have to lease/buy permission from you (the property owner) for egress/ingress, equipment storage (oil derrick, etc. ) , and anything else they needed that required access to your property so they could extract their minerals located under your property.
So if oil was found on your property, you could likely work out a deal for you to lease them access to your property, let them deal with extracting the oil, and perhaps require a royalty per barrel.
In a way, they do all the work, and you collect a check.
However, if they had access to the bordering property, I think they could drill from there, at an angle, and extract oil from under your property.
(I ask that someone with more first hand experience please comment on this...I don't want to mislead the OP.)
Nope, not true. Mineral rights are senior to surface rights. They can take the minerals without the permission of the surface owner. They can also use a reasonable amount of the surface in order to do it and they don't have to pay a dime to the surface estate owner.
Now, what I just said above is the strictest interpretation of the law and in the real world, most mineral estate owners are smart enough to know that it's better to get the surface estate owner on your side than it is to make an enemy of him. So in most cases they'll make arrangements for what they need and pay for any damage they cause. They might even pay a leasing fee although they don't have to. The reason they'll do that is that it's cheaper in the long run to do that than it is to spend $$$ fighting lawsuits.
As for water, water is not part of the mineral estate, it is part of the surface estate and is governed by the principles of water law, which are generally 'prior appropriation' , i.e. first to use = senior.
My understanding is that most lands in the West, especially small parcels, are split estate with one owner owning the surface estate and another (sometimes the Federal government) owning the mineral estate. It all depends on when and how the land was patented, that is, how it passed from Federal to Private ownership.
So do smaller lots, <35 acres usually come with water rights? I've only seen water rights on larger properties and we've looked at a bunch of ~5 acre properties all along Castle Rock and Sedalia and non appeared to have water rights.
Martinjmpr
05-05-2015, 15:24
So do smaller lots, <35 acres usually come with water rights? I've only seen water rights on larger properties and we've looked at a bunch of ~5 acre properties all along Castle Rock and Sedalia and non appeared to have water rights.
I don't think so but I have to admit I never studied water law so I don't know. Unless there's a river or stream on the property I can't imagine that it would be much of an issue.
Great-Kazoo
05-05-2015, 15:30
1st thing is consult an atty who deals with this and not the internet
2nd
If you don't own mineral rights they can park a well 50yds off your back door and you can't do squat about it. Complete with a fire tube if required.
The O&G company can drill as close as the contract says they can & local (city, cty state) laws for said distance applies. Up here you see then an easy 50' from homes. Even if you did own them where they decide to drill is up to them, again following local law.
The owner probably received (as everyone in this area) a few letters / contracts saying they would be paid $XX for lease rights. They are probably hoping said letter or rights has a big payday down the road.
For us in a residential area they would come in from a drill site maybe 1mi away and angle? drill for access. I looked in to signing the contract for $$ and it's a real in depth deal once you sign regarding rights, collecting for damage etc.
OT: we have a non-potable well, one of the few in town. If we signed one of the O&G contracts we could list the house saying WATER & MINERAL RIGHTS INCL. It sounds silly since we're in an older residential area. BUT those extra perks in a sale can add $$ for the seller
But the internet is free. :) You just made the prospect of buying just about any house on land somewhat daunting.
I get what you're saying about a lawyer but I'm guessing that means I would need someone on retainer to review every property we might be interested in since, like water rights, none of smaller lots we've looked at have come with mineral rights.
Anyone know if there's a bunch of drilling in the Elizabeth area? The area is zoned as a residential subdivision but I'm not sure if that means anything or if they could just go into the middle of the city and drill as long as they met the required distances.
1st thing is consult an atty who deals with this and not the internet
2nd
If you don't own mineral rights they can park a well 50yds off your back door and you can't do squat about it. Complete with a fire tube if required.
The O&G company can drill as close as the contract says they can & local (city, cty state) laws for said distance applies. Up here you see then an easy 50' from homes. Even if you did own them where they decide to drill is up to them, again following local law.
The owner probably received (as everyone in this area) a few letters / contracts saying they would be paid $XX for lease rights. They are probably hoping said letter or rights has a big payday down the road.
For us in a residential area they would come in from a drill site maybe 1mi away and angle? drill for access. I looked in to signing the contract for $$ and it's a real in depth deal once you sign regarding rights, collecting for damage etc.
OT: we have a non-potable well, one of the few in town. If we signed one of the O&G contracts we could list the house saying WATER & MINERAL RIGHTS INCL. It sounds silly since we're in an older residential area. BUT those extra perks in a sale can add $$ for the seller
Working the the water resources department was kind of cool, the woman did some research and came back with the original plans for a 'Livestock Water Tank" from 1951.
http://dwrweblink.state.co.us/dwrweblink/0/doc/613347/Page1.aspx?searchid=91063837-f7a0-4b16-a765-62627e27796c
She said it's a very little discussed topic around there but that they're generally exempt.
Great-Kazoo
05-05-2015, 18:07
But the internet is free. :) You just made the prospect of buying just about any house on land somewhat daunting.
I get what you're saying about a lawyer but I'm guessing that means I would need someone on retainer to review every property we might be interested in since, like water rights, none of smaller lots we've looked at have come with mineral rights.
Anyone know if there's a bunch of drilling in the Elizabeth area? The area is zoned as a residential subdivision ( up here the derricks are in between housing / platted lots) but I'm not sure if that means anything or if they could just go into the middle of the city and drill as long as they met the required distances (Yes) .
You're over thinking and complicating the buying issue. Get the seller AND realtor, to explain exactly what the mineral rights you do not get entail, IF you buy the property. It's the realtor's responsibility to have disclousre on property thay are listing.
Make sure what he says is in writing and you have an O&G attorney simplify it for you. They run $150-275 an hour, no free consultation. That money laid out could solve issues down the road, IF you look out one morning and see them putting up berms next to your shop.
The internet is not the place to think what your next step or options are. Ideas & suggestions, yes. Legal advice that protects you, not w/out said advice possibly putting them in a jam.
but, but an attorney on line said i could.
DISCLOUSRE: I'M NOT AN ATTY, REALTOR, OR ONE SELLING THE PROPERTY. JUST someone who has run in to issues like this before. It was worth the money spent on an attorney BEFORE hand. YMMV.
You're over thinking and complicating the buying issue. Get the seller AND realtor, to explain exactly what the mineral rights you do not get entail, IF you buy the property. It's the realtor's responsibility to have disclousre on property thay are listing.
Make sure what he says is in writing and you have an O&G attorney simplify it for you. They run $150-275 an hour, no free consultation. That money laid out could solve issues down the road, IF you look out one morning and see them putting up berms next to your shop.
The internet is not the place to think what your next step or options are. Ideas & suggestions, yes. Legal advice that protects you, not w/out said advice possibly putting them in a jam.
but, but an attorney on line said i could.
DISCLOUSRE: I'M NOT AN ATTY, REALTOR, OR ONE SELLING THE PROPERTY. JUST someone who has run in to issues like this before. It was worth the money spent on an attorney BEFORE hand. YMMV.
I echo this. Also I would never recommend agreeing to the seller retaining any rights without knowing specifically what those rights are. Additionally, if it is the seller with the rights you should negotiate the terms for access to the rights.
I think you should retain the rights. A weaselly secret is that though the contract discusses the rights, the deed may not, because title companies don't prepare deeds like that, then he would retain the rights.
See a lawyer. I practice in real estate but not O&G.
I agree to a certain extent but I think it's others that are over thinking it. The wording seemed pretty clear as far as what mineral rights are being transferred (none). I was able to verity that the seller doesn't own the rights, hence they can't convey them to me. Would you really track down the actual owner of mineral rights to any property you're buying? Not saying that's a bad thing but it seems like overkill.
Having an O&G attorney involved in every home purchase transaction seems like overkill but that's just me.... and I'm pretty paranoid to start with. :)
Great-Kazoo
05-05-2015, 23:34
Having an O&G attorney involved in every home purchase transaction seems like overkill but that's just me.... and I'm pretty paranoid to start with. :)
Not for every purchase, just the one you have concern about. This one. Very few deals involve mineral rights, if any. The up side is these were not the current owner's either. That's a good thing since there has been no test drilling etc in this latest boom.
Martinjmpr
05-06-2015, 09:01
I was able to verity that the seller doesn't own the rights, hence they can't convey them to me.
I would imagine that's probably the case with most small property transfers and basically it means that the language in the contract is meaningless boilerplate that somebody probably put in there because they thought it was a good idea and nobody else ever thought to take out.
The seller or real estate company probably just wanted to make it absolutely clear to the buyer that what they were conveying was the surface estate only, no mineral rights of any kind went with it. Overkill, perhaps, but in our litigious society not necessarily a bad idea.
Go to the title company you are going to use and ask them who currently holds title on the mineral rights. I am guessing it is a 3rd party and that is why the language is in there. If not, you have your answer and can negotiate accordingly.
As for water rights - those are HUGELY important if they are part of the existing property. It should include a certain number of water acres per yer in a given aqueduct for a given period of time - withindrawn through a given number of wells -- all pursuant to the terms and conditions of the office of the state engineers.
I prefer to have the water rights as a separate quit claim deed from the rest of the property.
I don't think so but I have to admit I never studied water law so I don't know. Unless there's a river or stream on the property I can't imagine that it would be much of an issue.
You need specific permission to hook up to a utility, a tap, or drill a well. The state engineer can help and check with the neighbors. The magic lot size is 35 acres for a lot of issues.
buffalobo
05-06-2015, 14:37
Are those records kept by County Clerk? Recorded like deeds?
Are those records kept by County Clerk? Recorded like deeds?
Good question, that would be great to know.
buffalobo
05-06-2015, 14:54
I believe they are as I remember looking through recordings related to my property about 10 yrs ago and seeing recordings for mineral and water rights. Mineral rights for my property were sold to Amoco in 1969.
thvigil11
05-06-2015, 14:56
Are those records kept by County Clerk? Recorded like deeds?
Should be. Getting a clerk that knows they have that info and know how to find it. That is another question now isn't it?
buffalobo
05-06-2015, 14:57
The public can search many county clerks records on the internet. Should be able to use legal description of property to search.
Thanks again for all the advice!!!!
I've continued to dig and after about 30 min with the county clerk I found out that they have an active lease on the 10 acres starting in April 2012. I think the seller is misleading us and their realtor.
The only lease I've had experience with was for 3 years, and I'm under the impression that is the norm, as a shorter lease is more lucrative for the owner of the mineral rights.
You could just buy a town house and not have to worry about any of this stuff. ;)
Mineral rights are real estate records and generally recorded with the County Clerk and Recorder. Also any easements are recorded there. Leases may be recorded but usually not, I have no knowledge of O&G.
Water can be both personal and real property, so not all water rights are recorded with the County Clerk. The state engineer usually can point you in right direction.
The only lease I've had experience with was for 3 years, and I'm under the impression that is the norm, as a shorter lease is more lucrative for the owner of the mineral rights.
You could just buy a town house and not have to worry about any of this stuff. ;)
This whole thing does make staying in the suburbs sound attractive, or at the very least, making sure we own the water and mineral rights.
I didn't think to ask what she meant, but the lady said he had a BIG lease so I'm guessing he has been buying up the mineral rights in the area since a 10 acre lease doesn't sound BIG to me. Even if the lease expires I'm sure he'd happily lease them out again.
Holger Danske
05-06-2015, 20:04
Personally, i'd walk and look for a different property.
Got the lease papers from the current owner (they're 50% owners), only got $10 for a 5 year lease but 3/16 of any output. At the moment I'm trying to get them to sell the rights to us since they're saying it's very unlikely there will every be any drilling. .20 per acre per year isn't soemthing worth holding out to if it's never going to be drilled. :) Currently leased through early 2016 and no permits or requests in place at the moment.
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