Determining Mineral Rights in Texas

Understanding Mineral Rights in Texas

When considering the value of property, most people focus on the surface, the house or land, but sometimes the greatest value of the land is in what lies beneath the surface, its minerals. Like houses and lots, minerals are labeled as real property in Texas and may be conveyed with the sale of the property. However, determining who has mineral rights often requires serious detective work, especially if the real property has had several different owners over time.

Defining Mineral Rights

The United States is unique in that it has a history of conveying rights for property beneath the surface as well as property above the ground. However, today most real estate sales separate mineral rights from the surface land. Since many areas in Texas are rich in minerals, not only oil and gas, but also minerals like silver, onyx, agate, and gypsum, exploring the minerals common to a specific area is a wise use of time for a potential buyer.

Four main types of mineral rights may convey with the property:

  1. Surface rights, as the title suggests, apply to minerals only on the surface of property.
  2. Mineral interests focus on ownership underground and may include royalty payments, shut-in payments, or leases.
  3. Royalty rights mean that the owner receives a portion of the profit from the minerals produced from the property.
  4. Oil and gas rights include the “rule of capture,” which states that oil and gas belongs to the person with the well even though the oil likely flows through adjacent properties to get to the well.

Valuation of Mineral Rights

Several factors affect the value of mineral rights; for example, the county, the type of mineral, lease terms, and the current market for that mineral all affect its value. Valuation is also based on whether mineral rights are producing or non-producing. An owner may receive royalty checks from producing mineral rights, most often from oil and gas companies in Texas. Non-producing mineral rights tend to be of less value.

Fee Simple Estates

A fee simple deed conveys complete ownership of the property, meaning that the owner has both surface rights and mineral rights. It is the most straightforward and basic type of property ownership because the owner controls the surface of the property and the areas above and below the property. The owner of a fee simple estate has the right to gift, lease, or sell the rights to the property separately or entirely. As a result, when real property conveys from seller to buyer, the mineral rights also convey unless the deed specifically states otherwise. Determining who has mineral rights in Texas can be a difficult process.

Tracing Mineral Rights

Servient estates are much easier to identify than dominant estates. The house that conveys is easy to see and clearly identified in the deed. Mineral rights may not be mentioned at all, but that does not necessarily mean that they convey with the property. A previous owner may have reserved mineral rights, perhaps many years ago.

The best way to know who does own mineral rights is to do a Chain of Title search, all the way back to the sovereign, the original owner of the property. This is often an expensive and arduous task, however, and given the time span of the search, the accuracy of old records may be questionable.

Working with a Real Estate Attorney is beneficial when trying to trace, buy, or lease mineral rights. In Texas, property owners may benefit substantially from mineral rights, so expert advice from an attorney may increase not only understanding but also profit for the buyer.

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