Issue Disputes When Selling Real Estate With Mineral Rights!
January 25, 2017
The recent oil and gas boom in Texas has been positive for many mineral owners who are now profiting from the sale of their mineral rights. Unfortunately, this flurry of activity in the western part of the state has not come without its downside. As more property and mineral interest owners have realized the potential of their land, disputes during real estate sales have skyrocketed. The problem is that many owners do not understand the laws relating to real estate sales and selling mineral rights, as the surface and what lies beneath it are two separate entities.
Landowners And Buyers Must Understand Ownership
The most important issue that Texas landowners must recognize before selling mineral rights or real estate is that surface ownership does not necessarily guarantee ownership of mineral interests. Ownership of the product beneath the surface must be confirmed, as it is not automatically sold with the land itself. Those interested in selling land as a sale of mineral rights, or leasing that right, must first confirm that they own such interests and can conclude a sale.
Before purchasing land or leasing mineral interests, buyers must also confirm that the seller has legal ownership of such interests. In both situations, failure to do so could lead to unnecessary disputes, as there may be third parties who actually own the rights involved. Surface rights, which also may not be realized, present an additional concern.
Contract Problems Creating Major Issues
The issue with many of these flawed real estate sales is that the contracts have not mentioned mineral rights ownership. Many property sellers are either completely unaware of the concern or believe they have the ownership required for selling mineral rights, only to discover they do not. Uninformed sellers and real estate agents who fail to properly research property have unknowingly created a situation that leaves many real estate buyers and sellers frustrated and forced to take legal action against each other.
Real estate contracts must clarify who owns the rights to any minerals in the land and what portion of ownership each party carries. Buyers are then protected by state law, which permits the refusal of a property if there is a third party unwilling to sell their interests to the person purchasing the land. When these details are not included in deeds and real estate contracts, the sale of mineral rights may be prohibited.
Avoiding Disputes During Real Estate Transactions
To avoid costly, yet increasingly common property sale disputes occurring in west Texas, land buyers, sellers, and real estate agents must consider the issue of the ownership and sale of mineral rights. Before any transaction can occur, landowners or their agents must research the history of each parcel to positively identify ownership of minerals and any current leases. Then both parties will be aware of who has legal rights to what and attempts to favorably rectify the situation can be made. It is important for those interested in selling mineral rights to understand that an owner of rights is not required to sell their interest to facilitate the sale of a parcel of land.
The activity occurring in the Permian Basin region of Texas has land and mineral owners excited, with many of them profiting through the sale of mineral rights. Landowners are motivated to sell, while investors are looking to buy. To promote an easier transaction and one that is legally made with no surprises for any party, it is essential that both sellers and investment buyers work with experienced royalty company professionals who thoroughly understand the land and rights sale process and can be instrumental in identifying ownership of land, mineral, and surface interests so that disputes can be avoided!
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