Selling Mineral Rights – Be Careful What You Do!
February 29, 2016
Before selling any mineral rights, it is critical that rights owners understand the meaning and entitlements of mineral rights ownership in Texas. Selling mineral rights is a resourceful way to exchange sometimes a large sum of money for the minerals and resources within a piece of property. Yet there is more to this than simply signing a contract and closing on the deal. Understanding mineral value and how these rights can be transferred, as well as the responsibilities and limitations incurred by selling mineral rights, is important.
Land Ownership, Mineral Rights, and Mineral Royalties
One of the most critical things property owners must understand is that mineral rights and mineral royalties are two different things. Mineral rights are the ownership of the minerals contained within a parcel of land. These rights may belong to the property owner; however, the property owner may also sell their mineral rights to someone else. Mineral royalties are payments for the actual product drilled or mined from a property over a contracted period of time. Mineral rights owners can sell their royalties to companies looking to buy the product from their land; however, the rights owner, whether this is the landowner or not, remains in control of these rights.
Mineral Rights - Valuable Today and Tomorrow
Mineral rights remain valuable, unless the land is depleted of all resources. It is important for rights owners to realize that the wealth within their land holds certain value not just today, but into the future as well. Considering the fact that resource prices do greatly fluctuate, what is worth one amount today could be worth much more or much less tomorrow. The main thing to know that there is always some future value to mineral rights, especially in terms of royalty sales. This needs to be taken into account before selling mineral rights.
Mineral Rights Are Considered Estate Property
Just as actual land and property can be passed down to heirs, so can mineral rights. Specific declarations regarding the passing of mineral rights are an important part of estate planning for those who own them. Once again, it is important to consider the value of these rights in the future, and their potential worth to future generations, before actually selling mineral rights.
Selling Mineral Rights Removes Surface Rights
In Texas, the sale of mineral rights gives the buyer control over the land surface. This means that the new owner of these rights can drill anywhere and anytime they please. no matter who owns the surface and how it is being used. This is a major consideration for property owners looking to sell their mineral rights, since they will essentially be relinquishing all control over what happens on the surface of their land to the buyer’s well or mining operation.
There are many positive reasons why a person might want to sell their mineral rights - and just as many reasons to be cautious. Before agreeing to any kind of sale, it is very important that property and rights owners understand the extent of a sale, what it means for them, the use of their property, and the worth of their mineral rights. Selling mineral rights should only be done with the assistance of experienced royalties companies, ones who can advise on Texas mineral rights laws and help mineral rights owners make the best decisions for their needs!
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