Selling Your Mineral Rights? Better Learn These 5 Facts!
December 6, 2017
Selling your mineral rights can be financially rewarding as long as the sale is carried out properly. The sale of mineral rights can help generate income when you want or need it. Yet before you offer your mineral rights for sale, make sure you understand some important facts. You will run into fewer issues when dealing with buyers and end up with a positive sales experience.
1. What Do You Actually Own?
When you have mineral rights for sale, do you know what you are actually selling? “Minerals” are any substance in the ground that can be extracted, including oil, natural gas, metals, coal, and other materials. Ownership also refers to legal possession of those materials as they have been sold or handed down with the land.
Before you attempt to sell your mineral rights, it is essential to first confirm ownership by performing a thorough title search, then substantiate what substances are held within your land.
2. Understand Surface Rights
The sale of mineral rights pertains to the minerals under the surface. You retain ownership of the surface, even after you have sold your mineral rights. Still, it is important to understand that surface ownership is subservient to mineral ownership. This means that the person who purchases your mineral rights has priority to what happens on the surface in terms of drilling for deposits.
Unless modifications to this rule are specifically stated in the sales contract, you may not have any control over where drilling on the surface occurs.
3. Understand What You Are Actually Selling
Minerals cannot be accessed until they are extracted from the ground. As such, by selling your mineral rights, you are selling the product that is extracted from the ground and a number of additional rights. These include the new owner’s right to reasonable access to the surface, the right to any royalties generated, and a number of contractual rights such as the ability to convey, renew, extend, or expand rights and other considerations in the event of delays.
4. Know What Your Rights Are Worth
Mineral value varies greatly depending on the size of the property, the size of land deposits, what is required to extract materials from the ground, whether other area wells are or are not producing, how much the mineral rights for sale were sold for, and the current market price.
Considering the many details that must be accounted for in determining value, be sure to work with the right experts who can properly and fairly calculate what you actually have. Avoid accepting offers until you actually know what your mineral rights are worth.
5. Be Aware of Unscrupulous Dealings
Most importantly, be wary of unscrupulous buyers who may try to take advantage of you. Purchase offers that seem too good to be true probably are. In addition, some companies may write their purchase contracts in such a way that the sale of your mineral rights takes away certain other rights you have as the seller and owner of the surface. Your best option when selling your mineral rights is to work with a lawyer who is experienced in these transactions and can explain all contracts to you so you understand everything.
Be sure to determine how you will be paid, whether as a lump sum or in payments, and confirm how much you will be paid before signing any contracts.
The sale of mineral rights can be confusing. If you are interested in selling your mineral rights, get educated about the details that can affect your transaction. Avoid accepting any offer on your mineral rights for sale or entering into any agreements before you understand exactly what is in all of the fine print. When you are careful, you can expect a successful sale without running into the problems that many inexperienced sellers face!
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