Understanding mineral rights vs. surface rights
A reader asks:
鈥淢y husband and I are buying a 50-acre farm in Western New York State. The real estate ad represented that mineral rights convey with the purchase, but the title search revealed that 50 percent of the mineral rights were retained by a prior owner (not the current owner, but the owner that sold the property to the current owner.) I am greatly concerned about this. Does this mean I won鈥檛 fully own the property? Can an oil exploration company build a well on my land without my permission? Can they act on eminent domain and force me out of my property? Do I need to get the permission of the other mineral rights owner? I heard that he died, so who owns that 50 percent? My husband and I are planning to plant blueberry bushes and I鈥檓 concerned about where to plant them. I asked my lawyer these questions and he said that it蘑菇视频 not a big deal, and not to worry. Should I be worried?鈥�
My answer:
Your lawyer is right 鈥� but potentially he may also be wrong. He蘑菇视频 right in the sense that New York has a moratorium on fracking and therefore the mineral rights have little value because drilling is prohibited. So as long as the moratorium is in effect, there is nothing to worry about.
According to Joe Wilson, a registered land man, it has become more of a common practice for New York landowners to retain 25 to 50 percent ownership of mineral rights with the hope that someday the moratorium will be lifted. Although becoming commonplace, the practice is a bit of a gamble because making money on mineral rights is never guaranteed, especially in New York State, and the retention of the mineral rights can complicate the passage of good title which can impede or slow down the time-frame of property sales.
If there comes a day when fracking is permitted in New York, you may be sitting on a 鈥済old mine!鈥� Then yes; you and the owner of the other 50 percent mineral rights will have to come to an agreement on the terms of a mineral rights contract. But there is no need to worry about it because the oil exploration company or investors that work with oil exploration companies will do all the work. They will locate the other owner (based on probate and recorded property records) and they will most likely lead the negotiations.
Mineral rights only apply to what is below the ground (subsurface). As far as the land surface is concerned, you and your husband are free to do whatever you want on the land surface. You have no need to worry about anyone interfering with your use and enjoyment of the land surface.
Generally, well pads are located at one location and the mineral rights affected by that location are up to a one to two-mile radius of the well pad.
If the oil exploration company engineers determine that your property is the best site for a well pad, the oil or drilling company will first contact you and pay you for the use of your surface rights. They won鈥檛 act without your permission.
Once the oil exploration company obtains access to the mineral rights, it will need to run pipelines to extract the resources. If pipeline routes have been identified to run through your property, you will be contacted by the oil exploration company蘑菇视频 land agent, who will negotiate a price for the easement rights. An easement is where you continue to own the land and have use of it. The pipes are buried, and in most cases, you will be allowed to farm the surface, but I would suggest planting only perennial crops on the easement because the pipeline may require maintenance or repairs. Also, something to keep in mind is that, constructing a pipeline is a joint effort with landowners and contractors. Access for the contractors will be necessary in various locations to construct and help operate and maintain the pipelines safely.
And you won鈥檛 have to worry about the oil exploration company taking possession of your property through eminent domain. Eminent domain does not apply to private companies. Only governments have the right to take possession of a property through eminent domain. Eminent domain is used only if the government needs the land for a public purpose (like building a road or school); the government is obligated to pay the landowner fair market value for the property.
Before making any decision regarding the disposition of your mineral rights, it is always advisable to seek professional advice from a mineral rights consultant for an evaluation of your mineral rights, and to consult with your lawyer and tax advisor.
(David Pearl is vice president of Infinity Resource Group, Inc., a professional mineral rights consulting firm, specializing in the leasing and sale of mineral rights in Pennsylvania, West Virginia and Ohio. Pearl is also president of a natural gas fuel dispensing patent holding company and director of a natural gas fuel island development company. Your questions are welcomed by calling 412-535-9200 or by emailing IRGOilGas@gmail. com.)