Mineral Rights and Utah Real Estate

Understanding Mineral Rights

Mineral rights are a cause of controversy among property owners. This is especially true in areas with oil and gas exploration. Owners of these rights have certain rights which are difficult for land owner’s to accept. These rights are often called oil rights or sub-surface rights.

How They Are Separated

Originally all property rights are owned by the same owner, and this is still the case in many places. If separate, it is because a previous owner separated them, selling one and keeping the other. When separated certain rights go with the minerals. The owner who separates them understands this but future owners may not.

The owners of each have certain rights to their property. This is where the issue comes up with surface owners. When they buy land they may not understand that others own an interest underneath their property and also have rights.

Surface Owners

The owner of sub-surface rights has the right to use the surface of the land to access and mine their minerals. This includes the right to open a mine, drill a oil or natural gas well, and build roads and other infrastructure to support this activity.

The last thing a land owner wants is a drilling rig right out the front window. The company handling the drilling or mining is required to restore the property after they are finished, but they may drill and extract minerals for many years.

Researching Ownership

If you don’t live in an area with mining or oil and gas exploration you may not have a problem and in fact may own both rights together. If you live in an area of exploration it is unlikely you own the oil rights. If you don’t own them you should remember the rights the owner of them has.

It is an expensive process to research mineral owners. Mineral researchers do this work and you can get contact information for them from the local county recorder.

Keep in mind that the lack of mineral rights and the possible access by mineral owners has already been factored into the price of the property.

Buying and Selling

Sub surface rights can be purchased and sold similar to surface rights. If not previously separated they will usually be transferred with the property. If you worried about the possible problems with mineral exploration and drilling you can offer to buy them.

Oil Lease

Before mineral exploration begins a lease is signed with the mineral owner. Exploration is expensive and the owner of the rights rarely does this themselves. A oil or mining company will lease the rights over a large area and do the exploration. Oil royalties will be paid to the owners if minerals are found.

Although buying property without the mineral rights is a concern, the odds of an oil rig on your property are low. It happens but this should not stop you from buying property if you find the property you want.

Summary

The owner of mineral rights has the right to enter property to access their minerals. This right was created when these rights were separated. When you buy land it is already subject to this right.

February 23, 2016

Property Rights in Real Estate

Real Estate Property Rights

When we own real estate or land we like to think we have all property rights to our land. That we can do anything we want. Build what we want, where we want, when we want. Keep everyone off. Unfortunately that is not the case.

Three Types Of Real Estate Ownership

Real Estate in the United States is divided into three separate property rights. Each can be owned together, or separately. Each can be owned by one or more people, companies or other legal entities.

Air Rights
Air Rights include from the surface of the land into space. It is possible to buy land that has limited air rights. An example would be not owning the rights above 50 feet. This would stop you from building anything higher than 50 feet. A previous owner may have retained the air rights higher than 50 feet to keep the view from being blocked.
Surface Rights
Surface rights are what we typically think of as land ownership. The surface rights owner has the right to use the surface, build on it, farm it, or use the land for any legal purpose.
Mineral or Sub-Surface Rights
Mineral rights is the ownership of anything below the surface. Mineral rights includes gravel, oil, gas, gold, etc,. Mineral rights include the right to use the surface as necessary to get access to the minerals.

I have heard many complain about the oil company stealing their property rights to drill an oil well. The oil company is acting for the owner of the mineral rights who has a legal right to access his minerals. To avoid this situation the surface owner must own the mineral rights.

In addition to the three basic ownership rights there are other situations where others can use or control your real estate.

Government Rights

Unfortunately the government has rights to your land which could be considered ownership rights. They have the right to tax, and to seize and sell land for delinquent taxes.

The government also has the right to regulate land use. Regulation comes in many ways from building permits to zoning. Unfortunately government regulation of real estate becomes more intrusive every year.

Lien Holders

Lenders and lien holders also have property rights. Lenders have the right to foreclose property if the loan is not paid. Other lien holders may not have that right, but can place a lien on your property.

Rights of Way and Easements

The owner of a Right of Way Easement has the right to cross your property as prescribed in the right of way documents themselves. The purpose of the easement and the width are usually described in the Right of Way document.

Eminent Domain

The most unpopular right is that of eminent domain. Originally this right was necessary so roads and public utilities could be built. The legal theory was, the needs of the many outweigh the needs of the few.
In recent years cities and counties have abused and expanded the right of eminent domain for questionable purposes.

When you buy land your property rights are limited. They are subject to all the above and to a continuous expansion of government regulation.

Understanding Mineral Rights. Mineral rights are a cause of controversy among property owners. This is especially true in areas with oil and gas exploration. Owners of these rights have certain rights which are difficult for land owner’s to accept. These rights are often called oil rights or sub-surface rights.

Lis Pendens. Lis Pendens is latin for “suit pending”. If a Notice Of Lis Pendens is recorded at the local county recorder on property it means there is a law suit pending on that property.

February 16, 2016

9 Questions to ask Before Buying Land

When Buying Land your are making a big decision and a big investment. Go slow, ask questions, and learn everything you can about the property before you buy. Below are some of the important questions to ask.

Should I Use A Realtor when Buying Land?

I believe in most cases you should use a realtor when buying land. The realtor is paid a commission from the seller so there is no charge to you. Why not use an expert for free?

Am I Paying A Fair Price?

Real Estate prices vary and it is hard to calculate an exact value for a piece of land. Be careful, look at similar parcels of land that sold recently to get an idea of the value when you are buying land.

Are There Land Use Limits?

There are many possible limits or restrictions on how you can use a parcel of land. Many restrictions are government regulations. These could include Zoning restrictions and Building Permit Requirements. You should also look for CCR’s (Covenants, Conditions and Restrictions.

Can I Connect To Public Utilities?

If the land is not already connected to electricity, water and sewer there can be significant costs in connecting. You may need to drill a well and install a septic system instead of connecting to water and sewer.

Does The Land Have Title Problems?

You should use a title company to handle the closing and insist on an Owner’s Title Insurance Policy when you buy land. This will insure you against any title problems, including liens, judgments, forged deeds etc. Have the title company explain the policy and any exceptions to coverage at closing.

Do I Have Legal Access To The Land?

Legal access means you have the right to use the roads leading to your land, crossing any property between your land and the nearest public road. The title company should insure access as part of the Owner’s Title Insurance Policy.

Who Owns The Mineral Rights?

The Mineral Rights are often owned by a different person than the surface rights (what we commonly think of as the land). If the mineral rights are owned separately the owners of the mineral rights may have the right to enter your property and set up equipment to extract their minerals.

Do I Like The Neighbors?

Before you buy land, meet the neighbors. While you are getting to know them ask them what they know about the land. They may have information that the realtor doesn’t.

Do I Like The Area?

If you find a parcel of land that you like but dislike the area you will end up disliking the land too. Investigate the local schools, the stores, the community and the roads you will travel.

Don’t forget to find out what the area is like in the winter and the summer. Of course this doesn’t cover everything you should look into when buying land, but it gives you a place to start. Remember caveat emptor (buyer beware), when buying land.

6 Reason to use a Real Estate Agent. Buyers and Sellers should find an experienced, trustworthy Real Estate Agent and let them guide you through the land closing process in Utah.

How To Calculate Real Estate Values. The most important step when buying or selling property is to decide the real estate values. I recently observed two land purchases. The two parcels of land were almost identical. Both were 10 acres of vacant land next to one another. The first parcel sold for $5,000.00; the second for $47,000.00. Almost 10 times more!