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Can I invest in mineral rights under my property?

Mineral rights are a topic that should be discussed if you’re looking to purchase land. You may be interested in making money with the minerals, oils, and gases that land might contain, whether you are looking to buy land yourself or look for land for sale.

The mineral resources under your property could even be more valuable than the land. Individuals who want to purchase land can face legal issues if they have mineral rights.

What are MINERAL RIGHTS?

Mineral rights are the right to own the natural resources on a property. The property owner can decide what, how and when the minerals are extracted.

Many property owners cannot extract the resources and may lease or sell the rights to others.

What minerals are included in this list?

Minerals include coal, ores and metals, as well as oil and gas.

But how is that legal?

Minerals can be found below the surface. The property owner may retain all rights on the surface, but someone else can have the rights to the minerals below.

There are many options available to the property owner for transferring ownership of minerals on their property. They have the option to sell or lease the ownership of minerals in one layer or in specific areas or individual minerals.

The owner can lease or sell the rights to all land on the property that has a coal seam if the property is in a taxable area. The rights to non-coal minerals would also be included.

They may also be able to sell or lease rights to only that particular area of coal, or to give the right to a portion of the coal seam to third parties.

Do you need to sell or rent?

There are two options available for transferring mineral rights to another party: selling them or leasing them.

You receive a lump sum when you sell your rights. All profits go to the new owners. The new owner has full control over how the minerals are extracted. In many cases, mineral rights outweigh all other rights.

This is a problem for those looking to buy hunting land, or who want to preserve any wildlife or forests on the land.

Selling rights can still be profitable if the contracts are written correctly. Selling rights can be more lucrative than leasing them. Future payouts are also guaranteed.

Lease mineral rights are agreements that allow a company to extract minerals and then sell them, while you keep ownership.

To come on your property to test for minerals, the company will pay an initial lease price. They will also be paid royalties if they extract the resource. This allows them to make more profit over time than if they extract all at once.

Before signing

Before you sign away your mineral rights, it is important to do thorough research and plan.

The company will need access to the minerals on your land if the extraction has to take place on-site. Although this can be done in a minimally invasive manner, it could cause damage to wildlife or contaminate the environment. Before signing, ensure that all details regarding access, cleanup, and remediation are in writing.

In cases where the surface is disturbed, an archeological survey will take place to determine if any culturally significant items could be destroyed. The extraction permits may be refused if this happens.

When extracting minerals, there are many other factors to consider. The ground can sink, soil and water can be contaminated and gases may seep from the ground. Before signing any contract, consider the environmental implications.

A company can buy mineral rights and not extract them for many years. A company may buy mineral rights without extracting them. It is not uncommon for this to happen. This is a key point to remember when looking at property.

Get a lawyer

Selling mineral rights can be a complex and high-stakes business. To ensure that you get a fair deal, have a lawyer review any contracts. It can be difficult to understand the laws in different states.

The details of mineral rights contracts are complex and have many details that the average person wouldn’t look for. Many people don’t know what remediation is required after extraction or how to negotiate access to the surface.

Although the fees of a lawyer can be expensive, they should be considered in light of future profits.

Who is the beneficiary of mineral rights?

Mineral rights leases or sales would typically not be of benefit to small property owners.

A small-scale landowner may still be able to sell or lease rights to oil and natural gases since these can be extracted up to three miles from the well. For a small amount of land, this may not be worthwhile.

Selling or leasing mineral rights could be an option if you own a larger property, or are interested in buying hunting land. The chances of finding valuable resources are higher when you have larger units. Because there is more space between your extraction site and you, the impact of extraction can also be lower.

Leasing hunting land can be especially advantageous as the owners may not be able to live there. The extraction can scare off wildlife so it is best not to lease hunting land.

Although selling or leasing mineral rights can prove to be very beneficial for landowners, it’s something property hunters should seriously consider before purchasing land.

You should research the legalities of extraction and reputable lawyers to ensure you make the best decision for your investment and land.

 

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