How to understand your mineral rights

Owning land doesn’t necessarily mean you own what’s beneath it – mineral rights refer to the legal ownership of underground resources like oil, gas, or precious metals. Whoever holds the mineral rights gets to decide how those resources are used. 

All homeowners should understand mineral rights, especially in areas where resource extraction is common. This article will explain how mineral rights work, what’s included, and what isn’t. 

What are mineral rights?

Mineral rights are the legal entitlements to anything valuable that sits below the ground, and owning these rights allows you to extract these resources and sell them. They’re separate from surface rights, which cover the land, soil, and anything you can see. 

It’s important to know who owns the mineral rights – if it’s you, you could earn extra income by leasing or selling them. If someone else owns them, that person may have the power to drill or dig under your property without your consent. Understanding these rights helps you protect your land and maximize its value. 

Surface rights vs. mineral rights

Surface rights give you ownership and control of everything on the surface of the land, including your home, yard, trees, and crops. If you own the surface rights, you can live on the land and build on it. Basically, you have ownership over anything that takes place above ground. In comparison, mineral rights apply to resources below the surface.  

Sometimes, the same person owns both the surface and mineral rights to a piece of land. But in many cases, these rights are separated, which is known as a severed estate. That means one party owns the land itself, while someone else owns the rights to the minerals underground. This split can cause confusion, especially if the surface owner doesn’t realize someone else has control over what’s beneath the property. 

Before you buy land, you should review the property deed and title report for any mention of mineral rights. Ask the title company to perform a mineral rights search if necessary or check the county land records yourself. You can also ask the seller directly if they’ve sold or leased the mineral rights. When in doubt, it’s a good idea to consult a real estate attorney who’s familiar with local property laws. 

What minerals are included under mineral rights?

When you hear “minerals,” you may think of solid materials like gold or coal, but mineral rights often cover liquids and gases too. In most cases, this includes oil, natural gas, and other valuable resources found beneath the surface.  

However, the exact definition of minerals can vary depending on state laws, and these rules can impact what's included in your mineral rights. Here’s a list of what’s usually included: 

• Oil 
• Natural gases 
• Precious metals (gold, silver, mercury) 
• Coal 
• Non-precious or semi-precious metals (aluminum, copper) 
• Rare earth elements 

What minerals are not included?

Several minerals aren’t included in mineral rights. Here are some of the common ones not included: 

• Limestone 
• Sand 
• Gravel 
• Subsurface water 

The rules can vary by location, so if you’re unsure whether something is covered by your mineral rights, it’s a good idea to check with a real estate attorney or your local land office. 

How do mineral rights work?

Owners of mineral rights can explore and exploit the area they own the rights to for minerals, or they can sell the rights to private companies or organizations to exploit and explore. When selling rights, rights owners can take payment in the form of royalties, a lease, or shut-in payments (when a well capable of producing is not utilized). 

Provisions in mineral rights sales agreements

There are typically certain provisions that occur in these sales agreements. The provisions lay out the sales agreement and can operate like the contingencies in home sales. A few common provisions include those below. 

• Conveyance: This provision outlines the price, specific minerals, net profit interests, and royalty interests produced from the property. 
• Diligence: This provision denotes a time period restricting the seller from selling the rights to someone else while the buyer is running the title. It also notes how and when the sale price can be adjusted if necessary. This provision allows the buyer to back out of the sale if there are problems with the title or the rights. 
• Closing: This provision lays out details like closing type, time, costs, and taxes. 

How mineral rights are held

There are a few different ways that mineral rights are held. The combination of the mineral rights and the surface rights is referred to as an estate. How these estates are held can vary from location to location. 

Below are the types of estates: 

• Unified estate: Mineral and surface rights are tied together. 
• Severed estate: Ownership of mineral and surface rights can be separate. 
• Fractional estate: One estate owns a portion of the mineral rights. 

Special circumstances regarding mineral rights

In some parts of the United States, mineral rights are frequently severed from the surface rights and held by a different owner. This practice is most common in energy-producing states like Texas, Oklahoma, Pennsylvania, Louisiana, Colorado, and New Mexico. 

In these states, a history of oil and coal development have led landowners to sell or lease the underground estate while keeping the land on top. If you’re shopping for property in any of these states, never assume the minerals come with the deed – verify who owns them before you make an offer. 

North Carolina takes a slightly different approach – sellers must give buyers a Mineral and Oil and Gas Rights Mandatory Disclosure Statement at closing. The form forces the seller to indicate whether the minerals were severed or will be severed before the sale.  

Here are some steps you can take to ensure you understand what you’re buying and protect yourself from unwanted drilling:  

• Read the disclosure: North Carolina residents should review the mineral rights form and ensure they understand it before signing.  
• Check the appraisal: If the mineral rights stay with the land, be sure your appraiser factors its value into the property’s worth. If the minerals are severed, confirm the appraisal reflects that reduced value. 
• Put it in the contract: Spell out in the purchase agreement which rights transfer – surface, mineral, or both – and make closing contingent on those rights. 
• Seek expert help: Hiring a real estate lawyer who’s familiar with local mineral law can help you avoid any unwanted surprises, especially in states where severance is the norm. 

How to search for mineral rights records

Before you buy land, it’s important to verify who holds the mineral rights – here are some steps you can take to search for mineral rights records:  

• Title insurance companies: Most title companies can perform a mineral rights search as part of a full title review. This is often the easiest way to uncover whether rights have been sold, leased, or reserved in the past. 
• County recorder or clerk’s office: Mineral rights transactions are usually recorded at the county level. You can search these public records yourself to find out who owns what. 
• State geological or natural resource offices: Some states maintain mineral rights records or maps showing where mineral leases exist. These agencies may also provide guidance on how to find ownership records. 
• Ask the seller for documentation: Always request a written disclosure or confirmation from the seller about whether they still own the mineral rights. 

FAQ 

So do these rights transfer with the property? Or are they separate? Here are a few answers to some commonly asked questions about mineral rights. 

Do mineral rights transfer with property?

Whether mineral rights transfer with the property depends on the estate type. If it’s a severed estate, surface rights and mineral rights are separate and don’t transfer together. However, if it’s a unified estate, the land and the mineral rights can be conveyed with the property.

Do mineral rights expire?

Yes, mineral rights can expire. All agreements have different term lengths. If you’re selling mineral rights, you can set the term length. If someone owns the mineral rights on a property you own the surface rights to, there may be an expiration date that’s different.

Can I buy the mineral rights to a property I don’t own?

Yes, you can buy the mineral rights for a property you don’t own. This is referred to as a severed estate, where someone owns the property surface rights with the mineral rights being separate. To research how to attain these rights, look at the county’s courthouse for a deed record of mineral rights, then contact the owners of the rights. Another way to purchase rights is to do a quick internet search on rights for sale.

What are the most prevalent minerals for mining?

The most prevalent minerals for mining in the U.S. are oil and gas. States including Texas, North Dakota, Alaska, California, New Mexico, Oklahoma, Colorado, Utah, and Louisiana have large oil and gas reserves. 

Another prominent mineral is coal. States such as Wyoming, West Virginia, Kentucky, and Pennsylvania have large coal mining operations. 

How can I determine if there are valuable minerals on my property?

If you think there may be valuable minerals on your property, you can hire a geologist or land surveyor to help you determine if this is the case. You can also look at mineral rights listings to see if your property has separate mineral rights for sale.

The bottom line: Know your mineral rights

Mineral rights are the ownership rights to oil, natural gas, silver, and other underground resources. It’s important to know the mineral rights of your property. If you own the rights, they can become a reliable source of income. If someone else owns the rights, they can remove valuable minerals from beneath your feet, literally. 

If you’re buying property in an area known for mining or oil drilling, you’ll want to know what kind of estate you’re buying and who owns the mineral rights to the property. Ready to take the next step? Start your home buying journey today with Rocket Mortgage® and get expert guidance every step of the way.