Tag Archives: Easements

Property Owners’ Frustrations with Mineral Rights Owners

West Texas oil well pumper and black brama cattle.

West Texas oil well pumper and black brama cattle.

When mineral rights exist on a property there may be easements associated with those rights. For example, a mineral rights transfer often carries an easement with it to allow the grantee of those rights access to the property.  It may allow the grantee to transgress across the property, to install a well or some sort of structure on the property, and to extract minerals from subsurface on the property. This may affect what the land owner can do to develop the property and it may affect any existing plants and agriculture on the land.

However, laws regarding mineral rights vary state to state. North Dakota, for example, allows the owner of surface rights to receive some compensation for damages done to their property by mineral rights owners, but the compensation does not cover lost farmland and disruption of normal farming and ranching practices. Jonathan Knutson explains, in his article North Dakota ranchers say mineral rights get too much emphasis, how Kim Shade, a rancher in North Dakota, estimates a $25,000 loss from oil vehicles killing cattle on his land and an additional loss of 15 calves who died from a chemical spill by an oil company, all of which are not covered by insurance. Other negative effects include harm done to crops from dust raised on unpaved roads by oil industry trucks and poorly sited oil wells which create sections of land that are too small to farm with modern equipment.

In Texas, mineral rights supersede property rights; therefore, oil companies who own the mineral rights to a property can come onto privately-owned property and start operations. When this occurs land owners are paid a leasing fee from the mineral rights owner. Yet, property owners in Texas are also having issues with mineral rights owners starting drilling operations on their property. Joshua Brown discusses the frustrations of an upset Texas property owner in his article Home (and oil) on the Range. Aside from the unpleasant aesthetics, some of the problems faced by the property owner include a huge tree dying from nearby oil drilling, a smelly retention pool filled with water and oil runoff, and fumes created by flare stacks that accompany each well.

If you own a property, it is advised to review the mineral rights deed associated with the property. Don’t just look at who the owners are of those rights but get a thorough mineral rights title search. This will help you understand the easements associated with it and what rights have been given up in addition to the access of minerals from subsurface on the property.

What Is A Title Search And Why Do You Need One?

A Title Search is conducted for many reasons.  The most common is before the transfer of ownership interest from one party to another or simply put, “before it is sold”.  If the buyer is securing financing for the purchase, the lending institution usually requires proof of ownership of the seller and their right to transfer interest as well as to ensure that there are no outstanding liens or encumbrances on the property that may be associated with the subject property.  In some instances a lender may want to use this information for title insurance, thus adding a high level of security to the lenders investment.

Experienced investors routinely obtain title search reports.  One of the biggest mistakes commonly made by a novice investor, is the failure to obtain a Certified Title Report prior to a sale or auction   Sean O’Toole, founder and chief executive of ForeclsoureRadar.com says on MSN.COM  that a title search is your best chance of success and that “the title search is must.”

Litigation and property rights are other important reasons to obtain a title report.  For example:  What do you do if your home is being wrongfully foreclosed?  How do you resolve an ownership dispute?  Does someone else have the mineral rights to your land?  Do you suspect you inherited land from a deceased family member, but you can’t prove it?  What if you are being audited by the IRS or other government agency? Did you re-invest your capital gains into a piece of real estate in accordance with the law? How do you prove that you did?

The bottom line is, if you are buying, selling, financing, litigating or investing in a piece of real estate, it is part of your due diligence to obtain an official title report.

What is a title search?

1.      A title search is a process of determining who, from the official public land records, has the legal right of ownership to the subject property.  The answer can be as simple as a single person owning a house or as complicated as multinational corporations owning fractions of interest that may contain mineral rights, easements, contractual covenants, obligations and rights of survivor ship.

2.      There are two typical types of searches.  A Current Owner Search and a Chain of Title.  A chain of title search is just what it sounds like. It is the historical record of ownership from one party to another up until the present time.  A chain of title is usually for a specific period of time and is often used for mineral rights, litigation, title insurance and historical research.  A current ownership search looks at the subject property starting from when the current owner first took possession of the property.  This could be 2 weeks ago, or 2 centuries.  It is like a snapshot in time of the financial and legal standing of that property as it currently exists.

3.      A title search can show you if there are any open liens, mortgages, and deeds of trust or even other owners.  This information can be critical to determine who is needed in order to legally transfer the ownership to another party

4.      In addition to all of this, the title search provides the present status of real estate taxes and other municipal charges that may be due and payable from previous years.

5.      A quality title search will also contain a judgment search.  This is performed to determine whether there are any unsatisfied judgments, federal or state income tax liens, mechanic’s liens, bankruptcy or other judgments against the seller or prior owners that attached to the property.

6.      Some title search services may provide a list of “Comps”.  This type of information generally shows the buying and selling history of similar properties in the local neighborhood.  This information is important for home buyers, investors and developers.