WHAT is 'Mineral Rights'

Mineral rights are the ownership rights of underground resources like oil, natural gas, gold, silver, copper, iron or uranium. Mineral rights differ from surface rights, which give the holder the right to improve upon or sell the surface of a tract of land. Owners of surface rights often have the right to dig beneath the surface to construct foundations for buildings, or to install infrastructure like a septic tank, but surface rights holders who do not own mineral rights beneath their land do not have the right to exploit any valuable resources therein.

BREAKING DOWN 'Mineral Rights'

Mineral rights which can be bought and sold by private individuals, separately from surface rights, are very rare outside the United States. In many countries, private citizens only have the right to buy surface land, while all the minerals within the country’s borders belong to the people, the state or monarch. For example, in the United Kingdom, mineral rights for oil, gas, coal, gold and silver belong, in theory, to the Queen.

Separate ownership of land and the minerals and other resources beneath it can often cause conflict. In 2013, the news agency Reuters published an expose on the practices American home builders, many of whom were selling homes in suburban developments, but retaining the mineral rights. Because many states don’t require sellers of homes to notify buyers that they are severing the mineral rights from a property, Reuters found many homeowners who felt misled.

Understanding your mineral rights

The development of technologies like horizontal oil drilling has made It is increasingly common for resource-extracting companies to purchase mineral rights separately from surface rights. That’s why it’s important for property owners to consult land records related to their property. These can be found at the county clerk’s office in the county where the land is located.

At the county clerk’s office, you can construct a chain of title to understand if and when the mineral rights to a piece of land were severed from the surface rights. It’s likely that the original land owner was granted both surface rights and mineral rights, but an owner along the way may have sold the mineral rights to another party.

If you do own the mineral rights to a piece of property, it may become worthwhile to sell those rights to a resource-extracting company. These companies will often entice landowners to sell their rights in exchange for a one-time cash payment, ongoing royalty payments, or both.

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