Mineral rights
Encyclopedia
Mineral estate
Ownership of mineral rights (more properly "mineral interest") is an estate in real propertyReal property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
. Technically it is known as a mineral estate and often referred to as mineral rights. It is the right of the owner to exploit, mine, and/or produce any or all of the minerals lying below the surface of the property.
The mineral estate of the land includes all unusual organic and inorganic substances forming a part of the soil which possess a useful property giving them special value. An exception would be sand, gravel, limestone, subsurface water, etc. which are normally considered part of the surface estate.
Mineral rights can be severed
Mineral estates are often severed from the surface estate. Such severance is accomplished with a conveyance or reservation of the minerals in a conveyance. This conveyance or reservation includes minerals or such substances considered as minerals. This is to include such things as natural gas, as it has been often asked by bemused geologists, “Is natural gas a mineral?”Further, this conveyance or reservation includes royalties, bonuses, and rentals.
Five elements of mineral rights
The five elements of a mineral right are:- the right to use as much of the surface as is reasonably necessary to access the minerals,
- the right to execute any conveyances of mineral rights,
- the right to receive bonus consideration,
- the right to receive delay rentals and
- the right to receive royaltiesRoyaltiesRoyalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...
.
The owner of a mineral interest may separately convey any or all of the above-listed interests, if the rights are the owner's to convey. Minerals may be possessed as a life estate, which does not permit a person to sell them, but merely that they can own the minerals so long as they live. After this, the mineral rights revert to a predesignated entity, such as a specific organization or person.
It is possible for the mineral right owners to sever and sell off the oil and gas royalties from oil and gas wells, while keeping the mineral rights. This conveys to the royalty buyer the rights to the revenue stream from the oil and gas production for a specific lease, but retains the mineral rights. In such case, if the oil lease expires, the royalty owner will have nothing and the mineral owner still owns the minerals.
Freehold and non-freehold ownership
The nature of the status of the land is fixed by law, and is distinguished as being either a freehold estate or a non-freehold estate. Freehold means ownership in perpetuity. Non-freehold would be like farmer John who bought timber rights, that only last 25 years.See also
- General Mining Act of 1872General Mining Act of 1872The General Mining Act of 1872 is a United States federal law that authorizes and governs prospecting and mining for economic minerals, such as gold, platinum, and silver, on federal public lands...
- Stock-Raising Homestead ActStock-Raising Homestead ActThe Stock-Raising Homestead Act of 1916 provided settlers of public land—a full section or its equivalent—for ranching purposes. Unlike the Homestead Act of 1862 or the Enlarged Homestead Act of 1909, land homesteaded under the 1916 act separated surface rights from subsurface rights,...
of 1916 - Air rightsAir rightsAir rights are a type of development right in real estate, referring to the empty space above a property. Generally speaking, owning or renting land or a building gives one the right to use and develop the air rights....
- EasementEasementAn easement is a certain right to use the real property of another without possessing it.Easements are helpful for providing pathways across two or more pieces of property or allowing an individual to fish in a privately owned pond...
- Land rightsLand rightsLand law is the form of law that deals with the rights to use, alienate, or exclude others from land. In many jurisdictions, these species of property are referred to as real estate or real property, as distinct from personal property. Land use agreements, including renting, are an important...
- Oil and gas law in the United StatesOil and gas law in the United StatesOil and gas law in the United States is the branch of law that pertains to the acquisition and ownership rights in oil and gas both under the soil before discovery and after its capture, and adjudication regarding those rights.- Overview :...
- Split estateSplit estateIn the United States, a Split Estate is when the property rights to the surface and the underground are split between two parties. It is the result of Homestead Acts such as the Alaska Native Claims Settlement Act or the Stock-Raising Homestead Act . Who owns the right the exploit the underground...
- Water rights