"In Ohio, Mineral Rights a Wild Card"

Ever since the words Utica Shale became a household name, many of us including lawyers hit the books to understand the legalities of mineral rights, leases, deeds and encumbrances as they relate to this energy boom that is upon us.

As a layperson astute in real estate, I immediately delved into the spirit of real estate law and practicalities.  Knowing that encumbrances have always dealt with the surface character of property, mineral rights were never an issue in the normal trade of real estate.  Basically unless one had a gas well or significant acreage, minerals were never a deal breaker.

Yesterday in a conversation with a bankruptcy trustee, it was explained to me that foreclosures, taxes, mortgages and judgements unless in the legal discription do not automatically apply to minerals.  Understand it this way, if a farm is foreclosed on and I own or leased the mineral rights, I still control the wild card.

Not to say if an energy company wants a mortgage subordination or property taxes brought current, so as not to break the deal, one should comply.  If a landman tries to use these encumbrances to bargain for a lower cost to them for a mineral lease, he is playing poker and again you hold the wild card.

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Permalink Reply by Ron Eiselstein on June 28, 2012 at 9:04am

Update:

Yesterday Ohio Land Management received notice that three City lots totalling 1.2 acres were rejected because of small delinquent property taxes, after 120 days.  Interesting many other delinquent lots merely had the energy company paying them off from the bonus proceeds.  The poker game goes on.............

Permalink Reply by Jacque Straap on June 28, 2012 at 10:39am

Ron,

Not sure I completely follow your statements nor have you disclosed enough facts to make a judgement on the accuracy of your statements.  You said:

Yesterday in a conversation with a bankruptcy trustee, it was explained to me that foreclosures, taxes, mortgages and judgements unless in the legal discription do not automatically apply to minerals.  Understand it this way, if a farm is foreclosed on and I own or leased the mineral rights, I still control the wild card.

In this hypothetical situation are you also the owner of the surface rights or are you dealing with a severance of the surface and mineral rights?  If you own both then I would assert that a judgment, a foreclosure or a tax lien would attach to everything you own.  All would work to terminate your ownership of both the surface and mineral rights.  If you only owned the mineral rights and the surface was owned by somebody else and it was the surface owner that was foreclosed upon then certainly your rights would continue unabated and unaffected.  Not sure what you are referring to when you say you control "the wild card".

Permalink Reply by Ron Eiselstein on June 28, 2012 at 9:43pm

Jock Strap,  I'm tired I worked labor all day at my amphitheatre, now I have to explain, you will get more out of me if you use your real name.  Anyway I'll give you this, property taxes are not "persona," they are "en rem."  You have to look this up cause I am tired.  You are having a hard time if you are sincere wherein, the point I am making is that as long as there is no case pending a landowner, encumbrances have nothing to due with the trade of his mineral rights,  Above you argued my point.

Permalink Reply by Jacque Straap on June 29, 2012 at 2:52pm

I got the drill on that in my first property law class (circa 1976)... so I don't need to look up the meaning of those two terms. 

In my opinion you fail to state your case, or make your point because you use terminology that has no legal meaning. 

"encumbrances have nothing to due (sic...its do) with the trade of his mineral rights"

...trade of his mineral rights???  What does that even mean.  What is he "trading for"?  Is "trade" supposed to refer to a lease transaction? 

Permalink Reply by C Middleton on June 29, 2012 at 11:48pm
Permalink Reply by Jacque Straap on June 29, 2012 at 11:54pm

get a freakin life middleman

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