No Mineral Rights + Guaranteed Non Surface Lease

Hello,

I am looking to purchase some land in NY state without mineral rights. The land is currently unleased. Is there any way that my deed and title work can be written to prevent the mineral owner from signing a lease that allows surface activity ? If possible, I'd like some guarantee that the mineral owner can only sign a non-surface lease.

Thanks, Mister Bluebird

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Permalink Reply by Jim Litwinowicz on December 7, 2012 at 11:49am

ASFAIK not possible. The mineral rights has precedence over the surface rights.  And you cannot write into a deed restrictions that pass in perpetuity. 

Only option is to buy at least a controlling interest in the mineral rights so that you have a say in the lease terms.

I am not an attorney so take all I say under advisement. Talk to a good real estate/O & G attorney.  then let me know if I am right.!

Permalink Reply by Mr. Bluebird on December 9, 2012 at 4:31am

Thanks for the info.   I'll probably just settle for the surface rights and keep my fingers crossed that the neighbors get the well pad.   Since it is NY state, I don't have much to worry about anyway.

Bluebird.

 

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on December 9, 2012 at 2:39pm

Mr. B,   With NY State under a fracing moratorium, I would think that finding land with minerals would be much easier than in OH or PA. Unless you have a particular piece of property in mind, I would continue looking until I found land with minerals. If the moratoruim is ever lifted you will have an income and property that is 100% yours. After reading about the Washington County PA Dentist who had his 10 acres of surface rights bull dozed, I would never buy property without mineral rights. There are still people who will sell land with minerals at a fair price. Don't believe the stories about mineral rights being sold prior to the 1900. Not everyone sold their mineral rights. If you take the time to look your efforts will be rewarded. Ask me how I know.    Ron 

Permalink Reply by Jack Straw on December 9, 2012 at 2:51pm

I will second Ron's comments.

RE: " I'll probably just settle for the surface rights and keep my fingers crossed that the neighbors get the well pad."

 

You'll sleep a lot better if you do not have that sort of "Sword of Damocles" hanging over your head.

My wife is like an elephant, she does not forget any bad decision I have ever made; and she never misses an opportunity to remind me of every failing. If you buy land without mineral rights, I hope that you significant other does not have my wife's memory.

 

All IMHO,

                 JS

Permalink Reply by Mike Coles on December 10, 2012 at 4:49am

Mr. B

I do real estate appraisals with and without mineral rights.  Is the current owner keeping the mineral rights or are they held by a prior owner?  If it's the current owner, then you should insist on getting the 'surface rights'.  These transaction are complicated.  Get a good 'oil & gas' lease attorney. 

Permalink Reply by Mr. Bluebird on December 11, 2012 at 1:24am

Hello,

Thanks for the info.   Regarding my own situation,  this is a property adjacent to what I already own.    I have mineral rights to what I currently own but I'd like to buy the neighbors property even if I only get the surface (they own minerals).   I don't think it is going to work out anyway because I didn't like their price and they didn't like my counter offer.    I actually initially reached out to them to see if they would sell so I am not surprised that they came back with a high asking price.     The property isn't on the market.  I believe they simply purchased it for the mineral investment so I thought I'd make an attempt to buy the surface in hopes they are growing impatient with their investment as NYS delays.

Regarding my original question, I think it is possible.   I saw a classified ad for some land in Greenwood NY.      The ad included "With NO OGM Rights (Will Put  No  Surface  Disturbance  In  Deed  To  Protect Surface Land From Drilling)"       Evidently it is possible in NY.   I didn't ask any details because I didn't want to waste their time.

Thanks again for your contributions to this thread and all threads.    There is are some real knowledgeable folks on here.  

Mister Bluebird.

Permalink Reply by Mike Coles on December 11, 2012 at 2:24am

Mr. B

I have warned realtors and appraisers to beware of this claim, "No Surface Disturbance" in the deed.

1st Scenario - Gas Lease Exist: The right to perfom surface activities has been conveyed to the drilling comany.  Thus, this becomes an unenforcable deed restiction.

2nd Scenario - No Gas Lease: The standard gas lease has significant sections related to surface disturbance activity.  In New York, the gas companies are only required to file a Memorandum of Lease.  Thus, obtaining a copy of the lease is difficult to impossible (I actually had an assignment where all parties refused to provide a copy of the lease).  The problem is without owning the surface rights how do you know what's in the lease.  Unfortunately, your first sign of surface activity maybe when the surveyors or a bulldozer appears on your land.  Needless to say, this is a legal nightmare.  Make sure you have a GOOD lawyer that understands the gas industry.

Mike

Permalink Reply by Jim Litwinowicz on December 11, 2012 at 7:47am

Here's another scenario; they sign a gas lease saying no surface disturbance. They and you are very happy.  Five years later the lease expires but the mineral rights were sold or the owner died and it went to his/her heirs.  Next owner doesn't care and signs a new lease allowing anything to be done. Your screwed.

Also, I know a guy with over 1000 acres for sale but he wants to protect some of surface as it is gorgeous land.  He wanted to put into the deed restrictions on surface activities on several hundred acres but attorneys told him it is not legal to put land use restrictions in perpetuity. They had a legal term for it.......but I forget it! 

Permalink Reply by Kathleen on December 16, 2012 at 8:41am
I felt safe reading my County's deed site that said my neighbor with 4 leases (744acres total) and one with 125 acres on my side and front said "no surface lease". Now I know if all this land is not included in a well within 5 years they could sign a different lease.
Until I read your post I just never thought that way. I just assumed I would not have a pad close to me. I know some of the land is in a unit and I hope they grab the rest soon.
Permalink Reply by Jim Litwinowicz on December 16, 2012 at 8:51am

Kathleen, if your neighbors have a no surface lease,it is more likely the pad will be on yours assuming you lease and they don't give you a no surface lease. After all they have to access it from somewhere.

Permalink Reply by Mr. Bluebird on December 16, 2012 at 3:23am

Hello,

I am moving forward with making a purchase and I am attempting to negotiate  "no surface disturbances".   But I am wondering if this is even necessary.   The property is less than a mile from the NY/PA border.    If they put a pad on the property and there was a horizontal angled towards the southeast, it could only extend about 4,000 feet before it hit PA.       Marcellus is relatively shallow at this point so I expect if/when they drill, they will use long laterals.

I am not really concerned with seismic related activities, roads, or pipelines.  I just don't want a wellpad on the property.    Given the proximity to the border, should I even be concerned with a wellpad ?   

Thanks in advance.

Mister Bluebird.

Permalink Reply by Frank Walker on December 16, 2012 at 6:50am
I'm not a lawyer and you need competent legal counsel on this one. Here's my opinion, anyway:

I assume you either cannot afford to buy the mineral/O&G rights or else those rights are not for sale. You also don't state that the mineral owner and the current surface owner are the same entity or person(s). I'm going to assume they are one and the same.

You would need a deed in which Grantor sells and foreswears all surface access to his deeded minerals, but reserves to himself all subsurface drilling rights below, say, a depth of 1500 feet distant from surface. You would buy all surface rights and all mineral rights down to a depth of 1500 feet, or whatever.

Normally, mineral rights overwhelm (and trump) surface rights. But provided both rights are currently held by the same entity, I see no reason owner cannot waive and/or sell a portion of those rights.

If mineral and surface rights are today not held by the same entity, your prospects for success and a happy outcome are significantly reduced.

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