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 Mike Coles on December 20, 2012 at 5:02am

Mr. Bluebird,

Congratulations on your deal. As a real estate appraiser, I've investigated other similar deals. This deal sounds like you should simply be getting all the surface rights and subsurface to say 500'+/- down for control over gravel and other hard mineral deposits while the seller retains the right to receive royalty payments from oil & gas extraction. By this means, any party that seeks surface activity (access roads, gathering lines, etc.) will have to come to you and negotiate. Be careful of 'verbiage' as opposed to the conveyance of property rights. Educate yourself and make sure you have a good attorney.

Permalink Reply by Mr. Bluebird on February 8, 2013 at 1:52am

Hello,

Here is the verbage that my attorney has proposed for the deed:

"EXCEPTING AND RESERVING unto the grantors, their distributees, successors and/or assigns, all subsurface, oil and gas and mineral rights to the above-described premises.  Surface rights will convey to the grantee"

If mineral rights trump surface rights, I don't think this is enough to protect me from the big giant oil/gas companies.   Any ideas ?    This is New York State.

FYI - My attorney is an experienced Gas/Mineral Rights attorney.

Thanks,  Mister Bluebird.

 

Permalink Reply by Mike Coles on February 8, 2013 at 4:01am

Mr. Bluebird,

I agree with you.  Minerals rights have also been interpreted to mean gravel and other aggregates in New York.  As I previously mentioned, the subsurface oil & gas rights should start below 500'+/- (pick a number). The productive Marcellus Shale is down below 1,000'+. 

Also (a little thing, shouldn't yours read: "Surface rights will convey to the grantee(s), their distributees, successors and/or assigns".

Finally, in preparing for the worst (and these are questions for your lawyer, I am not a lawyer and this is not legal advice), an oil & gas lease will probably come in the future.  As the grantee, should you require notification and a copy of the lease prior to signing to make sure none of your rights were signed away.  For example, the boiler plate oil & gas lease assumes the lessor has surface rights until title research proves otherwise.  You want the 'big oil' company to know upfront, they have to come to you for any surface activity (surface use agreements, pipelines, compressor stations, well pads, ets.).  I understand you don't want surface activity, but (as an exapmle) if you were offered $250,000 for a 10 acres compressor station site would you take it? Never say never for yourself or your heirs. 

Permalink Reply by Mr. Bluebird on February 8, 2013 at 7:01am

Mike,

Thank you for your detailed reply.   Thanks to others for previous replies.   I have relayed the concerns to my atty.

 

Mister B.

 

Permalink Reply by Mr. Bluebird on February 11, 2013 at 2:26am

It is about 50 acres.    I expressed my concerns to my atty. and he added a lot more details to the verbage.    One of the details was a depth restriction so the current owners will only retain minerals below a certain depth.     My atty submitted the update to sellers atty for approval.  I am confident the sellers will be satisfied that they will still own the potential riches.    I am also confident that the any OG company will see that they need to negotiate surface operations with me.     Once all this gets approved,  I'll post the final deed verbage here for future reference.      I'll check out that podcast Mike.  Thanks again for all of your input everybody.    

Permalink Reply by Mike Coles on February 9, 2013 at 8:19am

Mr. Bluebird,

I am not here to promote any one professional over another.  However, this particular podcast is the closest thing to discussing your concerns I have found.  Granted, Doug Clark is a PA attorney and you need a New York attorney.  However, having appraised in both states, PA is 90%+ similar to NY in matters surrounding real estate transfers.  Perhaps more importantly, the actual issues you need to address as the buyer and Marcellus Shale are very similar.  I've tested the link below.  It should work.  If not as a backup plan copy and paste into Google: 2010-10-09 The 7th show! Atty Douglas Clark talks Buying & Selling Marcellus Shale Property 

This will get you to the same podcast.

 

http://www.pagasleaseattorney.com/components/com_podcast/media/2010...

 

Good luck,

Mike Coles

Permalink Reply by Mr. Bluebird on August 6, 2013 at 10:21am

Hello,

I appreciate all of the help I got here so I will follow-up with the results and offer some advice. Unfortunately, I was not able to get the deed verbiage that I requested which would have given me the ownership of the first 50 or 100 feet of sub-surface. The seller objected to that and was willing to let the whole deal fall though.

My lawyer said that there have been cases where the minerals are owned by one entity and the surface by another and the gas company just came in on the property to drill without negotiating, asking, or even needing permission from the surface owner (we all know that). But he said in those cases, it was not in the deed that the surface rights were granted to the surface owner. He wasn't 100% sure, but said he hopes with the ability of horizontal drilling to drain such a large area, that the verbiage I have is enough protection. I am not too worried about it. It is recreational / hunting property and it isn’t my only lot. So if they do eventually drill in NY and I get a well pad or gravel pit, I’ll just hunt somewhere else.

Here is my advice for those in a similar situation. When negotiating prior to the purchase, agree on the deed verbiage. When we negotiated, we agreed that I would own the surface rights. That part was easy. But later on, we disagreed on the deed verbiage. My lawyer is partially to blame for this. Quite early on in the process, I was asking him about the deed verbiage. But he waited until a few days before closing to show me. Had there been more time, I think we could have convinced that seller that we were trying to protect me rather than steal 50 or 100 feet of minerals from them.
Thanks again for all of you help and advice. This is a great site.

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