WARNING: Selling Mineral Rights vs Leasing Mineral Rights

I have seen many posts on here lately that concern me slightly so I just wanted to post a comment.  Please make sure you understand the difference between selling your mineral rights and leasing them. 

Selling your mineral rights permanently separating your mineral rights from your surface rights.  You will receive the one time payment for that sale and that is it.  This sale is forever, unless by some chance the mineral rights are abandoned in the future and the owner at that time files the correct paperwork and is able to rejoin them.  If you have property that you want to pass on to your children and grandchildren this is something you may not want to do. This can affect property value too if your heirs one day want to sell the land. You are selling all your mineral rights oil, gas, coal, or some future discovery.

Leasing your mineral rights does potentially have some endpoint and you can specify specific minerals, oil and gas but not coal, coal but not oil and gas, and even different layers can be leased to different companies by lease language.  Also the lease language can specify an endpoint five years plus option for second five years if no production then lease ends.  Also if production does occur but later ceases then lease ends.  You are paid for production.  Your land both surface rights and mineral rights remain joined and pass on to your heirs even though minerals may still be encumbered by the lease the payment would go on to heirs as well.  And the rights go back to heirs when lease ends.

PLEASE, PLEASE do not sign any paperwork from anybody without taking the time and the roughly $200 for one hour of an attorney's time to look over said paperwork before you sign it.  There are several posts on here talking about payment for mineral rights and it is not at all clear if the company is leasing or buying.  They use the term bonus which is not accurate when selling minerals.  That is not a bonus.  It is payment for permanent ownership of your mineral rights.  It is a one time payment and you do not get royalties. The new owner gets them.   You will receive letters from various companies even if you have a lease asking to purchase your mineral rights.  If you are already leased you can not lease again so any conversation you are having is one about buying your mineral rights.  Just be cautious and make sure you understand fully what you are signing.

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Permalink Reply by Rachael M Rollson on June 11, 2014 at 4:21am

Minerals only.

But what really frustrates me is that the broker was confident that they could sell them for half the going price right now. I just want someone who responds when they say they will (I know, I know, I might be asking a lot there).

And near pittance is fine.

Permalink Reply by scott peterson on June 11, 2014 at 4:25am

Rachel, where in Potter is the property?

Permalink Reply by Rachael M Rollson on June 11, 2014 at 4:33am

Bark Shanty, Keating Township

Permalink Reply by scott peterson on June 11, 2014 at 4:38am

Was just curious. Love Potter Cty.....Gods Country PA.  I fish up there every spring in Pine & Kettle creeks.

Permalink Reply by Finnbear on June 11, 2014 at 5:36am

What is your asking price/acre for the minerals? Is this just oil&gas or complete mineral rights?

Permalink Reply by Joseph-Ohio on June 11, 2014 at 6:36am

All good questions Finn.

There are a myriad of points of order to stipulate in such a deal.

That's why a knowledgeable broker hired by and working toward the best interest of the landowner in my opinion is basically a must.

Most ( I'll hazard a guess ) would be ' dual agencies' however and would represent seller and buyer alike. That being a bit of a consideration to deal with.

All only my humble opinion of course.

Permalink Reply by Joseph-Ohio on June 11, 2014 at 7:03am

Should work unless the brokers work harder for the cartel than the landowner seller.

Permalink Reply by Finnbear on June 16, 2014 at 3:42am

How much control are you willing to give up over what happens on the surface of your land? When you sell your mineral rights, you still have to allow the buyer access on the surface to extract those minerals?

Permalink Reply by Joseph-Ohio on June 11, 2014 at 4:42am

My tactic would be find me a broker put it on the market for a sell price I determine to be in step and see where it all goes.

If it doesn't move than interested folks don't own it either.

Nothing lost in the process.

Its not my belief that minerals are worth nothing unless the area becomes hot insofar as well development.

Just need to find a buyer willing to pay the right price.

Good luck to you and yours in Potter County Ms. Rollson.

Permalink Reply by Rachael M Rollson on June 12, 2014 at 8:21am

Thank you for the luck. I might need it.

I guess my biggest problem is how to find a decent broker.

And I want to sell all of the mineral rights.

Permalink Reply by time will tell on June 13, 2014 at 3:16am

Saw an agreement with someone who sold there royalties and couldn't believe it .

They are taking ALL minerals and if unit is not drilled in the first 5 years , the renewal

bonus goes to the buyer .

These people are preying on the un educated .

Anyone looking to  sell there royalties should get an attorney - that isn't in with the

producers and get good advice .

From what I read on the agreement , these people give dishonest used car salesman a

good name .

(((((((((BEWARE OF THESE PEOPLE )))))))))))).

 

Permalink Reply by Jacob Fewx on June 13, 2014 at 3:30am
Does any one know what percentage brokers are charging? I have one that had an increasing percentage based on how high above going price he was able to secure for me.

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