Abandoning Mineral Rights...

 

SB 445 - Legislation which will create a period of time in determining when an owner has officially abandoned their mineral rights. Currently, landowners across the state are facing the dilemma of owning surface rights, but not owning his or her mineral rights. Furthermore, the subsurface owner of the mineral rights may not even know they are the owner. Ultimately, this abandonment is an obstacle for the current landowner who would like to use their property for the development of natural gas.

My legislation would deem mineral rights in real property abandoned after a period of 21 years of nonuse of the mineral rights by a subsurface owner. Nonuse of mineral rights is the absence of an issuance of a permit to drill a well by the Department of Environmental Protection, actual production or withdrawal of minerals from the property and the underground storage of minerals. If the subsurface landowner chooses to simply not develop the mineral rights, they could record a claim of interest with the county Recorder of Deeds within three months of the effective date of this legislation or 21 years from the nonuse, whichever is later. The 21year period is similar to current Pennsylvania abandonment law relating to adverse possession.

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0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 1, 2011 at 7:10am

thanks so much Richard for taking the time to share this with us!   I found other items of interest at that link also....I posted part of the info about the proposed legislation for royalties to be itemized....didn't know that Pa. doesn't presently require some kind of 'watchdog' system for that.

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on December 3, 2011 at 3:13pm

What is claim of interest thing all about? Sounds like all the mineral rights owner has to do is file some paper within 3 months of effective date of new law and..........What is the result? Does this allow them to retain them?

If so , what is the sense of this law...........? The only ones losing will be some of the privately held OGM's owners (snooze you lose).....Corporately owned rights will be retained........Their lawyers will be all over that...!

SOUNDS LIKE A TROJAN HORSE TO ME..............?

Hey , my own personal experience is that it stinks to find out you don't own Oil & Gas rights to land you and generations of your predecessors have been paying property taxes on for 84 years (in my case)...BUT...it is what it is. As someone pointed out to me recently when I complained that the OGM owner pays no property tax....Be careful what you wish for. (Thanks Jim L.)

Legislation like this can open many cans of worms. I pay enough taxes now , I surely don't want to be re-assessed on what I do own to include god knows how much mineral value. Be very discerning before jumping for what sounds good on the surface but may (probably will) have or will lead to trapdoors for EVERYONE.

 

Permalink Reply by James Kerns on December 3, 2011 at 3:28pm

I agree with Glenn on this one, i vote no new tax, and no new paperwork requirements on a landowners part, to keep what is rightfully already theirs. If something like this were to make the vote, it should read that if you purchased the land with the OGM rights, no further action on your part for as long as you own the land, to retain those rights. If its property owned by the same family for generations, same deal. Only need to file chain of title and custody, when property changes hands. Does that make more sense?

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on December 3, 2011 at 4:35pm

Right. James brings up what I didn't consider.......If I own both surface and OGM's do I still have to file this "claim of interest" paperwork or risk losing my mineral rights? Sounds like a potential trapdoor to me.......?

Permalink Reply by Ireland on December 3, 2011 at 3:28pm

Who is telling you that mineral right owners dont pay property taxes on the land? I own 12 properties of over 15,000 acres of just the mineral rights in Clearfield County, PA and I every year I receive property taxes twice a year on these properties and if I dont pay them they get sheriff saled. Some of your info you are getting is incorrect.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 3, 2011 at 3:56pm

Hi Ireland...just happened to look at your comment.

Are you saying that you do not own the surface rights ...just the gas/oil rights?  Do you get taxed on the amount of the royalties or taxed with no royalties coming in?  or are you speaking of the surface property taxes?   If you receive no royalties yet...are you being taxed for the land as you refer to it as 'property taxes'...yet it isn't real property and I think you are saying that you do not own the land....maybe capital gain regarding royalty?   What land value could the county be giving regarding the mineral rights alone?

I am very interested as I am new at being a Lessor but I do understand that I would be paying taxes (as income taxes to both fed and Pa state) if there are royalties besides the property taxes (c & g)(which are paid to the county)...but didn't know that the Lessee would also be paying property taxes? You mean that the oil company as lessor of my land will get a property tax bill twice a year also?   And if you really are just paying taxes because you only just own the mineral rights, does the county tax collector use the same tax amount as they do for the surface land ..how do they calculate the tax amount of just the mineral rights regarding 15,000acres?

If indeed this is true that you are paying taxes on just owning the mineral rights and not the surface land...then how could the oil and gas lease holders be abandoning these old leases which some cannot find without a title search...for like you said they would be in default and could be sold.

Permalink Reply by Ireland on December 3, 2011 at 4:18pm

You are correct I only own mineral rights no surface rights. I'm not sure how they calcuate the tax amount. I did pull out my taxes to look. The one I am looking at is 1,171 acres of mineral rights in Pine Twp Clearfield County. There is no well or anything on the property and my taxes for the one I received in March the assessed value land was at $1,448 and Bldg was $0. Discount was $30.65 Face $31.28 Penalty $34.41. Granted, this is not a lot to pay but the county is taxing me for the mineral rights.

Like I said I have no idea how they come up with these figures, I inhereted these properties down form generations and we always have had to pay taxes on mineral rights.

I heard numerous people say you dont have to pay taxes on mineral rights, yet Clearfield County is charging taxes on them. I own some parcels with other people and if they don't pay there taxes I get a letter stating they are selling that persons % in the land and that I can buy it at sheriff sale if I'd like.

Permalink Reply by Nancy Mosley on December 3, 2011 at 4:26pm

In West Virginia there is some formula for calculating the assessment, related to the acreage and the production (if any) reported to the state by the O&G company/companies. A nonproducing small acreage is assessed the minimum, then the tax is calculated based on the local tax rate.

 I own some parcels with other people and if they don't pay there taxes I get a letter stating they are selling that persons % in the land and that I can buy it at sheriff sale if I'd like.

This is a good idea. West Virginia, at least the county I know about, doesn't do that. The way to find out is read the local paper, where the delinquent tax properties are all listed.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 3, 2011 at 4:44pm

that's amazing...this is the first I have heard of that...but I am new to the leasing of natural gas.  What I find interesting is that my dad owned acreage with the mineral rights (they were not on a lease at the time) and he only paid property taxes (also in Pa.).   If a property has had in the past a gas lease and then it expired then the mineral rights are consistant with the owner of the property rights (and not seperated though they had been before).   What you are telling me is if the lease of the gas/oil/mineral rights is active then there will be a county bill sent to the owner of just the mineral rights as lessee even without production....if I understand this correctly.

Again, I say if this is true...then the Lessees (those who have just the gas/oil/mineral leases) that are abandoned then they would not have paid the taxes to the county seat.

Therefore any landowner of land that found out about an abandoned lease of gas/oil/minerals on their land (because done many years ago)...would just have to pay up the years of taxes if they weren't sold at sherif auction....

Surely those landowners who are in a dilemna about such should contact the county and see if the mineral rights owner has paid their taxes and if they were even billed for such.

One thought though is if the original owner of land and mineral rights (lessor) might have sold instead of leased their royaly rights then perhaps that is what kind of billing you have...where you are not leasing the rights but have full ownership seperate from the landowner of the surface property who only owns the land.  In fact, that is most likely why you receive a billing and that is trackable for the county to know who then owns the mineral rights.   Whereas, with a landowner just leasing the gas/oil/mineral rights then the lessee most likely does not receive a tax bill also regarding property taxes.

thanks Ireland for posting that.

Permalink Reply by Jim Litwinowicz on December 3, 2011 at 4:44pm

You are the third person that has told me they pay taxes on mineral rights...and all were from Clearfield Co.  Perhaps they have some unique law there.  It may also be possible that rights become taxable when they are bought/sold separately for some monetary amount that can then be used to define the value. Any realtors or attorneys know?

Permalink Reply by Little Cougar on December 4, 2011 at 12:16pm

I have never received a tax bill for my mineral rights in Greene County...just pay the income tax on royalties I receive each year when filing my income tax.  Surely the O&G would know and maybe they are paying that tax when they leased the gas & oil.  In fact, I never heard of this before this discussion.  When I read that post several weeks ago, I think from someone in WVA, I thought how odd...how can you put a value to something that has yet to be mined or if there is even any minerals under your surface???  Maybe its only by county and maybe it has something to do with buying the mineral rights from other properties that the tax is based on.  I have a feeling a can of worms may be opening up...

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on December 4, 2011 at 1:54pm

A BIG CAN OF WORMS!!!

Maybe this State Senator subscribes to the "share the wealth" philosophy......?

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