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 8, 2011 at 8:16am

Hi Dennis and everyone...

interesting the use of the word 'reserved'....as I am learning that even when a seller of surface property retains (reserves) the mineral rights that not all states will honor that for a 'forever' time period.   In Louisiana the mineral rights cannot be separated from the surface rights.  So each state has their own set of rules regarding 'reserving' mineral rights and some for how long.

 http://www.ehow.com/how_6853060_reserve-mineral-rights.html

http://www.ehow.com/list_6832049_ohio_s-sale-land-mineral-rights.html

Perhaps this proposed SB445 is also trying to maneuver that into existance for Pa. also...now there is good and bad involved in such...so it really needs further defined before passing into law.

 

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 8, 2011 at 8:39am

I also posted this in the other discussion involving the SB445...it is important so I will pst here also:

and a thankfulness to you Dennis...this is what I have been trying to say...even as far as sending an email to Senator Yaw and receiving a form letter back.    They should not present the bill as worded if the people think that it is only for old LEASES (leases are like renting...not a deed of sale).   For the bill is catering to subsurface ownership which is not leasing.

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


You see that the SB445 is referring (comparing) to the present law in Pa regarding adverse possession in receiving property if it meants criteria for using property owned by another.

http://answers.yahoo.com/question/index?qid=20090208224037AAECdHE

http://www.gregartim.com/adversepossession.htm

In using that in the SB445 then the state of Pa is actually stating that there is a way to revert the ownership of mineral deed back to the present owner of the surface land at the end of 21 years if they meet the criteria to do such...what is really the criteria?

as stated in the above post of the copy of the form letter sent to me from Sen. Yaw..

The goal of this legislation was to streamline the process for surface owners to gain access to the subsurface rights in the event that no party lays claim to the subsurface rights. 

see he isn't talking about mineral LEASE holders....just subsurface owners.

Permalink Reply by Jim Litwinowicz on December 8, 2011 at 9:34am

" 21 years of nonuse "  How is non-use defined?  Is that no extraction of minerals? Or does that mean no royalties being paid? What about house gas usage? Or does that mean no leasing activity?  Does selling the rights, paying taxes on them, placing them in trust, or bequeathing them to your heirs count? Or dividing the interest?

Permalink Reply by Larry Gander on December 8, 2011 at 10:16am

EXACTLY...HOW CAN WE OWN & PAY TAX ON THIS OIL,GAS & MINERAL RIGHT AS A LONG TERM INVESTMENT AND THEN SAY WE DON'T OWN IT AFTER 21 YEARS? [ or any other length of time ]. I DON'T BELIEVE THE STATE OR ANY ONE ELSE CAN SAY YOU DON'T OWN SOMETHING THAT YOU LEGALLY PURCHASED. WHETHER YOU HAVE CHOSEN TO UTILIZE ITS VALUE WITHIN THAT OR ANY OTHER TIME FRAME. /LG

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 8, 2011 at 2:51pm

I think they are saying 'abandoned'...as in no taxes paid, no drilling or no attempt to activate an effort to produce....yet they are not clear about this in sentences of the bill being presented unless that SB445 is just a brief intro of the bill on Senator Yew's website.  But again, they are not talking about old leases that have not been worked ...they are using terminology to refer to subsurface OWNER>

I gave an example further up these posts...about a grandmother who has had a mineral deed for about 50 years and then passes away and leaves it to her grandchildren who do not even know about the Marcellus.   They rightfully own the mineral deed ...according to this proposed SB445...they could be subject to the 21 years...unless Senator Yaw is saying that if the bill passes then the 21 years would start??  in that case how is that helping those now that would like to purchase back the subsurface rights...and who would really sell their mineral deed if they knew they could also do a lease for several thousand per acre?

Permalink Reply by Larry Gander on December 9, 2011 at 3:55am

TO ALL,   SB445 is a unneeded bill.......  For example: In WV.......

If an owner of Fee Simple, [surface & sub-surface] OR surface only, OR OGM, [sub-surface] rights does not pay TAXES owed by the end of the following year then that ownership right is put up for sale to the highest bidder at a advertised Courthouse public Sheriff sale. The purchaser [who to win the bid must pay the back TAX plus a premium] must then research the Courthouse property records and notify ALL owners of record that they have ONE year to redeem their property/OGM rights by reimbursing the winning bidder the price of his bid AND his REASONABLE cost of research and notification.Only then [at the end of that year]  may he take legal ownership.

Can an heir or any one be missed by this system? Yes, but it seems far superior to any other that I've heard on these pages.......LG

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 9, 2011 at 7:09am

From what I can see so far about this...when one has only a 'lease' with a Lessee whether known or unknown (based on how long and when and who)..the owner of the property is still paying taxes on both surface and subsurface in their property tax bill as the subsurface rights have NOT been separated from the main property of the surface...only leased.

Therefore I think they need to work on these abandoned leases or even leases that are unreasonable as the property owner is continuing to pay the taxes on both the surface and the subsurface and by all rights is still the owner of both.  And the proposed SB445 isn't identifying that problem.

This con game that the oil companies have been doing to tie up leases for a primary term and then find ways to hold the lease indefinitely with those of us that are not that educated in the oil/gas business...and they do not pay taxes as the Landowner continues paying the taxes...there should be a reasonable time frame where they cannot continue in leasing as they have been.   That kind of legislation I would support...but the SB445 isn't solving the problem that is present for so many that cannot use their subsurface rights in a new lease because those rights (not sale...lease) are tied up in a who knows where situation.

Permalink Reply by Little Cougar on December 9, 2011 at 1:18pm

I think you and others that feel as you do are missing the point.  Why should anyone have to give their mineral rights that they rightfully own to the surface owner after a certain period of time just because they have not leased those minerals, oil and gas to someone in the last 21 years.  Think about it, the reason most people keep their minerals when they sell the surface is because they are in an area that has proven minerals/oil and gas beneath the surface or because they have producing wells in those lands.  If someone had died and their long lost heirs have not been informed, then it seems that the state or county that these rights reside in should do all they can to find the rightful heirs. The O&G companies seem to have no problem finding them.  It seems that this bill has come into being just because of the possible wealth that might be had because of the Marcellus and Utica shales and the possible gas/oil that might be extracted from this land.  As to the taxes...if your county/state requires a mineral right owner to pay taxes on the mineral rights, I am sure the mineral right owners are paying their taxes except in extreme cases.  And the surface owners are definitely not paying the taxes on those mineral rights...so what is the beef? The surface owners are only paying property taxes...nothing more. So if they want the mineral rights, they can pay the taxes on them too...and possibly they may never see a lease let alone a royalty or bonus payment for those rights.  Stop the beefing and let well enough alone.  That's all we need is more damn laws.  Tell this Senator Yaw to work on getting to work on putting people back to work, stop favoring big business, the banks and Wall Street and let the little mineral right owners alone.  It is so obvious that some constituent has come crying on his shoulder with a promise that if he can get them the mineral rights, they will contribute big time to his campaign.

Permalink Reply by Jim Litwinowicz on December 10, 2011 at 10:00am

"Abandoned" historically means rights to which no rightful owner can be located.  It does not mean rights where no attempt to utilize the minerals/O&G has been attempted or are sitting idle. But that needs to be defined by law.

If taxes, where applicable, are levied and they are seriously past do, that may trigger an abandonment declaration. Companies with O&G ownership  that have been dissolved or went bankrupt and failure to locate heirs or prior owners are other examples of what I would consider justifying declaring rights as abandoned.

But there needs to be strict guidelines on what is actually considered abandoned.  And what efforts are required to research and notify possible rights owners should be codified. Just placing an add in the local legal notices should not suffice.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 10, 2011 at 1:05pm

Hi Jim, this is what the bill that is proposed says about "what is actually considered abandoned"

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.

 

Permalink Reply by Jim Litwinowicz on December 10, 2011 at 4:31pm

VG; thats a pretty poorly definition of abandonment.  By that definition, then any of the rights to both the Marcellus and the Utica that had been reserved more than 21 years ago would be considered abandoned since they were not being utilized because the technology didn't exist. Its kinda crazy to consider mineral abandoned when there is no practical method to extract them.

Look for the coal companies to set this guy straight.  They would lose huge chunks of mineral rights if this passes.  Its my guess that he has no intent on getting this through but is merely doing this to please some constituents that have complained loudly and thus assure his re-election.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 10, 2011 at 8:37am

Little Cougar...I don't even have a mineral deed that this proposed legislation would affect...but have spent the time trying to let others here know and Senator Yaw that the Senate Bill 455 proposed is not clearly defined and could hurt  some by them losing their right to their mineral deed depending on the wording of the senate bill.

I just could see why someone would want hold of their interests as owner of the subsurface if there is an 'abandoned lease' but that isn't what that senate bill is proposing (the way I see it).  For some of the early "leases" were written poorly for the landowner and subsequent landowners and I could see why they would want some legislation to regain the use of the subsurface again.     But the senate bill isn't properly worded as a return to present owner because of a 'abandoned LEASE'.

But I have learned from this discussion to be very careful when selling or leasing mineral rights as to how the contract is worded and the time of lease if  a lease.

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