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.

Views: 8677

▶ Reply to This

Replies to This Discussion

Permalink Reply by time will tell on June 13, 2014 at 3:37am

Stay strong Dianne on your stand .Speak up now or forever hold your peace .

Where is the ground locate ? State County .

In ohio we are offered 6000.00 to 13000.00 per acre depending on

percentage of royalty .

 The thing is they can sell there royalties for more with better terms and

a ending date if unit is not drilled .

Permalink Reply by time will tell on June 13, 2014 at 3:39am

Once this is done you will never have this chance again !!!!

Permalink Reply by Diane Sutherland on June 13, 2014 at 3:50am

Hello, Tuscarawas county, Clay Township section 18 - minerals under parcels:  07-00427.000 (93.179acres) and under 07-00427.003 (10 acres)

Permalink Reply by Finnbear on June 16, 2014 at 3:11am

So, it appears that she wants to GIVE away the rights for $530/acre? This is a foolish move, tripping over hundred dollar bills to grab some pennies. Tell the buyer the price is $5000/acre as a starting negotiating point (which may be too low) and start shopping the acreage around to every mineral rights buyer you can find (the internet is a wonderful thing) if you're dead set on selling out. The problem with selling your mineral rights outright is that once you do so, you lose control over your land and what happens on it. If you willingly sell (or give away as in this case) the minerals, you must allow the purchaser permanent access to extract said minerals. Since you no longer own the minerals, you have exactly ZERO say in who extracts them or how they do it. They could turn your 100 acres into a worthless wasteland taking what is legally and rightfully theirs. Not the position I'd ever want to be in with an asset like 100 acres of land in Ohio. Some banks are now very unwilling to lend money on land that has been stripped of its mineral rights so you could end up with 100 acres that is very hard to sell, should you ever need to, because the pool of buyers is artificially severely reduced to only those who have the cash to make such a large purchase. Talk with some of the auctioneers here in this part of OH who are regularly auctioning mineral rights and see what they think they can sell them for. Just my 2 cents worth.

Permalink Reply by Diane Sutherland on June 16, 2014 at 4:15am

Hello and thank you for your opinion/help. There's more on my original posting, but I'm so new to the forum, I don't know how to find it.

Just to clarify. 3 members of the family (I'm one of the 3) - each owe 33.1/3% of mineral rights only under the 100 acres. My Mom and Uncle sold the land for $60,000.00 in 1996 and retained only the mineral rights. My Uncle has since passed as well as his daughter and she gave me her 1/3. So, the proposed offer is to give each of the 3 of us: $17,666.00 (total $53,000.00). I rejected the offer. My mom and cousin accepted his offer. The complicating factor is that the deed from my mother's 1/3 is written up so that my siblings and I have to sign off as to approving the sale. They've all signed - quite frankly - scared she's going to write them out of the will if they refuse. I haven't signed yet - trying to talk sense into my mother. Sadly, she doesn't care, so I'm signing today (under protest) and her 1/3 will be sold for the $17,666 and my mother's 1/3 will be gone for pennies.

Permalink Reply by Dexter Green on June 16, 2014 at 5:00am

Don't do it.  For the love of God don't do it. 

Permalink Reply by Diane Sutherland on June 16, 2014 at 6:28am

Hello Dexter - I'm holding onto my 33 1/3%, but my mom will write me out of her will if I don't sign. Yep - she's just that vindictive.  My sister doesn't want to rock the boat and said if Mom wants to be stupid and sell, then so be it. My brother said it has nothing to do with him - Mom can sell whatever she wants and he already signed off. I can't save her from herself. I'm putting all this in writing so all have a copy, so it can never be said that I didn't attempt to explain and document the value of this asset.

Permalink Reply by Dexter Green on June 16, 2014 at 6:42am

So all three interest holders have to sign off on a sale, but each interest holder may still retain their share while allowing someone else to sell theirs?  Am I getting that right?

Permalink Reply by Diane Sutherland on June 16, 2014 at 7:06am

Hello Dexter - Sorry for the confusion. Each of our thirds (cousin, mom and me) are independently deeded to us individually; however, the complicating factor is that my mom's 1/3 is in an estate which includes me and my siblings. According to the Tuscarawas title company (they're handing the closing docs), there is a law that says the other members of the estate as well as their spouses have to sign off (grant permission) for the asset to be sold from the estate.

Permalink Reply by Dexter Green on June 16, 2014 at 7:48am

Diane,

Do you have an attorney who represents you in this matter?  Don't take the word of the title company, pay a lawyer a few hundred dollars to look at everything and make sure you're doing this properly and limiting any exposure for yourself.  Just my advice.

Permalink Reply by Diane Sutherland on June 16, 2014 at 7:59am

Hello Dexter, Thank you. No, I don't. Can you recommend one?

Permalink Reply by Finnbear on June 16, 2014 at 5:07am

Why the RUSH to sell so quickly?

STOP!!!!

Don't sign anything. Call Kaufman Auctions and Kiko Auctions TODAY and at least get a second opinion before GIVING this away. Google "mineral rights auctions Ohio" and start reading and making phone calls RIGHT NOW.

Why the huge rush? Does your mother need the money tomorrow for bail money or medical care? If medical, $17k won't go very far - one can easily burn through that in a couple days in a hospital. Could she wait a month or so for a whole lot more?

STOP!

THINK!

RESEARCH!

MAKE PHONE CALLS!

DO IT NOW!

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service