Make Sure You Own the Property Rights as Well as the Land
When you buy land in Central Texas, you are not necessarily buying the rights to the minerals, water and other resources located on or below that property. This may seem counterintuitive, but that’s the way things are done in Texas. After you have put an offer on a property and had it accepted, the title company will search all public records associated with your property to determine which rights you have purchased in addition to the land. If you have any concerns about ownership rights of the resources on your property, you should consult an attorney who is a rural real estate specialist.
This is the basic standard of ownership in which you own the land and all attendant resources on the surface, above and below ground. This includes water, oil, natural gas and/or any minerals.
What is a "Mineral"?
The word mineral generally refers to ores of metals, coal, oil, natural gas, gemstones, dimension stone, construction aggregate, salt and other materials extracted from the ground.
Surface Rights vs. Mineral Rights
If you buy a property which has oil or minerals beneath the surface, you need to be sure that when the title transfers to you, it includes ownership of the property, all buildings and its underground resources. It is possible that the previous owner sold the mineral rights to a third party who has the authority to harvest the minerals and sell them. This situation should be revealed in the title search; you need to decide if it is an acceptable condition of your purchase.
Selling Your Mineral Rights
You may choose to sell the mineral rights to your property. When you do so, be aware that you are giving the owner of the rights carte blanche to enter your property and harvest the minerals, oil or natural gas. You should weigh the inconvenience of having work done on your property against the potential profits from selling the rights. I strongly recommend that you have an attorney negotiate any contract in which you are selling or transferring mineral rights. A specialist in the field can add clauses to the contract which can protect you and your property.
Leasing Your Mineral Rights
A lease is an agreement that gives a company the right to enter your property, conduct tests and determine if suitable minerals exist there. To acquire this right, the company will pay you an amount of money to work on the property for a specific duration of time. If the company finds minerals, it may proceed to excavate them. If the mining company does not start production before the lease expires, then all rights to the property and the minerals return to you, the property owner.
When minerals are produced from a leased property, the owner is usually paid a share of the production income, called a royalty payment. The amount of the payment will be specified in the lease agreement. It can be a fixed amount per ton of minerals produced or a percentage of the production value. A mineral rights attorney should review any lease agreement before you sign it.
If you have rivers, lakes, streams or wells on your property, you must find out whether you have the right to access these water sources. In Texas, water rights do not necessarily relate to the ownership of the water source, but instead to your right to reasonable use of the water. During the buying process, the title company will search the public records of your property to determine your access and use rights.
Very few, if any, rural Texas properties are connected to a municipal water and sewer system. Water sources in rural areas vary and may include
Water Co-op Many rural areas have public water co-ops which provide drinking water.
Rivers/Lakes/Streams If you have any of these on your property, you must find out whether you have the rights to use them as water sources. Texas ranch property can be sold separately from its water rights. During the buying process, the title company will search the public records of your property to determine your access and use rights.
I will help you determine the water source for any Central Texas land you are interested in buying.
Learn More About Private Water Wells
Three Critical Steps You Must Take to Protect Your Mineral Rights.
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