mineral rights ?

Discussion in 'Land Sale - Buy - Lease' started by SCOE, Feb 5, 2004.


  1. looking to buy some property and the seller wants to keep the mineral rights. what exactly are "mineral rights" and is it a big deal not to have those rights?

    thanks
    scoe
     

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  2. The way I understand it is- The guy who holds the mineral rights could sell a lease to an oil company. They could then come in and drill an oil well on your property, but you would not get the money. Thats an example of my understanding, maybe someone else can guide you further.
     

  3. In general Orion is correct. I would NEVER buy land without the mineral rights. You could not stop an oil or gas well from going up, the operators have free access to the land including heavy equipment, 24 hour operation of diesel generators, etc.

    I am not familiar with Michigan law but I know out West a lot of people have been burned badly in exactly this way. Spent a fortune building their dream getaway only to have oil / mining company come in and set up shop in the front yard. Hard to believe but true - do NOT buy until you have a Michigan property rights attorney advise you.
     
  4. When we bought the 5 acres our house sits on, back in 1983, I asked about the mineral rights. I was told by the real estate agent that in Michigan anything less than 40 acres, you don't have access to the mineral rights.
     
  5. Most homeowners (small pieces of land)dont own mineral rights. Large tracks of land are where you would make sure you get them. Sometimes the current owner selling the land doesnt own the mineral rights.
     
  6. thanks for the info. we are not going to buty the property without the mineral rights.
     
  7. I researched this a little further and discovered a couple things. Most all of the northern Michigan land that was originally granted from the US government was granted to timber companies. When the timber was all gone and they sold the property they retained the mineral rights. But, if there was no lease extenision on the mineral rights or there was no activity to remove minerals, then the rights were reverted to the current owners. An abstract at the courthouse would possibly show who the mineral rights belonged to. I know on my property there where a couple different gas companies that had mineral rights at different times. Those leases have since expired and the rights are mine. You may want to possibly check to see if it is a lease that a company owns and when that lease will expire. Also, I bought my property on land contract and the sellers retained mineral rights until I had paid it off. There was a clause in the buy-sell agreement that neither party could remove timber or minerals prior to the property being paid off. This was a good clause for both parties. Check further before you give up on the piece of property. Its confusing, but keep asking questions. I think the abstract at the county might be your best bet. Good luck
     
  8. I wouldn't worry about it much. I think you are protected by law over a oil rig being too close to your house. I wouldn't pass on a good deal for land, it might double in a year or two after you turn it down.
     
  9. Mineral rights, and what can be done with them, is a very complicated issue that is highly variable from one area to another.

    It's a very smart buyer who looks into the mineral rights issue on a piece of property before he buys it.

    The down side of that is that in many cases, there's nothing the seller can do about the mineral rights, because he doesn't own them, either. And like Mukwa says, prices do continue to rise with or without the mineral rights.

    In much of northern lower Michigan, the mineral rights to a great deal of both private and public lands are owned by the state of Michigan. Millions of acres of land reverted back to the state when taxes weren't paid by the homesteader, including a number of timber companies, and the land eventually went back into state ownership. After World War II, the state began selling that land back to the private sector, but retained the mineral rights.

    Too many people didn't realize that until the state began leasing the rights on that property to the gas and oil interests in the 80's.

    So, the lesson to be learned is, check into who owns the mineral rights on any property you want to buy THOROUGHLY before you buy it, and try to buy them back. The state is not selling any mineral rights at all, although legislation has been written several times to allow that. But, since the gas and oil leases and the royalties from them provide such a huge source of revenue to the state, those bills have all died before even being put to committee.

    There are a number of restrictions on each lease, and again, that varies from lease to lease. Normally, you can't place a well within so many feet, usually 350, of an occupied dwelling or body of water, and wells can only be placed every 40 acres, on some leases, every 80 acres. Each lease is different.

    If there is any salvation to this, it is that a portion of the royalties realized by the state from oil and gas leases do go to a very good fund called the Michigan Natural Resources Trust Fund, which has purchased many thousands of acres of land in Michigan for the public's enjoyment and recreation.

    And that that gas and oil does heat our homes and fuel our vehicles.

    Make sure you understand all the possibilities in your area thoroughly before purchasing a piece of property, but don't let it stop you from buying a piece of property-just don't expect to be able to buy the mineral rights.
     
  10. This was a very educational thread, thank's to all who contributed.
     
  11. When I bought my 40 acres and house I only got 1/2 the mineral rights. Half had been sold to an oil company to get them to drill an exploitory well on the property. It was a dry hole so nothing came of it. The oil company retained 1/2 the rights.

    A few years after I had bought the property we had an oil boom in the area. When a lease agent came to lease the property I told him I was interested but I wanted him to research the other 1/2 the rights.

    He came back the next night laughing. The rights had been inherited by a local attorneys wife. Some of the retained rights have to have a retainer filed inorder to keep the rights. The attorney had not filed the retainer to the letter of the law and had lost the rights on a lot of properties. It made big $$$ in my pocket book.

    This is something to have checked if you are buying a piece of property that has had the rights sold off.
     
  12. You have touched on one a many things to consider when buying property. I'm in the process of looking for property in the eastern upper. Does anyone know or would suggest a lawyer in is area. With "for sale buy owner" possibilties, this is a must. Would like to use someone in the area that knows about property purchasing. All we want is the start of our "Making Memories" property, and not a nightmare!!!!
    Thanks Guys.....
     
  13. On EUP properties that I have inquired on, almost all, the State Of Michigan owns half of the rights including half of mine.

    The only mineral that I know of being mined in the EUP is limestone, sand and gravel. Gravel is a high dollar item.

    I would not be too concerned about it just aware of it. Remember to inquire about splittable rights, timber rights, aboriginal rights and hunting rights.

    My best advise is consider it in your offer, have an attorney look over your closing documents and have your closing at a title company.
     
  14. Thanks Luv2hunteup
    Maybe worrying to much
    Can you suggest any lawyers in eup???
    Want to make sure I won't miss anything
    Thanks.......
     
  15. Contact Veum Law office in the Soo at: (906) 635-1513.

    I have used them several times to handle real estate transactions. They are very thorough, and very reasonable in price.
     

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