Mineral Rights are Real Estate!
Ownership of mineral rights (more properly “mineral interest”) is an estate in real property. Technically it is known as a mineral estate, although often referred to as mineral rights. Mineral estates are sometimes severed (or sold) from the surface estate. Such severance is accomplished with a conveyance or reservation of these rights. This conveyance or reservation includes minerals or substances considered minerals. Mineral rights include hydrocarbon resources such as oil and natural gas, which are technically not minerals, because a mineral is formally a naturally occurring crystalline “solid”. But nonetheless, legal regimes typically lump them together under this one term. Such a conveyance or reservation includes royalties, bonuses and rentals. In the absence of such a conveyance, the surface owner retains the rights.
So with that said….Many landowners in several Ohio counties receive letters from companies and investors trying to educate us as to why landowners should sell our mineral rights. They make some great points and for some folks, It may be the way to go. As a real estate professional specializing in land sales, I can tell you that we have brokered minerals for folks in several SE Ohio counties and for some of them it just made sense for them to sell. Everyone should understand that the sale of Mineral Rights is considered the sale of Real Estate in Ohio. If you are thinking of selling your mineral rights you should market them correctly. If someone sends you a letter wanting to purchase them then maybe someone else wants them as well. Find a good LICENSED real estate professional that knows how to market what you have. I don’t know many people that would sell their house (also real estate) to the 1st three people that send them letters wishing to purchase it. Also be aware that many of the so called “mineral brokers” or “mineral buyers” are just people that buy and resell your mineral rights. Why leave that cash on the table? Many of those “middle men” get a commission from the actual buyer of the minerals when they bring them deals. Its actually illegal in the State of Ohio to receive a commission from the sale of real estate without a real estate license. Be cautious of the LOI (letter of intent) commonly used by the mineral buyer. This document can sometimes allow the mineral buyer tie up your real estate for up to 120 days while they “run title” to verify that you actually own what you think you own. While this is necessary for the purchase, quite often this is the time these folks are calling around to find a buyer to flip your minerals to. The sale of your real estate should involve a real estate purchase contract. The buyer should also be willing to provide you with earnest money (typically $1000-$5000) up front but contingent upon the verification of your mineral ownership. You should also have YOUR attorney review your deal prior to selling. There are lots of good attorneys out there that you can contact. Not only are we licensed land brokers we are also land owners. We have been thru the process of leasing and also have sold some of our own mineral rights because at the time it was the right thing for us to do. Just keep in mind, the sale of your mineral rights is the sale of real estate no different than selling your home.
If its right for you to sell your mineral rights then be cautious and get the most for them that you can. You most likely worked your tail off to get them in the first place!
Feel free to give me a call anytime to discuss your options.
-Brian Bauer (614) 949-6764Click here to return to our blog