Mineral Interest

A mineral interest (also known as a mineral right or mineral estate) is the right to exploit an area for the minerals it harbors. Mineral rights can be separate from property ownership.

In general, the owner of property has the right to build tall structures into the sky, the right to enjoy the land surface and the right to exploit any minerals in the ground under the property. English common law, which also applies in the United States, says that anything captured of value on the property belongs to the property owner. In England, if a fox or valuable animal was caught while running across a property, the animal belonged to the owner of that property. This is called the rule of capture.

The rule of capture also applies to minerals under the property's surface. If oil and gas, regardless of the location where it was originally formed, seeps under a property, the owner of the property has the right to capture and sell that oil and gas from wells drilled on the property.

The mineral estate of the land includes all organic and inorganic substances that form a part of the soil. Exceptions include sand, gravel, limestone, and subsurface water—which are normally considered part of the surface estate.

The reason why the law has developed these details is that the owner of a property has the right to sever the surface estate of the property from the mineral estate of the property. For example, the owner can convey or sell the surface rights to one person (such as a farmer) and the mineral rights to a different person, such as a mining company, and can even further sell only part of each. The right to sell these property rights separately makes the land more valuable, because an owner might be better suited to gain value from one set of rights (a farmer on the surface) than the other (the mining company working under the surface).

In the United States, the mineral estate of most properties were separated from the surface estate during the 1920s when the rush to develop oil and gas peaked. So, all land records must be searched back to that era to find out who actually owns the mineral rights to a particular property. However, with the advent of fracking, the drilling of oil and gas wells has spread to regions of the nation which had never been considered for drilling in the past. So, property owners are suddenly confronted with offers to lease the mineral interests under their land.

Major elements[edit]

The five elements of a mineral right are:

1. the right to use as much of the surface as is reasonably necessary to access the minerals,
2. the right to further convey rights,
3. the right to receive bonus consideration,
4. the right to receive delay rentals^[1] and
5. the right to receive royalties.^[2]

The owner of a mineral interest may separately convey any or all of the above-listed interests. In addition, the right to extract different minerals can be conveyed to different purchasers. For example, the oil and gas interests could be sold to one owner while the right to mine coal or gold could be sold to a different owner. The nature of the mineral rights being created are described in the document that first conveys the mineral interest separate from the general property estate.

Some states have laws to reunite the mineral interest with the surface interest if the mineral interest owner fails to use his rights for a state period of years. For example, in Michigan if the mineral interest is not active for 20 years, it merges with the current surface interest.^[3]

References[edit]

1. ↑ Delay rental. Retrieved on March 18, 2014.
2. ↑ Mineral interest. Retrieved on March 18, 2014.
3. ↑ MCL Section 554.291