Land Buying Do's & Don'ts...

[Gale Hawkins]

We had a sales contract to purchase a farm which stated that we would have all mineral rights to the property. At closing I read the newly prepared deed and found that one company owned coal rights, a second company owned gas rights, and a third company owned oil rights. Finally, there was a restriction on timber rights also. This was all a complete surprise!

We did not sign the closing documents and said these issues needed to be resolved to our satisfaction. It took about 3 weeks and we obtained releases from all parties regarding mineral rights and the timber restriction removed. After everything was straightened out we did in fact close on the property and have had no problems at all. We did elect to purchase title insurance for the property.

I suggest you use a good real estate attorney to look after your interests.

That was a good job of protecting your future assets and reminds us all to read before we sign anything.

 

[buck12]

Beware of unrecorded easements. If there are trails on the property, one of your neighbors may have an unrecorded easement - which, under the right set of facts - is just as enforceable as a recorded easement.

Good luck!

Please explain more as to unrecorded easements. I have not heard of this before and would like to know more because one day soon I hope to purchase more land.

 

[Gale Hawkins]

What is an unrecorded easement?

 

[SBB]

The web site that Gale Hawkins linked to is a good explanation of an unrecorded easement. It will vary state to state, but the easiest example is someone who drives over a neighbor's property over a long period of time can create the legal right to continue to do that. That legal right won't appear in a title search and it is not extinguished just because the neighbor's property is sold. If this is something that you are concerned about before you buy property, the first thing you should do is just look to see if it appears anyone is making use of the property you want to buy and/or ask the seller if that is happening. Then compare what you see/hear with what's recorded on the title. In my part of the country (and I suspect it is like this in most places) standard title insurance won't protect you from an unrecorded easement, but you can purchase an "extended" title policy that will. You'll most likely need to get a survey done to purchase an extended policy.

 

[R_Walter]

If the mineral rights don't convey and you are located on a potential oil&gas reservoir, then you could have drilling rigs and derricks on your property w/o any recourse.

 

[jayste]

If the mineral rights don't convey and you are located on a potential oil&gas reservoir, then you could have drilling rigs and derricks on your property w/o any recourse.

Or they could be next door drilling under you.... Which I guess could be good as to not have the surface problems.

 

[sweettractors]

Well fella's,

After further research, I'm please to find that: There are no restrictions, easements, utility problems, access issues, or privacy issues.

A few positives learn are that the neighbors are good people (only 3 families). The property is on a dead end street. It borders a super fertile bottom, with 500 acres of land locked government owned public land (locked by the 3 families & the proposed property). This gov land was bought up to conserve the wetlands in this bottom. The property & gov land have excellent deer, duck & turkey hunting (important to me).

Now for the negatives found. The price is at the upper level of what I am willing to spend. Also, the mineral rights are tied up for the next ten years. I was prepared for this though because every single family in the Parish in which I live has their minerals leased due to the haynesville shale gas field which was found 3 years ago. Its the largest natural gas discovery in this nation's history. Due to this, land is becoming harder & harder to find, because families are getting rediculous royalty checks & not needed to sell land. So I feel like I need to make it happen now or the opportunity might not arise for a long, long time.

Thanks for all the help fella's, JY.

On the positive side, Is there royalty payment to come to you yearly on the gas lease rights. If they drill a well during the lease period, you can probably get free gas in your home and shop out of the deal. The standard gas lease here in Ky gives the land owner 1/8 share of what is produced. This could be a chunk of change for you in the future. We have 14 gas wells on our property and it is not that big a deal to work around them with our implements, The state usually makes them put up a substantial bond for any possible property damage Ken Sweet

 

[MarkV]

I was also wondering if they just had the mineral rights or the right to come do test wells and set up a full production well on the land. That would make a big difference in the aesthetics of my place and how I felt about it.

MarkV

 

[R_Walter]

On the positive side, Is there royalty payment to come to you yearly on the gas lease rights. If they drill a well during the lease period, you can probably get free gas in your home and shop out of the deal. The standard gas lease here in Ky gives the land owner 1/8 share of what is produced. This could be a chunk of change for you in the future. We have 14 gas wells on our property and it is not that big a deal to work around them with our implements, The state usually makes them put up a substantial bond for any possible property damage Ken Sweet

Not if, as he said, the mineral rights do NOT convey!!!

 

[sweettractors]

Not if, as he said, the mineral rights do NOT convey!!!

I just recently bought a 32 acre tract and the previous owners lease conveyed to me. This tract has a monster gas well on it in the Black Shale formation. Ken Sweet

 

[R_Walter]

I just recently bought a 32 acre tract and the previous owners lease conveyed to me. This tract has a monster gas well on it in the Black Shale formation. Ken Sweet

The OP said the mineral rights don't convey to him. I only assume he knows of what he speaks. Do you know more about his situation than he?

 

[EddieWalker]

There are differnet types and levles of mineral rights. It gets complicated, and sometimes the owners of the land have them and either don't realize it, or want to keep what they have. I always put in the contract that I want he owers mineral rights, and when it goes through title, they are transfered to me. It's how I have what I have on my land.

Also there is surface rights to get to the minerals below. It might not apply, but if it does, you can refuse any surface access to the minerals below, but still receive royalties if your land falls into the block of other properties that are included if they drill near you.

This is what I've done and have been able to make a buck when they are drilling close by, but not on my land. I refuse to give access on my land, but still get something for the lease of my mineral rights, and something if they find anything. So far, nothing profitable has been found, so it's not very likely that I'll make very much from what I have.

What's important is that I can keep them off of my land, and if you can figure out how to do that even if you don't have mineral rights, you might want to work that into the deal.

Good luck,
Eddie

 

[Soundguy]

use a lawyer.. get title insurance. sure.. adds a lil tot he cost.. but in the long run.. it's a pittance. ( remember the title ins the lender gets don't protect you.. get a buyers policy ).. lawyer for a routine land purchase won't be much either.. probably 150$ on top of title search and ins fees..e tc. I'd use a lawyer even if there was a broker or sales agent involved...

soundguy

 

[ThrowinDirt]

Hey fella's,

To clarify, the mineral rights do not transfer to me, only after ten years & no production in the section. In an area like the one i'm in, everyone is highly aware of mineral rights & with certain people getting 50,000 dollars a month in royalty checks, no one is willing to just transfer the minerals. Heck, when all the oil companys were going around leasing all the acerage up I got 14,000 for the 1.2 acre lot my home currently sits on. Its ridiculous and has caused it to be extremely hard to find people willing to sell there land, much less transfer mineral rights. That's why i'm really trying to close the deal on this thing. I'm fortunate that all of you have helped out with alot of things that I wouldn't have thought of. Thanks, JY.

 

[ThrowinDirt]

We have 14 gas wells on our property and it is not that big a deal to work around them with our implements, The state usually makes them put up a substantial bond for any possible property damage Ken Sweet

I make my living working on Natural gas wells & have absolutely no desire to have a location in my backyard, free gas or not. I spend alot of time looking at those things. Don't want it to be 24/7. That's why surface rights were extremely important to me. I was informed that if the current owner had sold off the surface rights to an oil company prior to my purchasing the land then it would trump anything that was stated in our contract & I would have zero conttrol over them putting a drilling rig in my backyard.

 

[txdon]

Eddie, what do you put in the contract?
"I always put in the contract that I want he owers mineral rights"

 

[CubMon]

Just make sure it is not near a town named RedBud and don't buy or feed any local dogs.

Forget a local lawyer, bring one with gray hair with you and set him up for a few days to delve deeply onto that land deal for you.

Bill C.

 

[EddieWalker]

Don,

Just add to the contract that you want all owned mineral rights. When I've done this, I was told beforehand that they owner did not own any mineral rights. I put it in there anyway and in every case, it didn't matter except one time. That's how I ended up with a portion of the mineral rights to my land "AND" control of the surface rights. I didn't ask for control of the sufrace rights, but it came with ownership of the mineral rights that I was granted when buying the land. Kind of a bonus that I would not have received if I had not insisted on asking for the mineral rights when I was told the seller didn't have them.

That was a game. The seller knew he had them, but he was playing like he didn't. My realtor was shocked at what happened when we got to signing docs for title, and the seller played it off like he didn't know and didn't care. Later, both of our realtors got together and the truth came out. He didn't want to give them to me, but he was in big debt and had to sell the land. My low ball bid was an insult to him, but it was the only offer that he had received and he was in a panic to sell.

I got lucky, but it's also somehting that I made happen because I had nothing to lose and included something in the contract that nobody thought I would ask for.

Eddie

 

[txdon]

Eddie, very good information. The mineral rights are so often overlooked by anxious buyers, a decision that is regretted latter. I have always wondered why the mineral right owners do not have some obligation to a pay percentage of the property tax. ??

 

[crazyal]

Will this land need a drilled well or does it have town water? I ask because drilling for gas can have an effect on your well, even if it's not on your property. To get gas from shale they use a process called Hydrofracturing (think I got it right). They drill a hole then force liquids down it at very high pressures to open up the rocks to let the gas come out.

They also do this to water wells that have low yields. So depending on what chemicals they use it may or may not be a problem but they can leach into the water system. Also if they frack an area they may open up a different path for the water that was going to your well leaving you dry. You should read up a little then talk to some of the locals.