IN THE INTEREST OF FULL DISCLOSURE: The subject of minerals is very complicated. I am giving you a layman’s explanation of how minerals work in real estate transactions. If you ever enter into a real estate transaction where the subject of minerals comes up and you feel that you need some clarification, contact an attorney who is knowledgeable regarding the subject of minerals. Most real estate licensees have a nominal grasp of the subject of minerals.
Back in the very early ‘90s I was in Dick Stone’s dad’s office to discuss a real estate issue. While I was waiting to talk with Richard Stone, I picked up a law book that just happened to address the issue of minerals. What a fabulous article! In 1973, Texas Eastman Company leased some land in the Antioch Community, which is about seven miles southwest of Jacksonville, for the purpose of mining iron ore. Many of you may know that there are several areas in Cherokee County where there is iron ore. The city of Rusk actually had an iron foundry called New Birmingham, at the turn of the 20th Century. Most of the iron ore that is mined in the county, today, is for county road gravel. Anyway, Texas Eastman, instead of mining iron ore, began to drill for oil. When the landlord found out about this he told the tenant that he did not have permission to explore for oil. This occurrence turned into a major lawsuit that went all the way to the state Supreme Court. The Supreme Court ruled in favor of the landlord. Furthermore, out of this decision, came the definition of minerals that still prevails to this day. Under Texas law, whenever the word “minerals” is used, it refers to minerals that are extracted from the ground by drilling. This includes minerals such as oil, gas, sulphur....and even uranium. If an individual wishes to mine for iron, coal, lignite, gravel, sand, shale, etc., the mineral has to be given a name, such as lignite. All of these previously mentioned minerals are considered to be part of what we refer to as the “surface estate”. If I purchase a property from you and you want to keep the coal, you have to use the word coal. If I purchase a property from you and you want to retain the oil, gas, sulphur or uranium, you only have to use the word minerals, and that will only refer to what you can get by drilling; it includes none of the surface estate, which, if I am not mistaken, goes down 200 feet. If you ever decide to buy property where the owner wants to keep part of the surface estate, you should probably walk away from the deal, because he could come onto your property and start mining. By the way there is a lot of coal reservations east of New Summerfield. There are open pit mines close to the city of Henderson.
If you buy property where the seller retains the minerals, there are several things to consider. The major concern is whether the seller can come onto the property to drill for oil. It is possible to get the seller to agree to no rights of ingress or egress. If he agrees to that, he is not allowed to come onto the land. With the advent of directional drilling this may not be a problem because the oil rig can be put on an adjacent property. Keep in mind that, if the seller conveys all of the minerals he owns, he may not own all of them. There could very well be other individuals who reserved the minerals in prior sales and who did not relinquish their rights to ingress and egress. They could still come onto your newly acquired property and drill. If you are purchasing property and you are concerned about that possibility, the title company who examined the title to your property could investigate to see if there are prior owners who still have that right. You might have to pay the title company to do further research. There are often sales that take place where the seller retains any minerals he owns but where it is no big deal because there will never be any drilling in the area because there is little or no likelihood that anyone will ever drill for minerals in that area. I own about one eighth of the minerals at my home and, in the 35 years that I’ve owned the home, I’ve only leased my property once for minerals. A rig went up about a half mile from my home, in the ‘80s, and it was a dry hole. Haven’t seen another rig since. That should tell you something.