Whether you have interest in selling your land or have been approached by a buyer, you should always know exactly what’s included in the transaction. When you own land, there are two levels of ownership that you may possess: surface rights and mineral rights. Do you know the difference?
When you moved into your home, it was obvious that the physical structures — house, garage, barn, storage shed and yard were included. But, just how deep down into the soil does your actual ownership stretch? Sure, you can plant a garden or trees, but when it comes to drilling for oil and gas deep below your property, do you know who owns that space? It’s probably not you.
In some states where mineral deposits are plentiful, including Colorado, Louisiana, New Mexico, Oklahoma, Pennsylvania and Texas, a property owner’s rights are severed, or split into two distinct zones. This means you may own what’s on the surface of the land, but not what’s beneath the topsoil.
Surface rights specifically refer to the ownership of the surface of the land. This includes dwellings, buildings, the right to till the land for crops and even the ability to dig into the land to bury underground storage tanks, such as wells or septic systems.
Land that is owned under a surface rights contract may be sold, transferred or manipulated by the owner, within the guidelines of the governing city or county.
However, a person with surface rights to land cannot lease or sell their land to an oil or gas company for exploration and extraction purposes. This is because the owner doesn’t have legal ownership over the mineral deposits below their property.
Dig below the surface of a property and you’ll reach the zone where mineral rights take effect. In the United States, those with mineral rights ownership of land have the legal ability to explore, extract and sell naturally occurring deposits found beneath the land surface.
In addition to oil and gas, mineral rights typically allow landowners to also excavate for gold, silver, coal, copper, iron, uranium and scandium.
Like surface rights, mineral rights can be bought, leased and sold in accordance with the local and federal laws. Payments can be made outright or paid through a royalty system, based on what can be extracted from the land.
Both mineral and surface rights can also have co-ownership. If the surface rights owner wants to retain a partial stake in the mineral rights below their property, they have the option to only sell off a percentage of their mineral rights. Or, they can sell the mineral rights to multiple buyers, giving each a specific section of land.
Now that we understand the two possible types of land ownership, it’s easy to wonder how they work together. Some property owners may own both surface and mineral rights on their property, which is known as a fee simple deed.
But, what if they don’t?
For example, if a person or company who owns the mineral rights to the land beneath your home wishes to drill for oil, can they place equipment in your yard — within the surface rights zone — that you legally own? Yes.
When selling mineral rights below the land in which you own the surface rights to, often a small area of the surface-level property is included in the transaction. This allows the mineral rights owner to set up a workspace for drilling rigs, outdoor storage areas, containment ponds, roads, fences and water treatment facilities that are necessary to safely access the mineral deposits below.
If you’re not sure what ownership you have of your land, it’s best to review your mortgage details or the property deed. Then, contact a lawyer who regularly works with landowners who buy and sell the rights to their property. Just be aware that there is no one-size-fits-all solution. The depth of land included in surface rights contracts and the specific minerals that are allowed to be extracted from a mineral rights parcel varies from state to state.