Mineral rights

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Mineral rights are property rights that confer to the holder the right exploit an area for the minerals it harbours. Mineral rights are severable from property ownership.

Mineral 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. It is the right of the owner to exploit, mine, and/or produce any or all of the minerals lying below the surface of the property.

The mineral estate of the land includes all organic and inorganic substances that form a part of the soil. An exception would be sand, gravel, limestone, subsurface water, etc. which are normally considered part of the surface estate.

Severability

Mineral estates are often severed 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 as minerals. Mineral rights do 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.

Major elements

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.

The owner of a mineral interest may separately convey any or all of the above-listed interests. Minerals may be possessed as a life estate, which does not permit a person to sell them, but merely that they own the minerals so long as they live. After this, the rights revert to a predesignated entity, such as a specific organization or person.

It is possible for mineral right owners to sever and sell oil and gas royalties, while keeping the other mineral rights. In such case, if the oil lease expires, the royalty owner has nothing and the mineral owner still owns the minerals.

Freehold and non-freehold ownership

The status of the land is fixed by law, and is distinguished as being either a freehold estate or a non-freehold estate. Freehold means ownership in perpetuity. Non-freehold implies that the owner holds the rights for a specific time period, after which the holder no longer holds the rights.

See also

External links

  1. ↑ [1]


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