Eminent Domain /Mineral Rights Question

ufo_chris · #1 06/20/13, 04:54 PM

We own our mineral rights on 29 ac. but leased them a few years ago.
We have gotten a few offers to buy them ,even while being leased , for around 4G/ac.
Now we know the saying 'only a fool would sell their mineral rights' and agree even though of course the money would come in handy.
But ,there is a big but.....our place stands a chance to be taken by eminent domain IF they built this road/highway they have been talking about for years but got shelved and now we heard they are considering it again because of the shale traffic which is kinda ironic!
So, what if we don't sell and our property gets taken by eminent domain, will they pay extra for the value of the mineral rights?
If we'd know for sure they will take our property we would just sell the MR, but if they announce it it will be too late right?
Or can you retain ownership of MR with eminent domain and if so ,would any gas /shale people or whoever still want it with a highway on it?

Conhntr · #2 06/20/13, 08:59 PM

Ive never heard of anyone happy with the price they got from an eminent domain taking... I doubt you would be! Wouldnt be suprised if you timbered the whole lot, sold everything that could be sold, and then sold mineral rights and the eminent domain price wuld be about the same

Waiting Falcon · #3 06/21/13, 08:42 AM

Depending on the the "rules" you are offered one price and you do not accept it then they can move in and take the land eminent domain. Some will offer a second price but I wold not count on it. I would definitely research the road being built to see if they really are working on it. If they are I would put the place up for sale now for my price, and/or minerals included and get out of there

GunMonkeyIntl · #4 06/21/13, 08:52 AM

A friend of mine who has 35ac in the next county over had to sell 1 ac to the state for a bridge expansion, and they paid him $6k - which is at the high end of the market value. That may be because he was the only land owner they needed land from and didn't have to try to fit a bunch of land buys into their budget, can't say.

If I was in your situation, I would get a lawyer to look into the situation before I did anything. I don't kbnow much about mineral rights, but I would not be suprised to find out that if you sold them, and then sold the land to the state, that you would have to pay the mineral right-holder back out of the proceeds. I'm not saying that is the case, since I don't know, but it does seem like the sensible legal obligation. If you sell someone the rights, then the state buys your land and puts a road on it that prevents the rights-holder from accessing what they bought from you, then it seems like you would have to refund them.

simi-steading · #5 06/21/13, 09:05 AM

I don't believe they can take your mineral rights.. The government more than likely would have no interest in the rights even if you included them in your price.. The problem is, if you retain the rights, and there's a road built over those minerals, then they are pretty much useless to you...

Now if they were to drill on someone else's property, and bore over to your minerals, then yes, you could get your money, but you'd might want to be sure you have anything worth someone paying for if you decided to keep them.

Either way, I think you're pretty much screwed if they do take your land..

Peace n Quiet · #6 06/21/13, 09:57 AM

We're in the heart of Marcellus drilling and I work for the county assessment office. What you are facing has happened here. In those cases, the state got the land, but the prior land owners reserved the hydrocarbon and mineral rights. I've seen deeds come thru on as little as 0.03 acres!!

ufo_chris · #7 06/21/13, 12:11 PM

peace, you are saying the would not take the mineral rights? If we would retain mineral rights,would they still be worth what we were offered and could be sold later ?
and if a well goes up we would still get royalties?

they have just started talking about that highway again ,we really do not want to move ,we like it here....that is the problem with that em.Dom. even if they do pay what its worth we would never willingly take it....they don't pay u for all the work you done on the land and memories and having to move a whole homestead !

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Darren · #8 06/21/13, 12:35 PM

The difference in the Marcellus drilling as compared to the older shallow wells is that a Marcellus pad has horizontal bores that radiate out in all directions after hey get don 14,000' or so. They can easily bore under any surface obsacle like a highway. That means if they drill on the block that includes your property you still get the royalties as long as you own the minerals no matter what happens on the surface.

simi-steading · #9 06/21/13, 01:52 PM

The only worry about horizontal drilling and fracking is, if they stop 500 feet from your property line, then start injecting, they they will more than likely be taking oil and gas from under your land without having to pay for the mineral lease.. Sadly because of laws in favor of the oil companies, Compulsory integration is sometimes easy to get around..

oneokie · #10 06/21/13, 04:21 PM

You need to talk to an attorney, or a real estate attorney and an oil and gas attorney. Spend the money now and you won't have to second guess yourself later.

TheMartianChick · #11 06/21/13, 05:17 PM

Quote:

Originally Posted by oneokie

You need to talk to an attorney, or a real estate attorney and an oil and gas attorney. Spend the money now and you won't have to second guess yourself later.

I have to second this advice.

Ernie · #12 06/21/13, 05:57 PM

Quote:

Originally Posted by oneokie

You need to talk to an attorney, or a real estate attorney and an oil and gas attorney. Spend the money now and you won't have to second guess yourself later.

I agree with this. I think this is just one of those instances where you might not ought to rely on internet advice.

Sort of like asking, "does this mole look like cancer to you?"

ufo_chris · #13 06/21/13, 10:23 PM

Quote:

Originally Posted by Ernie

I agree with this. I think this is just one of those instances where you might not ought to rely on internet advice.

Sort of like asking, "does this mole look like cancer to you?"

I agree completely but we just found out about them wanting to do the highway again. it was over 15 years ago when they talked about it and it never happened .
So I wanted to see if any of you guys know ,I know there are a couple people on here that know a lot about this !
Also we don't know what's happening with that highway.....
So how do you go about finding a lawyer that knows ? The lawyer we have used b/f would not I don't think.

Ernie · #14 06/21/13, 10:51 PM

If you know of a respected real estate agent, or have a friend in the business ... ask them for a lawyer dealing with property.

texican · #15 06/22/13, 02:43 PM

Eminent domain usually only concerns surface rights... If they build a road, you still get to keep your minerals. If you do sell, still keep your minerals by reserving them.

The "only a fool will sell his mineral rights" is derived from the fact that there are very few financial instruments which require no management fees to 'hold', won't go anywhere, difficult to steal, there are no fees or taxes on them until they're produced. Very few legal means of printing money... if they eventually produce your mineral acreage, you will get mailbox money for decades...

Never sell... you will usually receive about a tenth of the actual value.

If it's been several years since you leased, look at your lease... it may already have lapsed, and is open to lease again.

Mike in Ohio · #16 06/23/13, 05:44 PM

Just remember Chris,

If you retain the mineral rights but sell the surface ( even under eminent domain) you are creating what's called a split estate. At least in Ohio it means that you will have to pay property taxes on the mineral rights.

I agree with others that you would do well to consult an attorney knowlegable about this. You might also speak with your county auditor about the issue of a split estate and property taxes. You should also be able to find out what mineral rights (even leased) are transferring for. This might help you negotiate a higher price if you do sell. Last year in Carroll, Leroy Van Horne (auditor) said that mineral rights by themselves were going for about $8k. This was at a meeting of Carroll Concerned Citizens.

Hope this helps.

Mike

ufo_chris · #17 06/25/13, 02:00 AM

Quote:

Originally Posted by texican

Eminent domain usually only concerns surface rights... If they build a road, you still get to keep your minerals. If you do sell, still keep your minerals by reserving them.

The "only a fool will sell his mineral rights" is derived from the fact that there are very few financial instruments which require no management fees to 'hold', won't go anywhere, difficult to steal, there are no fees or taxes on them until they're produced. Very few legal means of printing money... if they eventually produce your mineral acreage, you will get mailbox money for decades...

Never sell... you will usually receive about a tenth of the actual value.

If it's been several years since you leased, look at your lease... it may already have lapsed, and is open to lease again.

Thanks ! No its only been 2 years since the lease(5 years), we got 2K ,later on it went to 5 for some people ,but a lot of our neighbors got 1 -1 1.5K.
It helped pay some bills , but 5 would have been real nice !

We actually did some more research and found out seems the road project reopening is facing quite some opposition , so maybe it won't happen,
Sure hope so !

ufo_chris · #18 06/25/13, 02:06 AM

Quote:

Originally Posted by Mike in Ohio

Just remember Chris,

If you retain the mineral rights but sell the surface ( even under eminent domain) you are creating what's called a split estate. At least in Ohio it means that you will have to pay property taxes on the mineral rights.

I agree with others that you would do well to consult an attorney knowlegable about this. You might also speak with your county auditor about the issue of a split estate and property taxes. You should also be able to find out what mineral rights (even leased) are transferring for. This might help you negotiate a higher price if you do sell. Last year in Carroll, Leroy Van Horne (auditor) said that mineral rights by themselves were going for about $8k. This was at a meeting of Carroll Concerned Citizens.

Hope this helps.

Mike

Hi Mike,Thanks!
I'm not familiar with the split estate, not sure what you mean by paying property taxes on the MR. You mean like a sales tax?
I mean property taxes are on what you own so if you sell the MR how could you still pay taxes for them ,except your regular taxes for the land ?
$8k sounds pretty good,is there a price at which one should think twice about NOT selling?
Thanks!