Would you buy this property?

Discussion in 'Homesteading Questions' started by homemom1fl, Apr 6, 2006.

  1. homemom1fl

    homemom1fl Well-Known Member

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    Hi all,
    We have found a property that we really love but have hit a bit of a snag. The person who originally owned it reserved the right to 1/2 of the royalties on any mineral sales/lease. It is in KY and there was apparently some sort of oil boom there in the 50's/60's. There is a capped oil well somewhere on the property. The deed also states that the landowner (us) has the exclusive right to lease, in other words old owner can't say "hey, I own 1/2 the oil rights on this property and these fellas are here to install a pump and get mine out." I don't imagine that we would ever try to sell anything in the way of minerals but dh doesn't like the idea in case we ever want to sell the property as it might be a problem to some buyers. We don't intend to sell it later, but you never know what life might bring.

    So, if you loved everything else about the property, would this stop you from buying it?
    Thanks much!
     
  2. agmantoo

    agmantoo agmantoo Supporter

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    Most of us here in western NC are accustomed to getting the mineral rights with the purchase but I have come to realize we are the minority. If you really like the property go ahead and buy it. The mineral rights are unlikely to bring prosperity but if they do at least you will have 1/2 of the new found wealth and you have the control according to your satement in the original post. Buy it!
     

  3. nogreaterjoy8

    nogreaterjoy8 Well-Known Member

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    Make sure you check the laws for KY - here in WY, if someone else owns your mineral rights, they CAN just come in and set up wells or whatever. I'm not sure what effect a right to lease would do to it,......but there was recently a case in the court system here where a family did not want wells on their property and they ended up settling so the mineral rights owner paid about half what the land owners wanted to BUY the land the mineral rights were on. But according to what was in the paper - the mineral rights owner has the right to access his minerals in whatever way, shape or form he wants..........and that includes building big roads through your fields to get equipment in and out
     
  4. fantasymaker

    fantasymaker Well-Known Member

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    Memmeries fade!I doubt anything would happen check where the other 1/2 is at now and if it bugs ya see if you can buy them if not take comfort in the fact that nonpaying mineral rights are usually lost and forgoten within a generation
     
  5. homemom1fl

    homemom1fl Well-Known Member

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    They definitely don't own mineral rights, not even 1/2, they have just "reserved the right to 1/2 of any royalties paid for minerals sold or leased by landowner."
     
  6. Kimberly in KS

    Kimberly in KS New Member

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    Check with the local title company that would be doing the titlework to see if the primary term of the lease has actually expired. Here in Kansas you can get an Affidavit of Nonproduction which is signed by the current owner stating no production has taken place in X amount of years. Whether or not this will fully protect you I am not certain as I am not an attorney. Here is more info about mineral rights: http://www.vuwriter.com/vumanuals.jsp?displaykey=UM00000167 It does talk about Termination of Lease on down in the document.
     
  7. Gary in ohio

    Gary in ohio Well-Known Member Supporter

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    Lawyer time, If they get 1/2 the right do they get 1/2 the clean up fee when the EPA comes?
     
  8. Boleyz

    Boleyz Prognosticator, Artist

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    Hi!
    I too live in KY and I too own land, but no mineral rights (Natural Gas under me). The fact is, that the owners of the mineral rights do own what's under the ground. I own what's on top of the ground.

    If they destroy anything that I own in the pursuit of what they own, they must pay me compensation for the damages.

    Yes, they may come and drill for their gas, but they would be better served if they drill into the gas pocket from adjacent land which they own and is not occupied.

    Why risk drilling and destroying my house, barn, yard, drive, pasture, and becoming liable for damages, when the amount of gas is basically unknown, and can be tapped without such financial risk?

    75 years ago, owners of mineral rights really did screw over a lot of landowners, but that's all pretty much a thing of the past now. Around here, speculators got people to sell their mineral rights for a couple of thousand bucks and then had legal backing to go in and strip out the coal. That's all been stopped now.

    While I don't own the mineral rights on my place, and can't utilize the gas I'm sitting on, I also remember that the price of my land would have been much higher if the mineral rights went with it. I really am not too concerned.

    One other point...just because someone else owns mineral rights here, they can not come here and do as they please unless I open the gate and allow them on my property. Remember, I own what's above the ground, so it's still possible for them to tresspass. :cowboy:
     
  9. Micahn

    Micahn Well-Known Member

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    I would personally would not buy land with that sort of deal on it. Any land I have had over the years I want mine and only mine, Well maybe mine and the banks lol. You never know what will happen in the future, They might find some thing new on that land you all of a sudden could be giving bill gates a run for his money. Personally I would want that going to my family and who I choose to give it to instead of someone I do not even know.
     
  10. logbuilder

    logbuilder Well-Known Member

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    If you don't have city water, I'd want to make sure that their rights don't have anything to do with you drilling a water well. Here in WA, if you can't get water, no building permit.

    Robert
     
  11. Clifford

    Clifford Love it, or leave it...

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    When we bought our 40, it was a simple wooded area. All of the correction 40's in the area, the Federal Government holds the mineral rights too. Which I don't personally think is a problem because I don't see any Texas Tea springing out of the granite below us.. We bought the land because we loved the area, the land and this is where we are raising our children. We've only been here almost 3 years but have TOO many funny and precious stories to tell already. Unless you are sitting on gold, who cares about mineral rights.....
     
  12. homemom1fl

    homemom1fl Well-Known Member

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    Boleyz, in our situation they don't own any of the mineral rights, only half of any royalties made off of them. We would have the right to use the natural gas for our private use if we wanted to. Thanks for the input everyone.
     
  13. Boleyz

    Boleyz Prognosticator, Artist

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    Fact is, I do know the folks who own the mineral rights and they're good people. Also, I guess I should mention that the gas that is under me is already being tapped by at least 2 wells on adjacent land. Those wells have been there for many years. The coal on my place was stripped out and the land re-claimed (landscaped) about 30 years ago. When I bought this place, it was basically open pasture. I bought, then built a barn, storage building and house. I keep my horses, chickens, rabbits, dogs and kids here.

    We love it, and the only disadvantage is that I can't get free gas. But I see why they retained the mineral rights. They are using the gas to heat their homes (This place is the first spot ever sold from a large family holding).

    They didn't want someone buying this place and then putting in a trailer park, subdivision, or apartment complex and tapping into a resource that they've used and relied on for years.

    Yeah, free gas would be nice, but when I consider the time, money, and aggravation of tapping in, plus the price that the mineral rights would have added to the cost of my land, it's a lot easier for me to just use propane to supply my gas logs. I've also got electric heat pumps.
     
  14. Boleyz

    Boleyz Prognosticator, Artist

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    I don't believe mineral rights keep you from drilling a water well, as water is not considered a mineral.

    However, around here, the water is hard and sulferous. I've got city water, as do my neighbors. About 25 bucks a month on average.
     
  15. Windy in Kansas

    Windy in Kansas In Remembrance

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    May I suggest--- that you negotiate that after a certain period of years such as 10, 15, or 20 years the royalty interest comes back to you.

    If during that time period production were to be established then the royalty interest on that production and ONLY on that production would then be preserved as long as it continued.

    Any production established after the set time frame would be entirely yours.
     
  16. Karen

    Karen Well-Known Member Supporter

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    I don't see any problem. In your particular situation, you actually own the mineral rights; it's only 1/2 the royalties you'll have to give up.

    It would be different if it were 1/2 the mineral rights; but if it's only the royalties, then I wouldn't pass on a great piece of property at a great price over something that's never going to happen because you're the one in control of whether it does or not. Even if you do decide to someday, you're still in for 1/2. It's more than you have now! ;) If you want the "whole" then you'd be paying much more for property and, since your not out to make a business out of your property, it doesn't make sense to pass over royalties that aren't going to happen anyway.
     
  17. cwgrl23

    cwgrl23 Chief Vegtable Grower :) Supporter

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    I like this idea!