Seller Conveys Mineral Rights... Yes or No ?

By
Real Estate Agent with New Home Hunters of Fort Worth and Tarrant County
http://actvra.in/5Jq

I went on a listing yesterday.  Everything was going just fine.  My suggested pricing was accepted.  I also suggested that today's buyer... perhaps more than ever... might be in need of having some or all of their closing costs paid by the seller.  That was fine, too.

We walked through the home, and I made various suggestions about making the home more ready for showings.  I suggested thinning out the closets of items of clothing that the seller will not be wearing over the next four to six months.  I suggested that since she was not going to be wearing her winter clothes, and sooner or later she was going to have to pack them... she might as well pack them up for moving now... and make the closets look larger. 

All was going well... everything I suggested was being accepted... until my seller brought up the subject of "mineral rights." 

A large natural gas field has been discovered here in Fort Worth.  For the past year to eighteen months... much talk has taken place about signing over "royalty rigts" for the building lot people's homes are build on.  Many have done this, and most owners who put their homes up for sale... are insisting that they keep the mineral rights... and not convey them to the new buyer.

This... can cause problems... because most buyers who purchase... expect those same mineral rights to remain with the property.  They feel they are paying for the home... and want all the rights pertinent to the home... to convey with it.  It makes sense to me.

Of course... my seller wanted to retain her own mineral rights... and not convey them to the new buyers.  We chatted about it, with my suggesting that it would make the home more saleable if she, the seller, also conveyed her mineral rights along with her title.

She again insisted they not convey, and started becoming more than a tad belligerent.

So... I asked my seller if I could tell her a few stories.  Yes said... "sure !"

I asked her to pretend that she was going to be making an offer on her next home.  I suggested that we offer the seller an amount what was within 3% of the seller' asking price, and that the seller deliver posession within thirty days.  I suggested to her that the seller would probably accept an offer like that.  She seemed pleased.

I then asked her:   What if the seller... gave you everything you asked for in your offer... but was insisting on just one very simple thing? 

What if... the seller was absolutely insisting that... after she moved in... that the seller be able to retain his own key to her home... and whenever he happened to be in the neighborhood... he would be allowed to park his car... use his key... and walk in to her home and use her bathroom.

Her eyes opened wider than I had ever seen them.  She stammered, and then said... "What !  He wants to still be able to stop, use his own key, and walk into MY home and use MY bathroom ?  Why in the world would I agree to let him do that ?  It's my bathroom... and no... he cannot continue to use it.

I then asked her:  What was the difference between her seller continuing to use her bathroom after he no longer owned the home... and  her continuing to reap the royalties on the natural gas lease... under HIS home... after she sold him the house and he owned it ?

She sat silently.  At first she looked puzzled.  Then... slowly... a smile came to her face.  She said... "Well... no, he can't still use my bathroom... and ok, I get the point, I won't insist on keeping the mineral rights after I move."  She laughed... she told me I made my point... and she signed an addendum agreeing to convey the mineral rights to the new buyer.  Whew !

How do YOU handle the subject of both seller and buyer both wanting to retain mineral rights ?

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Rainmaker
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Karen Anne Stone
Fort Worth Real Estate
New Home Hunters of Fort Worth and Tarrant County

Dana:  Obviously, those two are not the same... but the silliness of keeping a key is the point I was trying to make.  What my point was... was that if you are talking about moving FROM one residential city lot, and moving TO one residential city lot... it makes no sense to insist on keeping the mineral rights on the lot you are selling, and to INSIST on getting the mineral rights for the lot and home you are buying.

Do you see the inconsistency here?  And also... I kept this post "public" because I thought what I was saying was correct... and honestly, I DO hope that a lot of potential clients see it.  If they agree with me, great.  If they disagree with me... they can find themselves another Realtor who suits their unrealistic needs.

Thank you so much for commenting on my post.  My absolute best to you in all your real estate needs.  Have a great week.

                                                            July 21, 2011

July 21, 2011 12:18 PM
Anonymous
Linch

Karen, give us some statistic data about the mineral right convey or not:

What the percentage in DFW area, the seller convey the right wholly??

August 03, 2011 03:14 PM
Anonymous
James

I have been looking for investment property in the Dallas/Fort Worth area and came across one listing that stated that the mineral rights do not convey.  Not knowing what that meant, I looked it up and came across this site.

After reading the majority of posts, I'd have to agree with Karen on this.  As a buyer if I am looking at a piece of property for investment purposes or even for my main home - regardless of the actual dollar amount of the royalties, I would just move on to the next listing.  Hence, a seller insisting on retaining any royalties has just lost a potential buyer.  Even if it is just $40/mo, that almost $500/year!

Quite frankly, I am amazed that there are buyers that would even consider buying without retaining any royalties - especially in this market.

March 06, 2012 12:06 PM
Anonymous
KC Jim

I read the comments here with great interest.  Why do you all suppose the railroad has retained the mineral rights on their properties since the 1800s?  Had they heard that oil companies would be "cracking" shale in 2012 to extract the resourses?  Of course not!  But, they were farsighted enough to believe that the future rights had some value.  Who knows, some scientist next year may develop a way to convert limestone into "XYZ" fuel, which will become the most used fuel on earth by 2050.  As for me and mine, we retain the mineral rights on ANY property we EVER sell!!! 

 And as to the lady who indicated that someone owning mineral rights under a property they no longer own would have to get drilling access on the property , it's as simple as leasing drilling rights on an adjoining property and diagonally boring under the property.  Think about it; not many mines consist of a single vertical shaft.  They have multiple horizontal shafts running off that main shaft. 

 As to the small 1/2 acre residential  lot not having much value as far as mineral rights, what if a single gas well drilled on that property was the largest producing well ever drilled?? 

Just saying....hindsight is 20/20 and a lot of wealth would have been in different hands if some sellers had retained mineral rights.

Just my 2 cents worth.

April 30, 2012 11:50 AM
Rainmaker
995,711
Karen Anne Stone
Fort Worth Real Estate
New Home Hunters of Fort Worth and Tarrant County

KC Jim in #108:  I understand your point... but my post is NOT about what you refer to as a "small" 1/2 acre residential lot.  They do not exist in newer homes being built in this price range.  The lots I am referring to are in subdivisions, and range in size from 50x110 to 60x120.  There is no way that anyone is going to be able to drill on a lot next to one of those... and go on an angle to pull gas out from adjacent lots.

Also... I am sorry, but I have no knowledge about railroads and their rights of way.  By the way... if a person sells a property, but retains the mineral rights... that property is worth less to a prospective buyer than a property (probably right next door... fifty feet away) which included the mineral rights.

Also... as far as a single gas well under a 50x120 lot being the source of "the largest producing well ever drilled"... I attempted to base this post in reality... speaking of subdivision lots in the $150,000 price range (including the new house)... in suburbs of Fort Worth, Texas such as Hurst and Euless... and not in far out examples that have no basis in fact or reality in these near-in suburbs.  Thanks so much for reading my post, and for commenting.           April 30, 2012

April 30, 2012 12:36 PM
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Karen Anne Stone

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The Real Estate Market in Fort Worth and Tarrant County offers such a great value to both "first time" and "move up" buyers. Karen Anne's blog gives you up-to-date market news, and features many of the great homes available at great prices !