Property ownership is an integral part of the American dream. Ownership of property has historically included the cone from the center of the earth to outer-space. You can survey your property and proudly declare that this expanse of land is yours. Legally, ownership of that expanse of land is known as the surface rights estate, which includes anything atop it, such as structures, trees and foliage. Ownership of what’s under the land is referred to as the mineral rights estate. Originally the two estates were treated as one. However, the law in Texas and many other states permits severance of the two estates to permit the surface estate and the mineral estate to be owned by different owners. When severance occurs by deed, inheritance, execution of an oil and gas lease, judgement or something else, the two estates must co-exist in accordance with complicated rules of ownership, but generally the mineral estate is considered the dominant estate so the owner of the mineral estate is entitled to develop the minerals and the subservient surface estate must permit the mineral estate development as long as the surface estate is not unreasonable damaged.
Mineral rights provide the owner rights to any mineral content below the surface, such as oil and gas. If a person owns the mineral rights, they have access to the surface of the property to reasonably develop the minerals.
Generally, when you purchase a home or land you own the surface and mineral rights, unless the latter is contractually owned by another party. If it is, you’ll know about it from a title report obtained at the time of purchase, so don’t worry that somebody will arrive on your property one day and begin digging in the hopes of striking oil or uncovering a thick vein of gold.
Types of Mineral Interests
Before discussing how to transfer mineral rights in Texas, it’s important to first understand the four (4) types of interests that can be sold, gifted or willed to another person or entity.
Mineral Interest is the interest generated from oil and gas production after either a sale by mineral deed or execution of an oil and gas lease.
Royalty Interest occurs once mineral rights are leased. The owner of the mineral rights retains royalty interest if they enter into a lease agreement with another party and reserve royalty interests.
Overriding Royalty Interest doesn’t provide ownership of the natural resources. It defines ownership of a portion of revenue generated from the production of oil or gas and is created by contract.
Working Interest is associated with any exploration, drilling and development of the property and is the interest which bears the expense of the mineral interest development.
Net Revenue Interest is a mathematical expression of the decimal ownership of the total mineral interest out of one (1) with the overriding royalty, royalty and working interests expressed in fractions but adding to one (1). Only the working interest bears the risk and expense of mineral development, however
How Can I Transfer Mineral Rights to Another Person?
Whether through sale, gift or inheritance, the transfer, or conveyance, of mineral rights in Texas relies on the following:
- A deed that names the seller/donor and the purchaser/donee. It states and describes the rights being sold or given. In Texas, a spouse usually isn’t required to sign the conveyance document. However, spousal signature will be required if the rights are held in both names or the mineral rights are located on the property on which they both reside.
- Filing of the notarized conveyance in the county government office which is generally the county clerk’s office. Because of the recording statutes protections for good faith purchasers for value the recording should always be done promptly after execution of the conveyance deed.
If you’re going to transfer mineral rights, it’s best to first secure the services of an experienced real estate or oil and gas law attorney. While the aforementioned provides general information concerning the transferring of mineral rights in Texas, there are many potential legal issues to take into consideration. If you have questions about transferring mineral rights in Texas, contact the skilled and highly experienced real estate lawyers at Bennett Weston LaJone & Turner, P.C.