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Dear Steve,
I went to a meeting about natural-gas rights and the gas people said I wasn't on the eligibility list. One
neighbor thought the builder owned the mineral rights in our subdivision. But there's nothing on my deed about
this. How do I check?
-- Virginia
Do mortgage companies have any rights to the money you get for a mineral or natural-gas lease?
-- Stephanie
Dear Virginia and Stephanie,
Your letters are among scads I've received since I first wrote about mineral rights in
March.
First off, Stephanie, mortgage companies typically don't own these rights, although some charge
subordination fees if you enter into a mineral rights lease. In newer lease agreements, many gas companies agree
to pay all the subordination fees that homeowners would have otherwise incurred. Request this from the gas company
if it's not part of the original offer.
As for you, Virginia, it's time to check your title policy. While most of these gas companies do
a reasonably thorough job of checking, their determinations are sometimes wrong. If you do not own the rights,
your title might note something like "Mineral rights do not convey" under "Exceptions."
Even if that exception is absent, that's still not a 100-percent guarantee you own the rights. I
would first check with other neighbors to see if they also don't own mineral rights. My guess is you live in a
fairly new subdivision, because most builders didn't have the foresight to claim mineral rights until the early
part of this decade.
Minus a title exception, the only sure way homeowners know if they own mineral rights is to retain
the services of an oil-and-gas attorney or "land man" who may have to research the property and (or) geological
surveys all the way back to the 1800s. But this can be cost-prohibitive for homeowners who don't have substantial
acreage. Land men say that current homeowners have those rights at least 95 percent of the time if there is no
exception on the title.
Now that energy companies can extract gas and other natural resources from heretofore unreachable
places, I strongly suggest that all home sellers secure mineral rights to their properties before putting them on
the market, even if no gas or other valuable natural resources have been discovered locally. (Conversely, savvy
homebuyers should ask for those rights as part of their offer.)
I mention this because another huge natural gas deposit similar to the lucrative 5,000-square-mile
Barnett Shale in north Texas has been found beneath a large section of northwest Louisiana, with smaller branches
into west Texas and parts of Arkansas.
Called the Haynesville Shale, this field has precipitated a mini land rush with gas companies quietly
buying up drilling rights for several months before informing the public of the find. Smaller fields in Pennsylvania,
Ohio, New York and West Virginia have also been found.
Payments are getting pretty substantial, too. In Texas and Louisiana, firms are forking out between
$20,000 and $30,000 per acre with royalties of 25 percent or more, often calculated to the middle of the street in
the front and to the rear as well if the backyard directly abuts another street.
Some homeowners have held out for top dollar and earned a few thousand extra for their efforts. There
are no reports to my knowledge of holdouts being offered less than initial offers.
Good luck, homeowners, in these fields of (found-money) dreams!
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