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What are mineral rights in real estate?

A sidewalk leading to a house in the distance
Mint Images/Getty Images
A sidewalk leading to a house in the distance
Mint Images/Getty Images

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Mineral rights are the rights to any natural resources that are present beneath a piece of property, such as oil, gas, coal or even gold. In real estate, this information can be useful when buying or selling a home and the property it sits on — especially if it’s located in an area rich in natural resources or close to mining operations. But owning land does not necessarily mean you own what’s underneath it.

What are mineral rights?

Mineral rights refer to the rights to extract minerals from a parcel of land. This can include the right to mine for precious metals or gems, quarry materials such as gravel and sand, and even drill for oil and natural gas. In many countries, the government holds claim to nearly all mineral rights on its land. That is not the case in the U.S. Here, a landowner typically also has the mineral rights to that piece of land — but not always. Sometimes, the rights to what’s underground are separate from the above-ground or surface rights.

Mineral rights vs. surface rights

Surface rights literally refer to the land at the surface of a property: in real estate terms, the actual ground a home is built on. When you buy a home and the land it sits on, be it a small backyard or a tract of several acres, your surface rights mean you can plant a vegetable garden, install landscaping, grow flowers, and the like. But you might not be able to, for example, drill for oil in your Texas backyard. For that, you’d need to own the mineral rights, which grant ownership to the resources below the surface. This can include the right to explore for, extract and — crucially — profit from any valuable resources found.

How do mineral rights work?

Legally, the combination of surface rights and mineral rights on a property is referred to as an estate. If the same owner retains both sets of rights, that is a “unified estate,” meaning the rights are unified under one owner.

If there’s something extremely valuable underground, a property owner can elect to sell the mineral rights to another party, while retaining the surface land rights to live on or develop as they see fit. This is complicated but understandable: Mining is expensive, so mineral rights owners must have deep pockets to finance the operation. And even if they have the money, the average homeowner probably has no idea how to mine for ore, or drill for oil, nor would they have the equipment needed. This situation is called a “severed estate,” because the mineral rights have been severed from the overall property rights. Laws concerning severed estates differ from state to state, often depending on the richness of resources in the area.

If you’re buying or selling a home, it’s important to check the deed carefully to determine whether the mineral rights are legally the owner’s to sell, or whether they belong to someone else. In some cases, mineral rights may even belong to a corporation. In others, they might belong to whomever owned the land at the time the minerals were discovered (often called the “rule of capture”). These rights do not always transfer with the sale of the property — a real estate attorney who’s familiar with the local market can help you figure things out.

How can I find out if there are valuable minerals on my land?

The top 10 mineral producing states in the U.S., per the United States Geological Survey, are Nevada, Arizona, Texas, California, Minnesota, Florida, Alaska, Utah, Missouri and Michigan. If you live in one of these states — or even if you don’t — there are several ways to determine if there are valuable minerals lurking beneath your property:

  • One of the best is to commission a geological property survey. These surveys can be costly, but they are thorough and accurate.
  • You might also hire an appraiser or geologist to look at the survey and make an informed assessment of the land’s mineral value. Their report can give you an idea of how much the minerals might be worth, and whether they’re worth pursuing.
  • In some areas where mining is prevalent, you can hire a mining specialist to do a more in-depth survey.
  • Finally, try searching online. The USGS site offers a wealth of information about mineral resources in the United States.

Bottom line

Mineral rights are complex, and they may or may not be tied to traditional land ownership. But they can be very lucrative. According to USGS, American mines produced more than $82 billion in minerals in 2020 alone. Of course, you’re not likely to find billions in your backyard — but you never know.

Written by
Michele Petry
Senior real estate editor
Michele Petry is a senior editor for Bankrate, leading the site’s real estate content.
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