The current demand of energy in the U.S., coupled with the awareness to minimize our dependency on foreign oil, has alerted many landowners to take notice of the value in mineral ownership. More and more real estate transactions are coming with mineral reservations, no matter how big or small the property. Texas law allows heirs to benefit from mineral reservations made over 100 years ago because the surface estate is separate from the mineral estate and, there is no statute of limitations. This leaves all kinds of opportunities for selling and buying minerals without necessarily having an interest in the surface. But, how do you know that a piece of property you own, you are buying, or you are selling has a mineral reservation on it? And, how do you find out the actual percentage of mineral ownership you are actually dealing with (own, buying, selling)?
Knowing the percentage of mineral ownership is extremely beneficial when it comes to property you are planning on buying or selling (or currently own). You would never want to buy a piece of property with the thought of getting 100% mineral interest only to later find you only own 50%. Unfortunately, this scenario happens quite a bit. Many mineral reservations in Texas were made in the 1920s when oil was often speculated to be produced just about anywhere ( or everywhere!) in the state. Since the 1920s a property is liable to have 10 different owners (a conservative count). All it takes is one seller to tell one buyer, from that 1920s reservation, that he is selling 100% of the minerals and a whole mess of miscommunication and sound purchasing is thrown out the door. This is a general example of the many types of over-purchasing for minerals, but you get my drift. So, how do you know for sure what you own or what you are buying?
Conduct a title search with specific attention to mineral reservations, or you or your representatives review such a title search that has previously been completed. Running this level of title search on the piece of property of interest will not only show you what you own/are buying/selling, but it will also show you who owns the remaining interests (if you don’t own 100%). This will give you the ability to purchase the remaining interests, maybe at a lesser value, or, develop a relationship with the remaining interest holders for future mineral development. The final results of a title search can only be found by conducting a title search (excuse my redundancy). No matter what you see in the title insurance policy ( since most standard title policies except to coverage in Sched. A or B for the mineral estate unless specifically included by endorsement T.19.1) or what you hear from the seller or the previous sellers before them, the only way to truly know what you are dealing with is by reading and analyzing the title chain and exception documents that every owner previous to you dealt with.
Because each piece of property in our Land is unique to its owner, you never know what you are going to expect when running title. One 5,000 acre ranch may have had 30 owners since the time it was conveyed from the State of Texas yet not have one mineral reservation, making the title search run smoother than ever. On the other hand, a 5,000 acre ranch, 1 mile east from the previous, may have had 5 owners since the time it was conveyed from the State of Texas and have 150 mineral reservations and conveyances, making the title a monster to calculate.
The bottom line is that conducting a title search for a property of interest is a great investment because it leaves no doubt as to the numbers & percentages you are dealing with. This information is Key when negotiating a buy, sell or lease and, can open up opportunities to acquire additional interests and/or set out on a joint venture for mineral development.