When you buy a house, how much of the land do you actually own?
Mineral rights grant ownership of natural resources under a piece of land, such as oil, natural gas and precious metals. These rights don't always come with the deed to the house, however, so knowing who owns the mineral rights can be an important part of the homebuying process — especially in states known for mining or drilling.
Here's what homeowners should know about mineral rights and how they might affect your property.
What are mineral rights?
Mineral rights grant the bearer permission to exploit underground resources like oil, natural gas, precious metals and rare earth elements.
Depending on the property, these rights may be separate from ownership of the surface territory.
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Mineral rights vs. surface rights
Surface rights apply to land used for residential, agricultural or commercial purposes. Despite their name, surface rights can extend dozens of feet below the ground.
"Depending on your jurisdiction, they can extend to a certain depth for a septic system or water well," said Jeffrey Yourkovich, a certified public accountant and mineral manager in Wheeling, West Virginia. "They can also extend above your property to a certain height that's not considered navigable airspace."
Mineral rights, on the other hand, are tied to specific natural resources that could be miles underground, like natural gas, oil or coal.
When mineral rights and surface rights are linked, it's known as a unified estate. A split or severed estate is when surface rights and mineral rights have been separated. In that situation, you might not have a say in how the minerals beneath your home are exploited.
Mineral rights are typically severed in states with a history of mining or oil drilling, including Colorado, Louisiana, New Mexico, Oklahoma, Pennsylvania and Texas.
According to Yourkovich, ownership rights can apply to specific minerals.
"You could sever the oil rights but the natural gas rights would remain with the surface owner," he said.
Mineral rights can also be fractionalized, allowing someone to retain a partial interest. This may happen when ownership is passed down through a family inheritance with multiple heirs.
What can happen if I don't own the mineral rights on my property?
According to Yourkovich, mineral rights are dominant in the U.S..
"That means the mineral estate owner has the right to explore, drill, mine and extract natural resources from the subsurface of your property without your permission," he said.
If someone owns the mineral rights on your property, they can also grant oil and gas leases to other entities.
A "no-surface clause" in a lease or deed can limit or prohibit access to the surface, but the mineral rights owner or lessee can still reach underground resources through horizontal drilling from another location.
How do I find out if I own the mineral rights to my property?
Whether you're inquiring about your own property or shopping for a new home, the deed is the first place to look to see how mineral rights are divided.
You can also contact the country clerk in the area where the property is located and inquire about the sale of any mineral rights.
Some states, including North Carolina, require sellers to disclose whether mineral, oil and gas rights for a property are owned by someone else.
In other areas, you may need to hire a professional landman or title company to research local records.
Should I buy the mineral rights to my property?
Whether it's worth pursuing mineral rights really depends on if there are valuable resources under your land. Finding out can require commissioning a geological survey and having it reviewed by a professional, which can be both time-consuming and expensive.
If you live in a part of the country not known for mining or drilling, it's usually not worth the effort. Even so, the issue could arise years later.
"Technology and research are ever-evolving, so we may not even know what other valuable deposits may lie beneath the surface," said Yourkovich. "This can make it difficult to know if mineral rights have any value or not."
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FAQs
What are mineral rights?
Mineral rights are the ownership rights to natural resources that are underground, such as oil, natural gas and precious metals.
Do I own the mineral rights on my property?
If the mineral and surface rights are unified, then you own both. If it's a severed or fractional estate, you may not own any of the minerals on your property.
How do I know who owns a property's mineral rights?
Checking the property deed can indicate who has mineral rights. You can also ask your county clerk to research the chain of title.
How much are mineral rights worth?
The value of mineral rights varies based on location, presence of underground shale, drilling activity in the area and other factors.
Do I need to own the mineral rights to my property?
Extracting resources from the ground is a costly and disruptive process. Most properties don't have natural resources worth extracting so owners don't have to worry about buying their mineral rights.
Bottom line
if you live in a state known for its oil, natural gas or coal industry, it may be important to know who owns the mineral rights to your property. If you don't, you could be in for a rude awakening.
Meet our experts
At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Jeffrey Yourkovich, a certified public accountant, mineral manager and chartered global management accountant at Yourkovich & Associates.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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