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What Should I Be Concerned About When Selling Mineral Rights?

If you’re planning to sell your mineral rights, there’re some critical things to consider first. While you can make a hefty amount of money out of the deal, not understanding the concerns clearly can also make you experience a significant loss as well. So, before you proceed with the deal, it pays to address the concerns to make the best decision. Here’re a few things you must educate yourself about.

What are your mineral rights?

First, clearly identify the part of your property that’s involved in the transaction. Learn the difference between mineral and surface rights. Next, ask the buyer to show you a map of your property and exactly what area and depth they want to purchase. Have the buyer outline the part of the surface property they’ll include in mineral rights purchase to host water reservoirs, oil rigs and new roadways, as well as house their equipment. Remember that contracts are always negotiable; so, never accept or sign the first contract offered.

Understand what it’s worth

Market value strongly regulates the value of mineral rights. Conduct a meticulous survey to learn what mineral rights sold for nearby and seek more bids on yours. Key factors influencing the value include:

  • Size of mineral deposits
  • Size of acreage/property
  • Current commodity prices
  • Producing or non-producing wells/mines in the area
  • Present and future exploration

Surface control

Another critical consideration to make before you proceed with the deal is the loss of control of ground surface. Remember that you too have control on the surface just like the owner of the resources under the surface does. It means you direct anyone who explores on the land and you can use the land in accordance to your wish like planting and grazing animals, among others. When you sell the mineral rights, you’ll simply lose that control. The buyer will retain the ability to drill or explore as needed, regardless of the way you want to use the property.

Know your limits

Selling your mineral rights can make you earn lot of money, but there’s another crucial concern to address. What will be the environmental impact of the extraction procedures? If you live in the property, what uproars will you be living with? Do you actually like the ethics of the buyer you’re doing business with?

Consult with experts and lawyers and clear all these details before signing the deal. Take some time to address the concerns above to decide whether selling your mineral rights is in your best interest!