What Every Landowner Should Know About Mineral Rights

Securing the rights to the minerals beneath a piece of property can bring many benefits.

 

Landowner meeting with partners. Photo: / Flickr.

A big question in many landowners' minds is what are mineral rights? In simple terms, mineral rights are full rights to a property that allows one to utilize the minerals found in an area.

Mineral rights aid in separating property ownership from split ownership. The two parties share the property rights over both the underground and surface minerals in a given place. The mineral list comprises and is not limited to Natural gas, Oil, Silver, Gold, Iron, Copper, Uranium, and Coal. On the other hand, Limestone, Sand, and Gravel are considered subsurface minerals. 

Mineral rights can be transferred from one person to another by selling them to a speculative buyer who may sell them off once the value increases. The whole issue of mineral rights sale can appear complicated for a non-expert to navigate. Getting a professional's help can go a long way in understating the process better and making better decisions. 

Mineral rights professionals also help to alleviate the chances of making mistakes that could be costly. For example, anew buyer in the market can avoid making a bad decision by considering experts in mineral rights for sale from Pheasant Energy to purchase mineral rights. 

Land ownership extends ownership rights to the property, minerals beneath, and airspace above the property. Securing the mineral rights to the minerals beneath a property has many benefits. 

 

Benefits of Securing Mineral Rights

 

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Some major benefits of securing mineral rights from a landowner include:

 

1. Mineral Rights Ownership Generates Income

 

The mineral rights can be sold or leased temporarily to a third party. The owner can decide to sell their mineral right based on different reasons, but one of the major reasons to sell mineral rights is to generate income. 

Some of the other reasons for selling mineral rights are:

  • Financial Needs – often, people find themselves in dire need of cash. As a mineral owner, one can sell off their mineral right for almost instant cash, allowing them to solve their urgent financial need.
  • Life-Changing Situation – sometimes, some minerals have a sharp increase in value. Mineral owners can make a sale at the minerals’ peak time and earn a life-changing fortune by selling mineral rights.
  • Potential Loss – A good mineral rights broker will always advice the client when the value of a mineral may decline. When a potential decline in value is detected, one can sell the mineral rights and prevent a possible loss.
  • Lack Of Heirs – As age starts catching up, it is advisable to sell off the mineral rights without heirs to inherit the mineral rights and prevent them from becoming unclaimed.
  • To Diversify – the mineral rights owner may want to diversify the type of mineral to have rights over depending on the market value. They may sell off the current one to purchase another one elsewhere. 

 

2. Mineral Rights Ownership Aid in Estate Planning

 

The greatest joy is seeing those who come after having something to inherit from their predecessors. Estates planning is guaranteeing financial stability for those coming after. Having some mineral rights can help in realizing that joy. 

One way to realize that is by sharing the royalties among the beneficiaries. The other way is to put the mineral rights up for sale and, from the proceeds, set up a stable financial background for the beneficiaries. 

Either of the ways will see the beneficiary have something to be proud of their predecessors. But, for any mineral rights owner looking to sell them off, you need to avoid some common mistakes during a mineral rights sale, including:

  • Selling Delay – the value of the minerals can vary with time; hence a delay in selling can lead to great losses. Having a broker can go a long way in mitigating such a situation.
  • Settling for First Offer – with an urgent requirement of money leads to the temptation to accept any offer. Weigh some options and get more than one offer and settle for the highest
  • Few Buyers – being unable to connect the many buyers is an indication that the product cannot create competition that will increase the asset value.
  • Encounter with Flippers – lack of a clear understanding of the market trends can expose the mineral rights owner to be conned by good sellers by making a low offer and selling at an exorbitant price.

 

3. Mineral Rights Ownership Enhances Flexibility

 

The owner of the mineral rights is responsible for creating the contract, hence can tailor make it to make the mineral right sales contract to fit the family or perianal requirements. 

The mineral rights owner can also dictate the kind of mineral to be extracted, which section they should exploit, and which side not to touch. 

The flexibility allows the owner set the rules as they deem right.

 

In conclusion 

 

The benefits associated with owning mineral rights are many. The owner is also obliged to pay taxes on income generated from mineral rights sale or leasing. Several accounting firms and genuine mineral sales brokers can always help in remittance and filling the taxes.