When buying land in Texas, mineral rights are presumed to be part of the deal unless explicitly stating that they are not included, and most buyers do not even consider what is below the surface of the property they are purchasing. This is a mistake that could be quite costly.
If you are buying or selling land, you will need to think about mineral rights. Sometimes, mineral rights can be insignificant. However, other times, mineral rights can mean millions of dollars.
Before you move forward on a land deal, it would be in your best interest to learn what minerals are prevalent in Texas, how to determine who owns the mineral rights, how to value mineral rights, what revenue options are available, and what happens to mineral rights when you pass away.
What minerals are prevalent in Texas?
Texas is well known for its large underground deposits of oil and natural gas. You cannot travel too far in the Lone Star state without finding equipment on the surface that drills for these two valuable commodities. However, Texas also has pockets of gems, rocks, and other minerals like gypsum, coal, limestone, and onyx which can be valuable as well.
To accurately determine what minerals are on your land, you can request a mineral resource report from a geologist, but this can be pricey. Carefully consider if the cost is worth it before proceeding.
Another cheaper option is to search online for mineral maps in your area. This will not be as precise as having a mineral resource report done but can give you a general idea of what minerals are predominant in your location.
Who owns the mineral rights?
Mineral rights ownership must be documented and filed with the state of Texas, and there are a couple of options if you want to find out who owns the mineral rights to property in Texas.
- Online Search – You can search online for records at www.mineralholders.com/Texas/. This lists mineral owners by county up to 2021.
- County Search – You can go to your local county property records office to find out ownership. This should have the most current records.
What is the value of my mineral rights?
Determining the value of mineral rights can be complicated, and too often, property owners undervalue them because they do not understand the process. A few factors impact the value.
- Non-producing versus Producing – If your land already has equipment and systems in place allowing for active production of minerals, the value of mineral rights will be higher than a non-producing property.
- Active Revenue Source – Are there leases with steady flow of income coming in? If yes, the mineral rights will increase.
- Potential Mineral Source – Value for mineral rights can go up if there is a potential for being a mineral source.
- Market – The current market for different minerals will impact value. The higher the demand the higher the price for mineral rights.
Before accepting an offer or assigning a value, do your research or find a company to help you determine the best value.
What are options for earning revenue from mineral rights?
You can make money from your mineral rights if there are minerals in demand found under the surface land. The easiest and fastest way to make money is to sell your mineral right outright. If factors have improved since you originally purchased your mineral rights, you might be able to turn a nice profit.
Another option could be that a company leases your mineral rights for potential sourcing. You can receive a monthly, quarterly, or yearly payment for the lease.
If you lease the mineral rights and if they are pulling the minerals, you should also receive royalty payments. However, you need to have the details clearly outlined in your leasing agreement.
Lastly, you always have the option of mining and selling the minerals yourself. This route can potentially have many upfront costs that you must pay before earning a profit. Also, there are many legal hurdles to wade through. Before jumping into this option, make sure to assess your financial and legal capabilities.
What happens to my mineral rights when I pass away?
Mineral rights transfer to your beneficiaries just as any of your property does. In order to have the mineral rights transferred and managed according to your wishes, you should have a legal will in place that clearly outlines your expectations. Without a will, your mineral rights and other assets will be handled by the courts.
In addition, your lease agreements should have wording that explains what happens with the lease, payments, and royalties in the event of your death.
Do you need more help with mineral rights?
Don’t become overwhelmed when dealing with mineral rights. There are many online services that can help, and Lone Star Ranch Management is here to assist you as well. Contact Ryan at 979-253-9662 or at ryan@texasranchmanagers.com for more information.
Resources
TSHA | Mineral Rights and Royalties (tshaonline.org)
https://www.tshaonline.org/handbook/entries/mineral-rights-and-royalties
Texas Mineral Owners and Royalty Interests (mineralholders.com)
