mineral rights question

[CRB]

Are mineral rights taxed at the local or state level?

 

[bikerfish]

I believe they are taxed at every level, just another form of income.

 

[bikerfish]

actually, I'm not sure the actual "rights" are taxed as per property tax, what kind of value could be calculated if nothing has been extracted? I'm sure any income that results from the rights will be taxed though.
good question, hopefully some of our lawyer/acct friends will chime in with some good answers!

 

[osprey]

Very few folks in this part of Pa own the mineral rights to their property i own 2 properties and neither mineral rights and if they want it they take it go to you tube and search Clearville PA Eminant Domain. Gas companies took what they wanted and the folks had no say.

 

[bikerfish]

maybe it's time to get the laws changed. you own the property, you own whats underneath.
I doubt it will never happen though. extraction industries have ruled our state for a hundred years now.

 

[JackM]

biker, you want the government to tell you that you are not allowed to sever the mineral rights from surface rights on your own land? I'll be danged, another communist.

 

[troutbert]

bikerfish wrote:
maybe it's time to get the laws changed. you own the property, you own whats underneath.
I doubt it will never happen though. extraction industries have ruled our state for a hundred years now.

Where mineral rights are seperate from surface rights, it's because someone sold the mineral rights, right?

 

[pcray1231]

Where mineral rights are seperate from surface rights, it's because someone sold the mineral rights, right?

It can happen that way. But more often, someone sold the surface rights and held onto the mineral rights. Selling both together would command more $. While I'd love to see em combined again, it'd be wrong. The current mineral rights owners may have never sold the surface rights if they knew they'd lose the mineral rights, and the current owners of the surface rights may have never bought the land if the expense of mineral rights came with.

 

[bikerfish]

I think you should be allowed to lease the mineral rights, but they forever should be owned by the owner of the surface property. when the property changes hands, the lease can be renewed or not, totally up to the new owner.
just because I like german motorcycles doesn't make me a commie!LOL
in my mind, selling the mineral rights is only making a short term buck. keeping the rights with the property would obviously make it more valuable.
this is going to start to be a huge topic in this state as the marcellus war gets going. these gas companies are going to take it all eventually. if they don't have or can't obtain the mineral rights, they will have their well padded government declare eminent domain and just take it anyways.
either way, the little guy will get royally shafted. no mineral rights, no gas lease, no royalty payments, and no water.
but that's ok, they can build a bunch of walmarts on the devastated land and the poor people can buy all the water they want there.

 

[pcray1231]

I think you should be allowed to lease the mineral rights, but they forever should be owned by the owner of the surface property. when the property changes hands, the lease can be renewed or not, totally up to the new owner.

First, the Marcellus companies mostly do indeed lease mineral rights, not buy them. I'm sure there are exceptions, but thats the typical way. They must then lease it from the mineral rights owner, which may or may not be the surface rights' owner.

I agree with you that I'd rather see them combined. But that ship has sailed, you can't go back. If you want to combine them again, who you gonna screw? Either the surface rights or mineral rights owner has to give up their property. Are you going to force money to change hands for this exchange? If so, you realize you're asking one entity to spend considerable amount of money they may not have to buy property they may not even want.

You have to understand that surface rights do not trump mineral rights. If you pass such a law, people like Osprey might be evicted from their land and forced to sell it to whoever owns the mineral rights. The alternative is to ask people like Osprey to dish out a bunch of $ he may not have to buy the mineral rights.

 

[bikerfish]

I totally understand the ship has sailed and there is no way to turn it around. just a shame these things have happened the way they did. I'm sure the original owners that sold the rights were swayed by the big lump of money they were offered at the time.
if most folks don't own the mineral rights, then who does? coal and gas companies? how ironic. in that case, I guess no lease is even needed, and no royalties will ever be paid.
I understand that surface rights do not trump mineral rights, but why should mineral rights trump surface rights?
I've heard talk around me of gas companies threatening land owners that they will take the gas, whether they sign a lease or not. they want to put in legislation that will allow just this sort of thing. they are telling property owners they better sign now or lose out altogether. it's gonna start getting ugly and it's only just begun. the only thing I tell these people is to get a lawyer, whether they want to lease or not.
you think you own your property? guess again. if someone wants something on it or under it bad enough, they will take it.

 

[pcray1231]

I'm sure the original owners that sold the rights were swayed by the big lump of money they were offered at the time.

Again, you're assuming the owner of both sets of rights sold the mineral rights for profit. Usually, it's the other way around. The owner of the land sold the surface rights to developers and held onto the mineral rights. Then we build malls, houses, etc. on the surface, and get mad when the original owner decides he wants to extract minerals.

if most folks don't own the mineral rights, then who does? coal and gas companies?

Possibly, but not usually. If the mineral rights and surface rights are indeed separated (they may not be), then the county should have some documentation. Usually, this happened way back from the original owners. In SE PA, it was perhaps farmers who owned large tracts of land and parceled it off for development. In that case, their heirs probably own the rights. In the northern woods, the areas were often settled by the lumber industry, and timber companies often own the rights.

The gas boom came later. I'm not saying gas companies haven't purchased any mineral rights, I'm sure they have. But much more common is the gas company leasing the mineral rights, not buying it. Many of these leases go back to the 40's and 50's, when the gas boom first hit in our state, but those are mostly the western half of the state where hundreds of thousands of wells have existed for decades. Marcellus is hitting a new area, and I doubt gas companies had much "ownership" in place. Also, Marcellus wells require access to much more mineral rights than just the plot the pad is put on. Because its newer and takes rights to more land, I can about guarantee they lease and pay royalties rather than try to purchase mineral deeds. How long that lease lasts for depends on the contract. But if the land and mineral rights are sold, the lease stays with gas company for the length of the lease. The new buyer now gets the royalties, of course, but cannot kick the gas companies off until the lease is up. They knew the lease was in place before buying, and bought the land as well as the contract.

you think you own your property? guess again. if someone wants something on it or under it bad enough, they will take it.

No, the first question is the real question. When you bought your land, you should know whether you own only the surface or the land underneath as well. If you don't own it, you don't have much say. They aren't taking anything from you, you didn't have it to begin with.

 

[JackM]

pcray1231 wrote:

you think you own your property? guess again. if someone wants something on it or under it bad enough, they will take it.

No, the first question is the real question. When you bought your land, you should know whether you own only the surface or the land underneath as well. If you don't own it, you don't have much say. They aren't taking anything from you, you didn't have it to begin with.

This is the crux. And pc is also correct that typically large tracts of land were purchased by land speculators of all sorts-- railroads, lumber companies, coal companies, surprisingly "land companies." When these folks subdivided and developed the landscape for our cities and towns with residential communities, they sold off only surface rights (typically) and especially where they KNEW their were mineral rights worth owning. Some areas of the Commonwealth never had the mineral rights and surface rights severed, others, almost always.

I am not certain whether "mineral rights" includes MS shale depth pockets of gas, but I assume they do. My mineral rights are probably owned by The Pittsburgh Land Company. If the company still exists. A question may also arise as to whether the mineral rights revert to the owner of the surface rights if no successor exists to the interests of the mineral rights owner.

 

[osprey]

Berwin White mining Company owns the mineral rights to both of my properties. There is virtually no property available in this part of Pa that comes with mineral rights. Seriously go to you tube and search Clearville Pa. Eminent Domain and you'll see what can occur if they want your property. They took those folks land for a natural gas underground storage facility and marcellus drilling occured after. Just for the sake of argument do any of you own the mineral rights to the property you live on? I'll bet not many or any.

 

[bikerfish]

I just don't like the idea that mineral rights trump surface rights. I guess it's because of the potential value of what's underneath compared to the value of the surface. money always wins.
pcray, thank you for setting me straight on alot of these things!

 

[JackM]

I don't think reservation of mineral rights under the surface carries with it the right to enter the surface and dig or drill, but this is NOT my area of the law. So you may not be entitled to the royalties of the quantity of gas extracted, but may be entitled to compensation for surface disturbance.

 

[pcray1231]

mineral rights don't trump surface rights, nor do surface rights trump mineral rights. The surface rights owner owns the surface, and the mineral rights owner owns whats underneath. Not that difficult a concept.

Where it gets difficult is when the two properties infringe upon one another, as Jack was saying. Jack, mineral rights owners do have a "right" to access their minerals from the surface. The law states something about "reasonable" concessions, it really likes the term "reasonable", so they make it a really gray area. They cannot, for instance, tear down a house or other improved property to put up a gas rig, that infringes upon the right of the surface owner. But if you have a nice, unimproved woodlot behind the house that is not "in use", the mineral rights owner can use that land, so long as they take "reasonable" precautions to prevent disturbance to the surface landowners rights as much as possible.

It's like if you buy a piece of land with no road access, surrounded by posted land. You have the right to cross said posted land to access your own land, so long as you do it as quickly as "reasonably" possible and cause as little disturbance as "reasonably" possible in doing so. The same is not true, however, for public land. For public land, it's not yours, you have to find unposted access.

 

[osprey]

The original intent and definition of Eminent Domain was supposed to be for the "Public Good" like a road or a railway or a flood control dam etc. not for a public owned company to get rich on they have perverted it.

 

[pcray1231]

but where does eminent domain come into this? I don't understand the point? I haven't heard of anyone using eminent domain for resource extraction?

 

[JackM]

It would not surprise me to see eminent domain used to take land in order to allow extraction if the benefit can be shown to serve the public good (local real estate or other taxes) and so long as "just compensation" is paid.