Jim Valentine: Mineral rights and other considerations

Jim Valentine on Real Estate

Jim Valentine on Real Estate

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Mineral rights are a part of real estate that often gets overlooked or trivialized. Most home Buyers are looking at the surface of the land and what it will mean to them if they buy it. What can they do with it? Will it serve their desired purpose? If you are looking in a subdivision the mineral rights are generally not included in the sale, or there are deed restrictions that prohibit mining activity. That is understandable.

In the outlying areas you can find acreage with the mineral rights intact. In the right area this can be of interest as you might have a gold vein on your property to tinker with. When you buy your property, you will see that you can’t get title insurance on mineral rights. If you are buying with the intent to mine, then you will need to be careful and check the title to make sure that the mineral rights weren’t stripped off at some time.

It was common for a long time for a seller to keep half of the mineral rights during a property sale in Nevada. This happened with regularity as most people didn’t concern themselves with minerals and it didn’t mean much to them to not have half of what they can’t see or are concerned with. If you are in a mineralized area, however, you might find somebody coming around looking to mine under your property if you don’t own the mineral rights. There are laws to protect your improvements in such circumstances, but it can be a legal infringement into your quiet enjoyment.

In recent times we usually take the position that if the mineral rights have survived this long with the property, they should stay with the property rather than having the seller retain half of them. It makes for a cleaner title in the long run. This eliminates the threat of future mining activity by your house and the reality is that if there was good value in the minerals there would likely have been mining at some time during the past 150 years.

There is more oil in Nevada than is generally known, mostly in the eastern end of the state. Hydrocarbons are part of your mineral rights package. There was a time when oil companies came through and leased oil rights on property. You may find such a lease in your title report when you buy property. What does it mean to you? It will depend on where you are and the likelihood of having a profitable well on your property. Usually, oil leases will have little or no consequence to the property owner, but you should be aware of the fact that it exists and what the nature of it is so you can make the right decision when buying or building your improvements.

Mineral rights can be a profit source if you have the right minerals, proper mineral rights and property location. It isn’t easy to pull all of those components together. Most sellers of mining property have a good understanding of their asset and its potential. Why would they sell? Often it is because of the cost of getting the product out of the ground considering the time as well as money involved. Planning, constructing, and mining and processing can be costly these days. Many people find themselves with a choice piece of dirt with mineral rights but are undercapitalized to properly proceed.

Having the mineral rights just for the sake of having them can sometimes throw a stick in the spokes of the deal. We’ve seen people lock up in negotiation for a property over the associated mineral rights that have no clear value. It becomes a matter of principle, unfettered ego. Keep your eye on your objective and understand what it is that you are buying or selling. Why let something of no value hinder your negotiation progress? It’s like having a wooden nickel – it sounds nice, but the value is trifling.

Know what you are buying, and you might find a bonus to your portfolio in the form of potential laden mineral rights. Be realistic about them whether buying or selling – they can have tremendous value or zero value.

When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, BS.3481, 775-781-3704. dpwtigers@hotmail.com 


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