Home, Land, Property Buying and Selling - Pennsylvania real estate question concerning mineral, oil, and gas rights?

Trying to purchase a piece of land. Just found out that the owners (back in 1890) kept 7/8ths of the minerial, gas, and oil rights. Would you say that drops the value of the property? If so by how much. Would you still concider purchasing the property? I worry the great great great grandson comes along and says that we want to drill for oil and or coal, and we wont have a say. Please state your thoughts. :confused:

I'm sure there are regulations on mineral rights. I don't know exactly where you would start but would assume it would be state agency. Once you find the right office it should be a simple matter to find out what your rights would be and what those with the mineral rights can or can not do.

Original landowner as lessor typically retains only 1/8 interest in leasehold interests of mineral rights. This passes on to heirs and assigns unless one of those have sold the interests at some point in time.

A search at the local court house record room back to the original lease agreement will establish the amount of interest and whether or not it has been sold at some point. The 7/8 interest owned by the lessee typically is sold and assigned over and over again. Some Assignees retain a fraction of the leasehold interests as well. You can do the research yourself, but it takes a legal opinion to establish a clear title to mineral interests.

The local tax assessor can tell you the fraction of the mineral interests the heirs currently own according to their records and to whom the tax bill is being mailed. The fraction of leasehold interests is not always accurate in the tax assessor's office.

The original lease stands, no matter how many times it has been sold and assigned, that is unless the heir(s) sold their interests. Great, great, great grandsons can not drill for oil and gas because mineral rights have already been sold.

Pennsylvania Department of Natural Resources should be able to tell you the status of any wells and who current operators are. Many leases stipulate that if drilling does not take place within a certain amount of time that the lease becomes void and it is relinquished to the landowner.

If trying to purchase a piece of land, this is typically the surface only unless mineral interests are conveyed with the surface. If you are trying to purchase a piece of land and no mineral rights convey, then who owns the leasehold interests is not significant. New landowner will have no mineral rights unless those interests are conveyed along with purchase of land. Clear title to land and mineral rights, if any, should be established. Should mineral rights convey with purchase of surface, then a clear title to mineral rights and the fraction of ownership should be established.

Most leases provide a certain number of acres around well site for operation. Rights of way to the well are either included in the original lease or in a separate agreement. Any entitlement to free gas to the landowner's house is also spelled out as to the amount. There may be other factors included, such as use of water on the land. This info is important for you as a new landowner to understand. The leaseholders have right to operate and drill for oil and gas, maintain wells and pipelines, and maintain rights of way. There are title abstractors who specialize in oil and gas leases.

twelvepole, I am doing some OGM rights deed research for friends and in PA and the old tax assessment bills listed a 1/8 interest..... We were assuming the 1/8 interest was the remainder of this specifc family line after things were held by siblings, transferred, etc. But now I am the thinking the 1/8 figure is the assessed value of the royalty. I have seen a Forest Stewardship paper that states the 1/8 figure was a figure set by the state for valuation way back when. Do you think this is correct????? thanks C

1/8 royalty to OGM rights to owner and 7/8 to leaseholder is standard. The tax office at the courthouse can tell you what the assessment is for the 1/8 rights and how much the annual taxes are on them.

If OGM were never developed, the value to the owner of the 1/8 royalty rights is nothing unless there is potential for development. Potential development of gas is dependent upon the existence of a nearby gathering sysem. Leaseholders and operators are more interested in large tracts of land such as farms. If there are producing wells or mines, then the value of rights would depend on amount of production. The Lessor gets 1/8 royalty and 7/8 goes to the leaseholder (Lessee). This is industry standard.

If you are trying to purchase a piece of property where the 1/8 OGM does not convey with the property, then there would be no value to you as a surface owner. Not owning the OGM is not used to negotiate the value of the surface. You will be purchasing the surface only, not what is beneath it. The tax office can tell you what the assessed value of the surface is and what the annual taxes are. If you are not purchasing the mineral rights, then their assessed value is of no importance to you. Again, you are purchasing surface only if someone else owns OGM.