If you are a landowner leasing out — or considering leasing out — mineral rights to an individual or company, you need to be aware of the fact that complications can arise. These relationships often involve significant sums of money, generational ownership rights and permissions for multiple parties to access the same piece of land, which can all be very complex.
Considering all that is involved and at stake in these real estate relationships, it is prudent to be aware of the more common disputes that emerge between property owners and the people leasing mineral rights.
- Financial disputes: These include royalty negotiations and signing bonuses, both of which will be crucial in a property owner’s decision whether to lease the mineral rights or not. If payments are not made properly or if a property owner fails to reserve the land for which the lessee has paid, a legal battle can ensue.
- Land usage and access disputes: During the terms of a lease, lessees are allowed to conduct test drilling and extraction. The timing of these events can be disruptive for the property owner, which can lead to heated arguments and bitter disagreements.
- Ownership disputes: Over time, property can change hands numerous times. Because of this, property owners may not know that they don’t own or are bound by a lease for mineral rights.
- Consequences of extraction: Mining and drilling can destroy, damage or otherwise alter land. However, these changes are not always immediately noticeable. Once the damage does become evident, it can be all but impossible to determine who is accountable.
Anticipating these disputes can help you craft a comprehensive, explicit lease that addresses these and other issues. Without this type of lease, confusion and vagueness can lead to costly litigation and years-long arguments that affect everyone’s access to and usage of the property involved.
Californians typically aren’t prepared to deal with mineral rights transactions on their own, and they may not be familiar with the legal process of creating, signing and enforcing a lease to protect their rights. Because of this, consulting an attorney experienced in mineral interest ownership and leasing will be crucial.