What a pleasant surprise to discover you have not only inherited your father's estate, but also the mineral rights under the surface. But if you want to sell them, you may find yourself in the predicament in which some siblings want to sell the mineral rights in the estate auction, while others want to hold onto them. Can you divvy them up? That depends.
Do You Own the Mineral Rights?
While perusing estate auctions selling estates with mineral rights attached, many sellers assume they can do the same. But you may not own the mineral rights. Mineral rights can be severed and sold separately from the land they are on. You may have inherited the air rights but not the subsurface rights to the minerals under the land.
The mineral rights may have been sold outright or leased. If leased, you will receive royalties on production revenues. Either way, if the big oil company that leases the mineral rights decides to start exploration and development of the minerals, you will be obligated to respect the rights of mineral rights owners or lessors to surface access to allow equipment and workers on the land.
Inheriting and Appraising Mineral Rights
If your father retained ownership of all or some of the surface rights, you may sell them at the estate auction. A big mistake is to have the mineral rights appraised alongside the real estate. If the appraiser has worked for many years in prolific oil and gas basins such as the Permian Basin, he or she may be, or contracts the appraisal to, a mineral rights appraisal expert.
In a worst case scenario, you sell the mineral rights in the estate auction for a pittance. A year later your neighbor sell his mineral rights to an oil and gas company for tens of millions of dollars. A mineral rights appraisal expert will know if, for example, an oil fracking company is slowly buying up parcels of land adjoining yours.
Dividing Mineral Rights Among Inheritors
If an inheritor does decide to sell mineral rights at an estate auction or separately, problems can arise when mineral rights are bequeathed to more than one sibling. To avoid property inheritance disputes, more estate owners are giving inheritors a percentage ownership in mineral rights or leases, but this too can pose problems. Alternatively, each sibling could own the rights under different parcels of land. If you are preparing to sell an estate with mineral rights attached at an estate auction, consult with an estate appraiser on options.
To learn more about estate auctions, contact a company near you.