I am attempting to buy a property in which the seller is retaining the gas and mineral rights. I am having trouble getting a bank to give me the mortgage. I am pre-approved for the full amount, however when the bank finds out about the rights they refuse the financing. Does anyone know of a bank that does not have a problem with this?
NOT LEGAL ADVICE
Dear Ms. Nyberg,
It sounds like they wanted an excuse not to give you the loan. Why do they care if you get the minerals or not? The loan amount is the same. From the bank’s perspective, whether the mineral rights convey or not should be irrelevant. That would be like your telling the bank, “Oh, by the way, they’re not conveying the dog house in the corner of the lot” and the bank’s telling you “Oh, in that case, hell no, you’re not getting the money.” RIDICULOUS.
You should ask them, “Well, you don’t give out loans where the mineral rights don’t convey? HOW DO YOU KNOW if they convey or not? Do you insist that all of your Borrowers buy a mineral-title policy before you give them a loan? For that matter, how do you know whether or not the minerals or mineral rights convey in my case?” Just because somebody reserves them in a Warranty Deed does not automatically mean that he had them to reserve in the first place. I know nothing about the laws and rules for getting a mortgage, but this does not seem like a valid reason to reject a loan.
They do that all the time, because an oil company can drill on your front steps, and devalue the collateral. What you can do is ask the royalty owner for a surface waiver, and the bank should be ok with that.