In Tarrant County Texas
I leased my mineral rights in 2008 with renewal due in 2011. I am selling my house now, before the original lease is up for renewal.
The question is: Who retains the agreement with the gas company, the old or new owner of the property? Do I automatically own this lease as the original signer or does it pass to the new owner for renewal when I sell?
In Texas you can reserve the mineral rights under the property when you sell the surface rights. This is very common and is easy to accomplish. The rights to the current lease, the rights you have to enter into future leases etc will be retained by you. Just make sure the reservation language is clear, hire an attorney to make sure your intent is clearly stated.
Some lenders don’t like to lend money for purchase of property subject to an oil and gas lease. It may be in your best interest to sell the house and then lease again. I’d want the maximum amount of buyers for my property.
If you want to keep the minerals, you must do so by stating that mineral reservation in your deed, or you can sever your minerals by deeding them out of your name into another entity. Either way, you will have to state in the deed that it is a conveyance of surface only and subject to all prior mineral reservations. I assume you will be going through a title company and their attorney will draw the deed for you subject to your specifications. Also, you will want to make sure you include the mineral reservation in your sales contract. If you wish to convey your minerals, that will also have to be a part of the sales contract and the deed. If you convey the minerals while under lease, that information needs to be a part of the contract and deed. If you keep your minerals and the lease expires then you are free to release them or if there is a well, you will receive the income from that. If you sell the house with the minerals, you should up the sales price. Minerals are a real property interest. In short, it is up to you to decide if you wish to retain the mineral interest or convey it to the purchaser.
Do I contact the gas leasing company to inform them of the transfer if I sell them along with the property? Lease renewal is due this year after my proposed sale date.
Laura Reagan said:
If you want to keep the minerals, you must do so by stating that mineral reservation in your deed, or you can sever your minerals by deeding them out of your name into another entity. Either way, you will have to state in the deed that it is a conveyance of surface only and subject to all prior mineral reservations. I assume you will be going through a title company and their attorney will draw the deed for you subject to your specifications. Also, you will want to make sure you include the mineral reservation in your sales contract. If you wish to convey your minerals, that will also have to be a part of the sales contract and the deed. If you convey the minerals while under lease, that information needs to be a part of the contract and deed. If you keep your minerals and the lease expires then you are free to release them or if there is a well, you will receive the income from that. If you sell the house with the minerals, you should up the sales price. Minerals are a real property interest. In short, it is up to you to decide if you wish to retain the mineral interest or convey it to the purchaser.
The company that has your mineral interests under lease should be the last thing you worry about in this situation. You signed a contract with them, it will terminate some time this year, they apparently are interested in renewing the lease. If you sell the property, the deed will be recorded and that provides constructive notice to the Lessee. You don't need to do anything else at this point. What to do with the mineral interest is an independent decision from the decision to sell your house and the surface estate. If your property is in an urban or suburban area, your lease may already include a no surface occupancy clause which gives the Lessee the right to pool your lease with others, but not the right to enter on or drill any wells on your property. If your property is urban or suburban and does not include this provision, you should certainly think about it for any future lease. If the property is rural, you can include similar restrictions on drilling within a set distance from any house or structure. These types of restrictions should reduce any fear that a prospective surface only purchaser might have about buying your house.
A decent rule of thumb, for mineral interests in a non-producing area, is that the value of the minerals is roughly equal to 3 times what they would bring in a typical lease bonus transaction. Most people when buying a house aren't willing to pay extra to receive the mineral rights, but they will be more than happy to accept them as part of the deal if they don't have to pay more. If you sell your house and don't get an offer that adequately compensates you for the mineral rights, simply reserve the minerals. If the buyer objects, wait for the next buyer.
I think if you sell fee simple you will lose the mineral rights to that portion you are selling - most residential real estate is sold fee-simple - contact a lawyer to be on the save side.