When people consider buying Colorado ranch real estate, they concentrate on the big issues: views, proximity to town, trout streams, horse pasture, and the quality of the home or the building site. All too often, they neglect to research the property's mineral rights.
Mineral rights? Yes, in Colorado real estate law, mineral rights and "surface rights" are often a "split estate." While you may assume that the property owner has domain over all his hayfields, orchards, and woods on his property, the fact may be that the mineral estate may have been severed from the property a century ago. That bucolic ranch property may end up with a gas well drilling crew pulling up with hundreds of tons of equipment, cutting the fence, dozing up the hayfield, and setting up a drilling rig on your beautiful property. And the property owner doesn't have a darned thing to say about it, because he doesn't own the mineral rights, which are a deeded estate, just like the acreage and water rights.
How does this happen? The two most common ways are the way the property was originally homesteaded or the rights were sold off by a previous landowner. In many cases, when properties were originally homesteaded back in 1910 or so, the government didn't grant mineral rights to homesteaders. The rights were reserved for future sale. Homesteaders didn't mind, because they couldn't foresee anyone digging for gold on a flat plain. When the rights came available for sale, they didn't see the point in buying them, and often wide swaths of mineral rights were sold to speculators for small amounts of money. The other way that mineral rights become severed is if the property owner sells them to a mining company or speculator. Who knows, he may have had trouble making his land payments and that was the life buoy that kept him afloat. Maybe he just wanted to buy a new pickup.
Few people in Colorado envisioned the natural gas boom that we are now experiencing in the early 2000's. The Mancos Shale formation covers wide regions of western Colorado, and it is known for its seams of coal. While seams of coal may not be recoverable because of its depth underneath hundreds of feet of rock, when it's punctured by a gas well, it emits methane--natural gas. That is considered a mineral.
No one wants their dream ranch to be plowed up and traced with gas wells and pipelines--especially if they're not earning any royalties from the sale of the natural gas! So how do you avoid this nightmare scenario? First and foremost, order a thorough title search when buying any ranch property, and make your purchase contingent upon clear ownership of the mineral rights. However, title companies sometimes miss mineral rights severance. Maybe the owner sold the mineral rights in 1968 and the new owner never recorded the deed, and presto! a sharp-eyed grandson going through grandpa's estate finds his new fortune.
Sometimes there will be a reservation in the title, such as "a reservation to pursue a vein or lode of ore" from some other person. Such as reservation isn't the same as severed mineral rights. At that point, you have to assess how serious is the possibility that someone will start at a neighboring property and go underground and follow a vein of silver, gold, coal, or whatever is under your property, and whether or not that would affect your enjoyment of the property.
If the tract is large enough to worry about--over 10 or 20 acres--I recommend hiring an attorney who specializes in mineral rights to look over the contract. When you're purchasing a ranch worth millions of dollars, representing your dreams, future, and heritage, you want to make sure you own it all.
If you have more questions about Colorado ranch properties for sale, horse ranches for sale, vineyards and orchards for sale, Colorado mountain property for sale, and Colorado cattle ranches for sale, visit my websites at link: www.aspenranchrealestate.com .
Gary Hubbell, Associate Broker
Needlerock Mountain Realty & Land
Crawford, Colorado
970 921 5588
970 988 2122 cell
970 921 5331 office
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment