When you purchase real estate in Sequim or Port Angeles, you will almost certainly see a little clause in your title insurance policy which reserves mineral rights to a prior owner, which could go way back in the chain of title. For example, logging companies like Weyerhaeuser have sold off tens of thousands of acres of land for residential use but reserved mineral rights. It was a standard practice and has been as long as anyone can remember. What mineral rights could there be? The obvious ones of value would be oil, gold, silver, and platinum to name a few.
So what does that mean for you as a buyer if you buy real estate and some company or heirs from the past still retain mineral rights? Probably nothing. When was the last time someone discovered a big oil and gas or other mineral rich find on the Olympic Peninsula in the Sequim or Port Angeles areas? Never. So why did they include that kind of reservation in the deeds? Because lawyers told them to. Simple as that.
Could there be a valuable mineral under your real estate? Yes, and you could win the lottery, too. The odds of a precious mineral being discovered under your real estate are about the same as winning the Mega Lottery. Then consider how the odds narrow even further. What are the odds that the only access to the minerals is through your land? Now the odds get astronomical. Sometimes oil wells are hundreds and even thousands of feet deep, but they rarely go straight down. Large oil reserves are often far from the rigs that pump the oil to the surface.
But here’s the clincher. Even if a precious mineral was discovered directly under your property, and there was no access from any other land (virtually impossible), the owner of the mineral rights cannot trespass onto your land, nor can they touch or damage the surface of your land. They would have to purchase your property for whatever price you demanded. (How does three million dollars sound?) When you put this whole issue in perspective, you should hope that minerals are discovered under your property someday. But I wouldn’t count on that any more than I would bank on winning the lottery.
There is one other potential option. You might buy the mineral rights and legally attach them to your real estate again. I did that years ago for a client who just wanted them, even though he understood there was probably no value to them, that they added no value to his appraised property value, and that it was extremely unlikely that precious minerals would ever be discovered precisely beneath his property. It took months, but we were able to purchase the mineral rights from a logging company that had owned the property way back when for $100. I don’t recall precisely, but I suppose their legal costs were five times that. But now they own the mineral rights. If you are buying property, I would not make this a contingency. Buy and close on your home or land, and then pursue purchasing the mineral rights later. Realize it may be very difficult to track down the owner and the person who has authority to transfer the mineral rights, and they may simply refuse to deal with it, because it comes up so rarely. But then again, why bother?
Last Updated on July 27, 2012 by Chuck Marunde
