Do Minerals Transfer with the property?

Do minerals transfer with the property?

I was representing the seller, when the buyer recently asked if the minerals transferred with the property; the question seemed more out of curiosity than anything else.

We looked at the copy of the title commitment and saw an Exception there for a mineral reservation by the Union Pacific Railroad in 1907.

Without the actual document before us, we really couldn’t tell whether all minerals were reserved by the Union Pacific, or if it was a coal reservation, or if they reserved the right to prospect for those minerals etc…so, I suggested that he read the document that was linked on his emailed copy of the title commitment.

Reservations made on deeds in the chain of title are shown as Exceptions on a title commitment, but title insurance examiners don’t (usually) follow the mineral chain. So, if the Union Pacific deeded those rights at a later date to the Golly Miss Molly Mineral Corp,  that transfer of rights wouldn’t show up on the title commitment. I knew if he had any further questions about the minerals we would refer him to legal counsel, or a “land man” to research fully the mineral ownership.

When minerals are “reserved” to the seller in a deed, those rights/minerals do not transfer to the buyer and are “severed” from the land.   In some cases, minerals/rights were severed well over 100 years ago. In the past, buyers may not have been aware of this.

The new 2016 Colorado Residential real estate contracts provide a new disclosure to buyers that they may not be purchasing the mineral rights, and that their property, or their neighbor’s property, could be subject to mineral development. The new disclosure, and Senate Bill 14-009 that requires it, doesn’t create a duty to investigate further for sellers or their agents, (however if the seller or their agent knows about anything that may impact the property they already have a duty to disclose.)

The Colorado Oil and Gas Conservation Commission (COGCC) may be a good place for buyers to get further information about oil and gas activity.

But, real estate documents often reference “Oil, gas and other minerals”. 

What are "other minerals"? Other minerals could be Oil, Gas,  Diamonds, Gold and Silver, Molybdenum, Amethyst, Sand and Gravel, Copper, etc… the list is very long, because Colorado is rich in mineral resources!

Just out of curiosity, I did a brief search for Oil and Gas production and Mines in our county.

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When I searched for “Mining in Larimer County”, I was so excited to find, on the first page of the search results, a nifty map entitled “Map of Mining in Larimer County Colorado”!

Eureka!

I thought, “ This map is a great resource for buyers”!

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To my chagrin, the Silver Mine Subs, was listed and located on the map, precisely in the middle of the City of Fort Collins!   They make a great sub sandwich, but I’m fairly certain they are not involved in any mining or mineral activity!

The new disclosure on the new 2016 Colorado Residential Real Estate Contracts will provide necessary disclosure for buyers and I’m sure, some interesting conversation along the way.  

‘ Looking forward to a great 2016!

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Mary Douglas, your Mountain Broker-Associate and REALTOR®

United Country Ponderosa Realty, Red Feather Lakes, CO

 www.marydouglas-redfeatherlakes.net

970-231-5756 phone or text- email: mary@redfeatherlakes.com

I specialize in the Red Feather Lakes and Livermore area, Fox Acres, Crystal Lakes and Glacier View Meadows Subdivisions, if you are interested in buying or selling your mountain home, please give me a call, I’m here to help you.

The information contained in Mary’s blog is deemed reliable but is not guaranteed and the opinions and views expressed in these articles are solely those of the author.

I write about my area in Colorado; Law, Custom & Procedure vary from State to State and even within the State.

REAL ESTATE IS LOCAL.  Always consult with your LOCAL Real Estate Professional.