Daniel, What is Mineral Land? That is the way my first call of the day started.
I received the phone call from my old friend Brian who is a lender about to give a loan to a couple buying 35 acres of vacant land for an investment. Brian and his borrower both live here in the twin Cities, where the subject of this article rarely becomes a topic. The land however is located up in St. Louis County. Brian mentioned to me that after reviewing the title commitment he became concerned when he discovered that the mineral rights were reserved to someone back in 1965. Should we, the lender, be concerned or should my client have any worries? He asked. What is your, Gibraltar Title's, policy regarding mineral rights? Can you delete this exception or insure over it?
That is a great question that does not come up very often.
First, let me say a few things about Mineral Rights. When we refer to mineral rights as being reserved by someone other than the owner, what we are saying is that those rights are "severed" and have a separate chain of title. There are different types of severed mineral interests, which may include ingress and egress (access) over the surface of the property. Either a private party, such as a mining company or you and I, or a government entity, such as the State of Minnesota, may hold those rights.
In the event there is a request to insure over a severed mineral interest several factors will have to be taken into consideration. For instance, is the property is located in a city or town in which mining would be prohibited or impractical? Another thing to be considered is whether or not the holder of the severed mineral interest has complied with the filing requirements of Minnesota Statute 93.52, which is a clarification of ownership and a verified statement to such interest. After each case is reviewed, in its entirety, on a case-by-case basis, the company may choose to offer the ALTA 9.1 Policy Endorsement. As related to mineral rights, this endorsement reads, in part, as follows: The Company insures the insured against loss or damage sustained by reason of: "Damage to buildings constructed on the land after Date of Policy resulting from the future exercise of any right existing at Date of Policy to use the surface of the land for the extraction or development of minerals excepted from the description of the land or excepted in Schedule B."
I understand that my brief answer to this particular instance may have invited only more questions. So, I would like to emphasize that there are many different types of mineral interest, and several different forms of mineral endorsements. If you have a specific question or case relating to mineral rights, please feel free ask here, or give my office a call at (952) 830-1904.
Daniel Dominik
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