What Are Mineral Rights? Subsurface Rights Explained

The ground beneath your property can hold valuable subsurface resources like oil, natural gas, and other minerals. The rights to these underground resources are called subsurface rights. When you own land, you might think you own everything under it. However, that’s not always true.

Understanding subsurface rights is important, as these rights can be worth a lot of money. They can also affect what you can do with your land. Let's learn what subsurface rights are and how they work. This can help you make smart choices about your real estate assets. Keep reading as we define subsurface rights, explain U.S. regulations, and explore what legal options subsurface rights refer to.

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Key Takeaways 

• Subsurface rights, mineral rights, mineral interests, and mineral estate all mean the legal ownership of the mineral resources found beneath your property.
• You can own land without owning what's underneath it. This is known as a split estate.
• If you own subsurface rights, you can explore, develop, lease, sell, or simply keep them. 
• If you want to sell your mineral rights, you can access thousands of serious buyers when you work with The Mineral Auction.

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Subsurface Rights vs. Mineral Rights

When landowners first learn they can own what’s beneath the ground, they often get confused by the terminology. Words like subsurface rights, mineral rights, mineral estate, and mineral interests get tossed around interchangeably, and it all starts to sound like just legal jargon. But the truth is, they all refer to the same thing: ownership of minerals beneath the physical surface of the land within the property boundaries.

The underground spaces beneath your property may be home to a wealth of natural resources, from precious metals to fossil fuels. The likelihood of valuable mineral deposits on your property is increased in resource-rich areas with a history of production.

Your subsurface and mineral rights grant ownership and control over everything under the ground on your property, including oil, natural gas, coal, metals, and other valuable materials. Because you own them, you can decide what happens to those natural resources. You can keep them, use them, lease them, or sell mineral rights to someone else. Surface rights refer to the legal option to pursue resource extraction or a mineral rights sale or lease.

When you sell your mineral rights, the buyer and all future mineral rights owners will have the right to mine on the property. It is also possible that the new mineral owner’s goal is to sell the mineral rights to a mining company that will later extract the minerals for profit. It may be a few years before sellers see anyone come calling for the mineral rights they've sold.

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Subsurface Rights vs. Surface Rights

Land ownership can be divided into two parts under property law: surface rights and subsurface rights. Surface rights are the rights to use the land's surface. If you have surface rights, you can build a house, plant crops, or use water on your property. You control what happens above the ground on the property's surface. You can also control a limited area beneath the surface for the purposes of building basements and other similar structures.

As we discussed above, subsurface rights, on the other hand, give you control over what's below the surface. This includes oil, gas, and minerals deep in the earth. These are part of your mineral estate and are sometimes separate from surface rights. Keep in mind that subsurface rights holders are still subject to applicable laws and certain restrictions placed by the surface owner.

An important thing to understand is that surface and mineral rights to the same property may be owned by different parties. This is called a split estate. It happens more often than you might think, especially in areas where oil and gas companies drill for resources beneath the land. Mineral and surface rights are also sometimes split when rights are passed down.

However, you should also note that selling your mineral rights ownership doesn’t mean you give up all control over how the land is used to develop and extract minerals. Surface use agreements dictate how the parties involved in buying mineral rights can impact the surface of the land. This gives surface owners some protection from disruptive mineral exploration and extraction.

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The Understanding Mineral Rights in the U.S.

In most countries, the government owns all rights to all mineral resources such as oil, gas, minerals, and rocks. Entities are prohibited from unearthing and selling mineral commodities without proper authorization.

However, in the United States, ownership of mineral resources, found below the surface, typically belongs to the individuals or organizations that own the surface. This means that they own both "surface rights" and the "mineral rights." However, the owner is free to lease, sell, or bequeath his or her mineral rights to other people. Most states have laws governing the transfer of ownership of mineral rights, mining, and drilling activity.

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The Rights Granted by Legal Ownership of a Mineral Estate

When you own subsurface or mineral rights, you have legal rights under property law. These real property rights let you benefit from the natural resources under your land. This is why it’s important to understand what constitutes mineral rights ownership. Let's look at what you can do when you own subsurface rights:

• Right to Explore — You have the right to explore the minerals that lie beneath your property. You can hire companies to study the land and find out what resources are there. 
• Right to Develop and Produce — This right includes drilling for oil and natural gas or mining for other natural resources. You can do this mineral development work yourself or hire an oil and gas or mining company to do it for you. Keep in mind that handling oil and gas development yourself can be prohibitively expensive and complex.
• Right to Lease — You don't have to extract the minerals yourself. You can lease your subsurface rights to an oil and gas company, mining company, or another production interest. When you sign a mineral lease, you agree to let the company drill on your property in exchange for a portion of the profits. This is a common way that mineral owners make money from their rights.
• Right to Receive Bonus Payments — When you sign a lease agreement with a company, you have the right to receive a bonus payment. The bonus payment is a one-time payment that can be worth hundreds or even thousands of dollars per acre, depending on your property's location and the minerals beneath it.
• Right to Receive Royalty Payments — If the company finds oil, gas, or other natural resources and starts producing them, you have the right to receive royalty payments. These are regular payments you get as long as the company is producing minerals from your property. Royalty payments give you ongoing income from your mineral estate.
• Right to Sell — You can also sell mineral rights. When you sell subsurface rights, you get money now instead of waiting for royalties over time. Many property owners choose to sell when they need cash or don't want to deal with managing the mineral estate. Working with trusted mineral brokers like The Mineral Auction can help you get a fair price when you decide to sell.
• Right to Keep — You also have the right to do nothing. You can keep your subsurface rights and leave the minerals in the ground. No one can force you to lease or sell your rights. You remain in full legal ownership of your mineral estate.

Keep in mind that after purchasing subsurface rights, the investment or production company is then transferred these rights. You lose the rights listed above when you sell and are no longer the subsurface rights holder.

If you’re not sure whether or not you’re the mineral rights holder for your property, you can conduct research into the property deed and county land records to determine the owner of the surface and subsurface rights. A title company or legal professional can conduct a title search to handle the process of identifying who owns the mineral rights to your land.

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Get Help with Your Subsurface Rights from The Mineral Auction

Subsurface rights are an important part of property ownership that can be very valuable. Your subsurface rights could be worth more than you think. Understanding these rights helps you make smart choices about your mineral estate. 

‍The Mineral Auction is a trusted mineral broker that helps property owners sell mineral rights through a trusted auction process. We have connections to thousands of qualified buyers and can help you get the best price for your mineral estate. Our team is here to guide you through a simple and rewarding sales process.

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Ready to maximize the value of your oil and gas subsurface rights? Contact The Mineral Auction today.

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