TitleBytes News & Happenings

Mineral Rights? Oh NO! (think Mr. Bill)

Geoff Pritchard, Chair of the MLTA Abstractor & Title Agents Committee

One phrase that makes most Title Agents (and underwriters) cringe is the inclusion of oil, gas, and mineral rights to a property. This is because not every time mineral rights are transferred do they appear on public record. Most realtors are now requiring mineral rights to be address on the warranty deed when the property is sold. These types of situations are discussed at the MLTA Abstractor & Title Agents Committee meetings, which take place at the MLTA Spring and Fall Seminars and the MLTA Summer Convention. This is a valuable committee, since we agents have a voice without the involvement of our Underwriters

According to the State of Michigan “A mineral right is a property right and may be sold, transferred, or leased similar to other property rights. Mineral rights are distinct from “surface rights,” or the right to the use of the surface of the land for residential, agricultural, recreational, commercial, or other purposes. Mineral rights may be sold or retained separately from the surface rights, in which case the mineral rights are said to be “severed.” A person may own all of the mineral rights for a parcel or any fraction of the rights. A person may also own rights to only one kind of mineral, such as oil and gas, or to only one formation or depth interval.

The ownership of the mineral rights in a parcel can usually be determined by examining the deed abstract for the property.” Title Agencies or Companies are often skeptical to add oil, gas, and mineral right verbiage for fear of the unknown. The Michigan Department of Environmental Quality offers a website to search for oil, gas, and mineral activity on or in the vicinity of a property, http://www.deq.state.mi.us/GeoWebFace/. But without a “patent” search performed by an outside vendor, Title Agents and Companies are limited to only what is in public record.

Michigan law does assist Title Agents and Companies in determining if an oil or gas right can be returned to the surface owner, but does not apply for mineral rights. Act 42 of 1963, Termination of Oil or Gas interest in Land states severed oil or gas rights revert to the surface owner after twenty years unless one of five actions have occurred in a 20-year period. These actions include issuing a drilling permit, oil or gas is actually produced or withdrawn from the severed holdings, the interest is utilized for underground gas storage operations, the severed interest is sold, leased or mortgaged, or transferred by a recorded instrument or a written noticed is filed with the county Register of Deeds.

As always, with question of this sort presented to a Title Agent or Company, your respective Underwriter or Underwriters are also a valuable resource for understanding, and possible authorization, if oil, gas, and mineral rights are able to be addressed in the sale of a property. But, if you’d like to share such views through an agent’s eyes, come join us. I hope to see every agent member of the MLTA at our next meetings at both Spring Seminars.