Replies to This Discussion

Permalink Reply by Max on July 31, 2012 at 4:01

Good question. 

Giving the laws of Louisiana, who knows?  I would think that if the minerals were not leased or under production, they would go with the forced sale.  A car repo doesn't take note of how much gas is in the tank and give it back to you, they take the whole car, gas and all.  

If there is a lease or production, I would think the contract would trump all the 'what if's'.

• ▶ Reply

Permalink Reply by Thomas C. McKowen, IV on July 31, 2012 at 5:00

The same rule applies as in other sales.  Recorded rights (mineral rights, royalties, leases) in third parties are not affected.  If mineral rights owned by the foreclosure defendant are not excluded in the sale, they go with the land to the purchaser.

• ▶ Reply

Permalink Reply by Andrew on July 31, 2012 at 12:03

What Thomas said is correct. The Mineral rights will go with the land in a foreclosure unless they are owned by a third party. If they are under lease, the minerals will be transferred subject to that lease.

In a non-foreclosure sheriff's sale, the minerals could be reserved from the sale. This would be most likely to happen in a partition by licitation.

• ▶ Reply

Permalink Reply by kittycatmama on July 31, 2012 at 13:30

Correct me if I am wrong. If John Doe owns a property with minerals, sells minerals, and then goes into foreclosure, those minerals come back to the foreclosed property (this is Louisiana I am referencing). If John Doe had a mortgage on property then minerals were mortgaged and he cannot sell what he doesn't own. Some people know when they are going into foreclosure & sell minerals to get quick cash. That won't fly.

  I have noticed that when some investors buy minerals, they will record a request of foreclosure on the property so if it does go into foreclosure they are notified

• ▶ Reply

Permalink Reply by Andrew on July 31, 2012 at 16:23

If the mortgage predates the mineral severance, then the mortgage will be on the land and minerals. The only way to avoid having the minerals be subject to foreclosure is have the bank agree to subordinate the mortgage to the mineral deed (this is very common with leases).

• ▶ Reply

Permalink Reply by Andrew on August 1, 2012 at 13:24

And if someone was insolvent and sold their mineral rights just before foreclosure, the creditor could file a revocatory action to annul the sale. However, if the sale was a legitimate sale rather than a sham transaction to defraud the creditor, the creditor would probably not go this route because the sold minerals are more valuable in cash than they are likely to increase the price yielded in a sheriffs sale.

• ▶ Reply