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Permalink Reply by Winter Kiptyn on July 25, 2009 at 1:31

I would think that if the previous owner reserved the mineral rights then it would pass on to their heirs and not you as the previous owner reserved the mineral rights. But without see the contract wording then not sure.

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Permalink Reply by Mac Davis on July 25, 2009 at 1:43

I should probably have mentioned this is Louisiana, where the previous owner would lose his mineral rights after 10 years. The previous owner looses rights in 2010 years no matter what, unless there's production.

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Permalink Reply by Checkmateking on July 25, 2009 at 2:22

Well yes, that's what contracts are for.

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Permalink Reply by Mac Davis on July 25, 2009 at 3:28

If I understand correctly, there are restrictions on contracts like this. For instance, if I sign a contract that says, I sell my mineral rights for 20 years to company XYZ, the mineral rights revert back to me (as surface landowner) after 10 years. If I sell the land to someone and reserve the mineral rights forever, the minerals revert to the surface land owner after 10 years.

(assuming no production.)

I wonder how the law is written. After ten years, the surface rights revert to the surface owner, no matter what any contracts say. This brings up the question of whether the surface rights owner can sell his "pending" mineral rights in this case for 10 years into the future if he doesn't currently own the mineral rights.

For instance, if the state law said something to the effect that "if mineral rights are severed from the surface property owner, 10 years after such severance, all mineral rights become the property of the surface property owner, nullifying any contracts for mineral rights." (Couch that in appropriate legalese.)

Does the law allow the surface owner to start the clock on a new 10 year severance of the mineral rights from the surface owner, even before they revert back to the surface owner? Assume the purchaser is aware of all the details of the previous mineral rights severance.

In concept, it makes sense that the surface owner would be able to start the clock on a new 10 year term even before the previous severance of mineral rights, but how is the law worded on this?

Once again, assume this is in Louisiana.

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Permalink Reply by Dion Warr, CPL on July 26, 2009 at 7:37

Mac:

Bump, and to further the discussion:

Might I point you to the following articles in the Mineral Code:

R.S. 31:77: Application of after-acquired title doctrine

If a party purports to acquire a mineral servitude from a landowner when the right purportedly acquired is outstanding in another and the landowner either subsequently acquires the outstanding right or is the owner of the land at the time it is extinguished, the after-acquired title doctrine operates to vest the right in the party who purported to acquire it to the full extent of his title.

R.S. 31:78: Prescription when after-acquired title doctrine applies; acquisition of outstanding servitude

If the landowner who purported to create the mineral servitude acquires the previously outstanding mineral servitude, after having alienated the land, the party in whose favor the doctrine operates has ten years from the date of the transaction by which he purported to acquire or the remaining period of the rights acquired by his grantor in which to exercise his rights, whichever period is greater.

R.S. 31:79: Prescription when after-acquired title doctrine applies; extinction of outstanding servitude

If the landowner who purported to create the servitude remains the owner of the land at the time of the extinction of the previously outstanding rights, the party in whose favor the doctrine operates has whatever time remains between the date of vesting of title in him and ten years from the date of the transaction by which he purported to acquired in which to exercise his rights.

Based upon the following applicable statutes, it would appear that after-acquired title would vest the mineral rights instantly to the seller upon extinction of the previously created servitude (in this case, 2010). However, said rights would only own the rights for ten years from the date of the deed (in his case, ten years from the date of sale in 2009.

This would function differently from the leasehold question that was on another thread, as to whether a lease signed by a party holding no mineral rights during the time of their possession of the surface could contract for a lease that would become applicable to a successor in title that became vested with mineral rights by prescription. In this case, the party who came into the mineral right contracted to burden it or convey it to a third party. In the leasehold question, a party attempted to burden a mineral right which it never possessed with a lease, which could not be applicable to a third party which became vested with the mineral rights.

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Permalink Reply by Mac Davis on July 26, 2009 at 18:55

Thanks again for the info. I'm still slightly confused. Maybe I need a few drinks before understanding passages from the Mineral Code.

Do you mean it would appear that after-acquired title would vest the mineral rights instantly to the seller (me) or to the buyer (company x)?

The first part of your post sounds to me like company x would get the mineral rights, but instantly to the seller sounds like they would come back to me.

i.e. are you saying company owns the rights from 2010 to 2019? (if no production, etc.)

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Permalink Reply by Dion Warr, CPL on July 27, 2009 at 4:16

Caliente:

I'm Dion. Did Baron say something, too? (Don't see a post from him)

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Permalink Reply by Mac Davis on July 27, 2009 at 8:12

Caliente, did you mean "has to drill before 2010" or "has to drill before 2019?"

2010 doesn't make any sense since neither I nor company x gets any rights at all until 2010.

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Permalink Reply by Dion Warr, CPL on July 27, 2009 at 4:33

Mac:

I'm sorry. Got mixed up in my own speak.

You bought property in 2000, with minerals reserved by the party from whom you bought the property. Ordinarily, you would receive your minerals (absent good-faith attempt to establish production) in 2010. But you sold your 'future mineral rights' to Company X in 2009.

Based upon this, at the point you would normally receive your mineral rights, you must make your mineral sale 'good' to Company X, so mineral title 'through' you (seller) to Company X (buyer), effective 2009. So Company X would have the rights from 2010 to 2019, as which point they would revert back to you (assuming a: there is no good-faith attempt to establish production and b: you still own the land at the date of prescription).

Again, sorry for the confusion. And you're correct, the Mineral Code can read like stereo instructions. Might I suggest (1) buying the 'orange book' (I think it's orange now) Mineral Code from Claitor's (with annotations) and (2) make sure to read the entire section which contains the relevant article (since there are numerous terms and conditions in the Mineral Code which apply to certain section(s) of the code.

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Permalink Reply by Mac Davis on July 27, 2009 at 8:28

Thanks again. This actually sounds like the way it "should" work.

To sum it up, the answer to my question is "yes." 8-)

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Permalink Reply by Jack B2 on July 27, 2009 at 3:13

If I might ask, I would like to reverse the question somewhat. If a person has only one year left on the retained minerals from land that they sold, what are the chances that they could secure a lease for their minerals?

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Permalink Reply by Jack B2 on July 27, 2009 at 3:43

To be more specific, the surface owner owns 2/3 the minerals and the previous owner owns 1/3 in Louisiana, out on the fringe of the play, at this time. What chance does the previous owner have in leasing their 1/3 with only 1 year left and the surface owner won't come to the table until the extinction of the outstanding rights and the acerage involved is 300.

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