Should You Be Concerned About Selling Your Mineral Rights?

If you own land that has significant resources underneath, such as oil and gas, you may have been offered an opportunity to sell your rights to these so called minerals. Companies exist solely to extract these minerals, and they may offer you very lucrative deals. Most people decide to sell their mineral rights because it can yield the most profit. However, before you decide to take advantage of the incredible tax incentives that come with selling your mineral rights, it is important to understand a few things first. That way, you’ll be able to make the best decision moving forward.

Potential to Grow

It takes millions of years for oil and gas to develop, and your stockpile will not grow over time. What does change over time is the price of oil and gas, and you should take this into consideration. The first company that offers you a deal may be trying to get your rights on sale. Without proper knowledge and consultation from experts in mineral rights, you may not even realize that you aren’t getting a good deal. Instead of rushing into signing away your rights, you need to think about the current value and where the market is headed. Leasing is another option that landowners sometimes find appealing. Leasing companies will survey the land, and they often give a signing bonus at the start. However, this does not guarantee you more money as the hefty tax incentives change for land that is leased.

Next Generation

If you consider that the mineral rights might be worth less now and more later, it may be in your family’s best interest to hold onto the mineral rights for a while. Mineral rights are legally defined as property, and they can be passed down through a will or given away. That being said, many families pass their plans for the mineral rights down to the next generation only to have those rights and wishes sold to the first bidder. As the leader of your family, it may be best to sell the rights now so you can better manage the money.

Control of the Ground Surface

If you own the minerals under the land, then you also own the land above the minerals. Ground surface is a considerable aspect of leasing or selling your mineral rights. With the mineral rights in your hand, you can control what goes on at the surface, and you may be able to use the land for farming, raising livestock, or developing it into commercial real estate. Once you sell the mineral rights, these options go away. You still own the surface land, and the ownership of mineral rights does not affect this in anyway. However, the company that purchases those rights is allowed to drill and explore the land as they see fit. That means that your options may be limited until the oil and gas has been extracted, and then the land can return back to normal, the way you see fit. In the end, there is little to be concerned about when selling your mineral rights.