How to Differentiate Between Mineral Rights and Surface Rights

How to Differentiate Between Mineral Rights and Surface Rights

In transactions where the mineral rights are reserved, it is important for the parties to understand exactly what “elements” are included in the definition of “minerals” retained by the seller, and what elements belong to the surface and therefore transferred to the buyer.

Law Talk: 

The definitions of mineral rights and surface rights, and the differences between the two, are firmly established in Texas common law. In many cases, such as Acker v. Guinn, Reed v. Wylie, and Moser v. US Steel Corp. (citations omitted), the Texas Supreme Court has expressly held that as a matter of law, the term “minerals”, or “oil, gas and other minerals” does not include limestone, caliche, surface shale, building stones, sand, gravel or water, all of which (mentioned by name by the Supreme Court) belong to the surface owner.

Further, the Supreme Court has ruled that the term “minerals” does not include coal, lignite or iron ore that lie on or within 200 feet of the surface if production of those three substances will destroy or deplete the surface.

At times, a surface buyer would like to make clear that they have the right to take the rock and gravel from the property, though the seller has reserved the minerals. When documenting the nature of the surface rights transferred to the buyer in the warranty deed, it is typically not proper or appropriate, and in fact may be dangerous, to list some, but not all, of the elements included in the surface estate. Obviously, the deed doesn’t describe every blade of grass, tree, fence, and improvement attached to the surface, even though they all are part of the surface estate and transferred as a result of the deed. If a deed lists some parts of the surface estate transferred, such as caliche, sand and gravel, it leaves open the possibility that the seller would claim that by making such reference, the listed elements were the ONLY surface elements conveyed. As a result, it is often best to refrain from a specific list when describing the nature of the surface rights transferred to the buyer; reliance on solid Texas law should be sufficient.

This Title Tuesday Tip is provided courtesy of Rattikin & Rattikin, LLP, attorneys and counsel for Rattikin Title Company and is not a legal representation or statement of law. Please confer with your legal counsel for any and all legal questions.