Reservation of Minerals Addendum- A Trap for the Unwary

Reservation of Minerals Addendum- A Trap for the Unwary

Agents should exercise caution when assisting clients in the preparation of, and compliance with, the Mineral Reservation Addendum. The revised form is structured differently from its predecessor, leading some agents to fill out the form incorrectly.

Law Talk: 

The latest version of the TREC Addendum for Reservation of Minerals contains some enhanced information meant to clarify the definition and nature of mineral rights in residential transactions. While the added language may seem to be a bit of overkill for most transactions, it does provide some useful explanations for many farm and ranch deals. 

Instead of the “affirmative waiver” language of the former addendum, whereby the seller either waives, or does not waive, its surface rights, the most recent form reverses the issue. Paragraph C of the addendum is worded as a reservation: either the seller reserves, or does not reserve, its surface rights to drill for minerals. So in most cases, where a seller reserving minerals will waive the use of the surface, they now must provide in the form that they do not reserve surface rights. In such instances, the seller should now choose the negative answer, instead of the positive answer, as in the past.

Also, be careful not allow a seller to unwittingly go into default by failing to provide contact info of known mineral lessees. Paragraph D of the addendum requires the seller to provide known contact info if they are conveying minerals subject to a lease. While often overlooked, it would be unfortunate for a buyer to be able to terminate a contract based on this slight default.

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.