When it comes to mineral estate planning, many mineral rights owners don’t realize how easy it is to lose these rights. Assets do not always remain static once the initial transfer has occurred. In fact, unless their mineral rights are in states such as Texas, Oklahoma, or New Mexico, inheritors will likely need to take action to keep their legal rights to mineral assets valid.
How Can You Lose Your Mineral Rights?
The tricky part is the laws around mineral rights vary from state to state. Your rights will be different depending on where your mineral rights are located, as will the timeline by which your rights might revert to the surface owner. Many rights are lost when owners lose track of their filing dates or fail to update or refile an affidavit to maintain them.
Take North Dakota, for example. In order to remain the owner of severed mineral rights in this state, you need to file an affidavit every 10 years. Otherwise, your rights revert back to the surface owner. In the 1999 case of Spring Creek Ranch vs. Svenberg, Spring Creek sought the addresses of mineral rights owners. All they found was a deed from 1950 without a street address, but this was sufficient for “reasonable inquiry,” and the mineral rights reverted to them. As long as effort is made to discover the owners of rights and the rights remain dormant, then ownership can be transferred.
Another way you can lose your mineral rights is by failing to pay state ad valorem property taxes on them. Just like any other legal asset, mineral rights must be properly paid to the county tax office. If you don’t pay taxes on your mineral rights, you risk losing them.
Some mineral rights have been lost through poor management. Oversight of a filing or expiration date can cause havoc for inheritors and their assets. Not being proactive is also a risk — owning property in a popular area that doesn’t get leased due to poor management can be just as unfortunate for inheritors.
Still, some people just don’t care about their assets as much as others. This can be especially true of mineral rights. If an owner feels like their assets will never be tapped into or yield a product, then they might want to avoid paying taxes and the hassle of filing the stipulation process, and will voluntarily let their rights lapse.
What Happens If You Lose Your Mineral Rights?
It’s important to have some degree of urgency over keeping the rights to your mineral assets, but you don’t need to let fear or anxiety take hold. By arming yourself with knowledge, educating yourself, and preparing for the realities of mineral ownership, you can avoid many problems.
First, it’s crucial to know the different ways to lose or forego mineral rights. Check what the rules are in your state. Some states (like Louisiana) have “prescription assets” and others (like North Dakota) operate under a dormant mineral statute, which states that rights may be lost if owners are not utilizing their minerals.
Unfortunately, the process of getting rights back can be difficult, if not impossible. Once lost, mineral rights revert back to the surface owner, and you will not get them back unless you purchase them again or they are conveyed to you. That’s why ensuring your filing is up to date and that you know exactly what to do to maintain mineral rights in your state is so vital.
What Is the Best Way to Go About Protecting Your Mineral Rights?
Mineral rights don’t just stick around. Like any asset, they need maintenance. Luckily, if you have the right help and support, maintaining your rights isn’t too much of a chore.
1. Keep rights current by filing.
In most states, you will renew your mineral rights by filing an affidavit (similar to filing a deed). It should be drafted, executed (by signing and notarizing), and then filed in the applicable county. Valor can help you do this — we go find filing requirements, format pages according to the state’s individual rules, and so on so that you don’t have to.
2. Keep rights through a claim of dormancy.
If the surface in question is dormant, and you haven’t leased it to oil and gas companies, you can still maintain your rights to mineral assets if you file a statement of claim or dormant mineral deed to state that the surface is knowingly dormant. Timing for these filings will, again, vary from state to state.
3. Use technology to keep track of assets.
We use our proprietary platform mineral.tech® and its evolving built-in features to protect mineral rights from expiring. After you log rights onto the platform, it’ll alert both our team and you as the rights owner when they’re nearing their asset expiration date. This allows us to effectively manage, plan, file, and execute accordingly.
4. Partner with a company that’s got your back.
Valor is an expert in this industry, and we can keep you up to date with any state-specific changes or actions you need to complete to keep your mineral rights. Part of our job is to prevent mineral rights from expiring and transferring back to the original landowners. So, with us on your team, you can relax knowing that we have safeguards in place to mitigate this.
At Valor, we know the value and importance of assets. We never want to see a prospective or existing client lose their mineral rights. We have a deep interest in setting up inheritors to avoid challenges. Not every mineral management company will add this value; many will not agree to manage non-producing assets. But we see this as part of caring for clients’ overall interests.