Clients selling a somewhat decent sized property in Texas. Completely unknown and untouched due to the time span the property has been in the family. They own the mineral rights and are willing to sell them (negotiable outside of list), which is their choice. How do I gently tell them that selling mineral rights is completely insane?

Are you their financial adviser? Where is the property located?

FILO505 said:

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Clients selling a somewhat decent sized property in Texas. Completely unknown and untouched due to the time span the property has been in the family. They own the mineral rights and are willing to sell them (negotiable outside of list), which is their choice. How do I gently tell them that selling mineral rights is completely insane?

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What do you think this means with regards to the mineral rights?

Never tested or probed. Would hate them to get a flat fee and miss out on long time royalties, but I'm no PETE guy, so I could use some advice/help

And that's their approach, but this is dirt I've never dealt with. They're willing to negotiate mineral rights, but it's not included in the list price. Any help would be appreciated

Granted, I'm going with what they're telling me on testing. I know for a fact they have mineral rights, though

I always keep the milk rights when I sell my dairy cattle.

Leon County, 100 acres raw

Only if they're not yet producing (important distinction). And that's only one (of many) things done differently in Louisiana! Texans don't need to follow their example.

Do you know the royalty interest that is owned?

Leon County isn't Midland or Pecos County but it has a lot of production.

https://www.mineralanswers.com/texas/leon-county#:~:text=Leon%20County%2C%20TX%20ranks%20%2368,Jan%201993%20to%20Mar%202022.

Diggity said:

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I always keep the milk rights when I sell my dairy cattle.

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In that case they would quickly become cutter or canner cows.

Fractionalization of interests is commonplace. It can be burdensome, to be sure, but demanding it be less so, for the benefit of non-owners, such as landmen and other ancillary actors is pretentious imho.

Edit to add: And, it necessarily increases with each succeeding generation (even in La.).

Third world problems

Martin Cash said:

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It should be illegal to reserve any mineral or royalty interest for longer than a set period of time, say 20 years. If you want the milk, keep the cow.

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Do you think that the government should get what the owner does not use of his own possessions?

eric76 said:

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Martin Cash said:

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It should be illegal to reserve any mineral or royalty interest for longer than a set period of time, say 20 years. If you want the milk, keep the cow.

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Do you think that the government should get what the owner does not use of his own possessions?

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I have no clue what that means. Who said anything about the government getting anything?

Martin Cash said:

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eric76 said:

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Martin Cash said:

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It should be illegal to reserve any mineral or royalty interest for longer than a set period of time, say 20 years. If you want the milk, keep the cow.

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Do you think that the government should get what the owner does not use of his own possessions?

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I have no clue what that means. Who said anything about the government getting anything?

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Why not start by justifying your suggestion regarding mineral owners losing their property after a term? Who would implement such an unconstitutional act other than government, pray tell? The local Chamber of Commerce perhaps? And regarding the term, what about 75 or 100 years? Or why not forever minus twenty? That's a term.

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My person opinion is that if you buy the land, you get it all.

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Your example probably involves mostly tiny interests. If the "owners" don't have enough concern to "keep up" with and/or claim their property, then they don't really own it in the first place. They just have a claim to it.

BoerneGator said:

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My person opinion is that if you buy the land, you get it all.

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Your example probably involves mostly tiny interests. If the "owners" don't have enough concern to "keep up" with and/or claim their property, then they don't really own it in the first place. They just have a claim to it.

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Is there a way for someone to take ownership of unclaimed interests, or nobody owns it anymore til the end of time?

JJxvi said:

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BoerneGator said:

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My person opinion is that if you buy the land, you get it all.

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Your example probably involves mostly tiny interests. If the "owners" don't have enough concern to "keep up" with and/or claim their property, then they don't really own it in the first place. They just have a claim to it.

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Is there a way for someone to take ownership of unclaimed interests, or nobody owns it anymore til the end of time?

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I would presume it's held in trust by some entity of the "state" while the rightful owner is being identified/located. Perhaps, after a statutory period of time, it may revert to some other authority, or even the surface owner, but it will remain a fractional interest just the same (unless included with some other fractional interest). There are more knowledgeable folks than me on this board to answer your question.

This sounds like the crap they pull in South America, where if you don't develop your land fast enough for the the governments liking, they go ahead and take it from you.

I don't know that mineral rights revert to the state or surface owner. In my case no one in my family knew my father owned any mineral rights and 49 years after he acquired them a producer tracked me down.

And that is most often because minerals will lie idle for years/decades before being produced. It's just the nature of the beast... and, until they are (produced), they have no taxable value, so they've not been flagged by local taxing entities. So, they can be effectively dormant for decades; even generations, until a discovery is made. People can forget they own minerals they have. It happens.

Every situation is somewhat different, but my advice against selling minerals (producing OR non-producing) is only a general rule of thumb. For example, if someone had no heirs, and wished to liquidate his assets, then I could see the benefit. But otherwise, it's highly unlikely one will realize the full value in a cash sale as opposed to lifetimes of production. That's due in part to the speculative nature of mineral production, coupled with the uncertainties of same. The specter of the New Green Deal adds a cloud of uncertainty as well, which may have significant effects upon my point of view, long term. Who knows what the future holds.

My comment not to sell mineral rights was based on my experience only. I had no idea I was heir to mineral rights until a producer contacted me 49 years after they were acquired. I get calls at least monthly to sell the producing interest and the offers are laughable to me.

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I get calls at least monthly to sell the producing interest and the offers are laughable to me.

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Precisely! They're not serious, but intended to prey upon the old, ignorant, and unaware, or druggie type who wants/needs quick cash to feed a habit. Same for real estate solicitations.

FILO505 said:

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Leon County, 100 acres raw

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What part of Leon County?

Always looking at nearby or preferably adjacent tracts

North side of Normangee