Mineral Rights Owner Reference Card

Five things to know

1. 1

   You do not have to sell

   Holding mineral interests, leasing them, and selling them are three different decisions. A mineral rights buyer can only help with the third. If you are unsure, the right first step is usually to keep the interest, deposit royalty checks, and revisit in a year. Family-held mineral interests are commonly held for generations.

2. 2

   There are several types of mineral buyers

   Direct buyers (end buyers) purchase for their own portfolio. Brokers source for end buyers and earn a commission, often paid by the seller indirectly through a lower offer. Aggregators package interests for resale to institutional investors. The structure of the buyer affects how the offer is built and how negotiable it is.

3. 3

   A complete offer should disclose certain things in writing

   Identity of the buyer (the entity that will appear on the deed). Net mineral acres or net royalty acres being purchased. Tract identification by legal description. The deed type (mineral deed, royalty deed) and whether reservations are being taken. Closing costs and who pays them. Whether the offer is subject to title curative or due diligence. Whether the offer is firm for a stated period.

4. 4

   Common pressure tactics to watch for

   A "this offer expires in 48 hours" framing on an unsolicited mailer. A request to sign before any documents are reviewed. Refusal to put the offer in writing. Refusal to identify the end buyer. Pressure to close before probate concludes. None of these are required for a legitimate transaction.

5. 5

   You can decline at any time and ask any question

   There is no obligation to respond to an unsolicited offer, and there is no penalty for asking the buyer to clarify or revise the offer. A buyer who refuses to answer questions or revise terms is not the right buyer. Your attorney or CPA can review any offer with you before you sign anything.

What your attorney or CPA can do for you

• ·Confirm whether the interest is in the estate, in trust, or already passed by deed
• ·Determine whether probate (or ancillary probate in another state) is required to convey
• ·Review the proposed deed for reservations, warranties, and after-acquired-title language
• ·Confirm the tax treatment of any sale (capital gain, depletion recapture, basis step-up)
• ·Coordinate with the operator on division-order updates after any conveyance