With all the discussion of natural gas reserves being tapped in Arkansas, the issue of mineral rights has become very important to Realtors® in the state.
Every Realtor® has heard the term mineral rights. We read it in the paper once in a while or hear it in some old movie about prospectors. The phrase is even included in bold print in Paragraph 8 of the ARA Real Estate Contract (Residential).

Lately though it seems like we have heard more about mineral rights in the media as gas and oil prices rise and there is discussion about the Fayetteville Shale Play – an area covering a large portion of the northern half of Arkansas that is rich with natural gas deposits. With this in mind it would be good for Realtors® to know a little something about mineral rights.

This article is not intended to give legal advice or encourage any Realtor® to give legal advice to a client. It is intended to give the average Realtor® a very basic understanding of a limited area of mineral rights and some of the associated issues. If any issue concerning mineral rights comes up in a transaction send the client to a knowledgeable attorney. This can be an extremely complex area of real estate law.

What are mineral rights? Basically mineral rights are the rights to take and use or sell the minerals located on or under the surface of the land. Mineral rights are included in the ownership of land unless they have been specifically cut out of the title by a deed, mineral lease or some other form of conveyance. When we talk about owning land in fee simple absolute, as in Paragraph 8 of the ARA Real Estate Contract (Residential), it would normally include all mineral rights.
Specifically what a mineral is depends upon the circumstances. Minerals can include not only oil, gas and coal but also diverse substances such as limestone, bauxite, clay, stone, gravel, gems, shale, talc, molybdenum, vermiculite, iron, zinc, lead, cinnabar and bromine brine to name a few. The interesting thing is that which minerals are included in the mineral rights depends upon where and when the rights were severed from the remainder of the land.

For example, bromine brine – salt water – was generally not extracted commercially until the mid 1950’s. Any grant or reservation of general mineral rights prior to 1955 generally does not include the rights to extract bromine brine because it was not considered a commercially viable mineral before that time.
There are two primary areas of dispute possible involving ownership of mineral rights. First, a dispute can arise between the buyer and seller over what was allegedly sold. Second, a dispute can arise between the surface owner and the mineral rights owner as to the extent of the mineral rights and liability for surface damage.

Realtors® are most likely to get caught in the dispute between buyers and sellers of houses and/or land over whether or not mineral rights were part of the transaction so we will limit our discussion to that type of dispute. These disputes arise because:
1. Most buyers believe that they are getting mineral rights when they purchase a home and/or land.
2. Many properties have had a grant or reservation that severed the mineral rights from the surface rights years or even decades ago.
3. Most title insurance policies do not cover mineral rights and most title insurers do not even look to see if the mineral rights are still included with the surface rights.

On those occasions when a problem arises it is usually because sometime in the past an owner of the land either sold the rights to the minerals separately or retained rights to the minerals when he or she sold the remainder of the property. It is fairly common in Arkansas to find that the mineral rights were severed from surface rights years ago. Sometimes the first time a property owner finds out that he or she does not own the mineral rights is when someone shows up on the property to start exploration or extraction. As you can imagine, this can be a rude shock to a property owner.

In most cities this is not an issue because mining or drilling is usually barred by ordinance. However, as more development happens in unincorporated previously rural areas the possibility of dispute increases. If a problem does come up it is possible that Realtors® will be named in any suit as additional defendants.
In Arkansas most real estate contracts call for the property to be conveyed in fee simple absolute. This would include mineral rights. The ARA Real Estate Contract (Residential) addresses this in Paragraph 8 which requires a general warranty deed. Paragraph 8 specifically allows the parties to modify this in Paragraph 27 if mineral rights are not owned. If this is not done then the contract calls for the warranty deed to convey “in fee simple absolute, except it shall be subject to recorded instruments and easements, if any, which do not materially affect the value of the property.”

If there are extractable minerals which have been severed that will likely materially affect the value of the property. On a side note, sometimes the warranty deed excludes rights conveyed by recorded instruments without restricting them to those that don’t materially affect value. This could open up a whole new can of worms if the dispute comes up.

The possibility for a dispute is further compounded by the ARA Seller Property Disclosure which specifically asks about known claims or rights to minerals on the property. The problem is that sellers don’t usually know that they do not own the mineral rights so it is not disclosed or the contract modified to cover the issue.
Often sellers assume that they own the mineral rights because when they purchased the property they received title insurance and nobody told them that there was any issue with mineral rights. However, since title policies don’t cover mineral rights the title companies don’t usually even look to see if the mineral rights have been severed. It is also possible to hire a title company or attorney to research the title history to see if mineral rights are owned. Another option is that you can address it by purchasing a mineral interests rider or getting an extended or enhanced title policy that covers mineral interests. Some companies have this coverage for an additional fee if you ask for it.

Without title insurance to cover the damage caused by severed mineral rights there is a possibility of the buyers suing the sellers based upon the contract and/or warranty deed with possible fraud allegations included in the suit. If that happens Realtors® might be pulled in as defendants as well. Who would win would depend upon the specifics of the case and what judge was hearing the matter but it would be a mess for us no matter who wins.

The bottom line is that while it is unlikely that you will get caught up in a mineral rights dispute it is possible. While I do not advocate stirring the pot and creating an issue where one does not exist I do believe that appropriate disclosure and discussion can go a long way toward stopping problems before they happen.
For some types of property in particular areas of the state I would always discuss with the clients the possible mineral rights issues just as I would discuss any other possible issues particular to that client or property. How far you should go in advising clients on mineral rights issues and title policy coverage is up to you and your broker.

Matt Lawrence is an attorney and executive broker for Coldwell Banker Commercial, Faucette Real Estate in Fayetteville. He can be reached by e-mail at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .