What are you really buying when you purchase property? When purchasing any piece of property, you are potentially purchasing more than just what you can see. To determine what exactly you are purchasing, a title company or an attorney will conduct a title search. This search clarifies ownership and status of property rights.
What are you really buying when you purchase property?
When purchasing any piece of property, you are potentially purchasing more than just what you can see. To determine what exactly you are purchasing, a title company or an attorney will conduct a title search. This search clarifies ownership and status of property rights.
Understanding the differences between property (which may include surface rights, mineral rights, and air rights) is important for buyers to determine the value of the purchase. These different types of property rights can impact how the property can be used and developed. Let’s take a look at what each of these entails.
Surface Rights
Surface rights refer to the legal rights to use and control the surface of a property, such as for farming, building, or other activities. These rights are often separate from subsurface rights, which refer to the legal rights to extract minerals or other resources from beneath the surface of the property.
In many cases, surface rights are governed by state and local land use regulations, as well as by common law principles related to property ownership. Property owners have the right to use and control the surface of their property within the limits of local zoning and land use regulations.
Mineral Rights
Mineral rights refer to the legal rights to extract and use minerals that are located beneath the surface of a property. These rights are often separated from surface rights, which refer to the legal rights to use and control the surface of the property.
Common minerals of value that may be extracted by the proper owner of such mineral rights may include oil, gas, gold, silver, and coal. These precious resources that lie beneath the surface may also be leveraged by leasing the right to an outside company that may specialize in extraction.
In many cases, the owner of the mineral rights may receive royalties or other compensation from the company that is extracting the minerals. “In Arkansas Mineral rights are considered a part of the sale with surface rights unless they have been specifically reserved.” https://www.aogc.state.ar.us/owners/Royalty_and_Surface_Owner_Bulletin.pdf
Mineral rights leasing has been ongoing in Arkansas for many years. The state has a long history of mineral extraction, particularly in the areas of oil and gas. In the early 2000s, natural gas companies began leasing mineral rights from landowners in Arkansas as part of the Fayetteville Shale play, which was a major economic boom for the state. However, mineral rights leasing in Arkansas goes back much further than that, with companies purchasing mineral rights for various resources such as coal, zinc, and lead in the late 1800s and early 1900s.
Make note that when a title company or attorney conduct a title search to determine the ownership and status of property rights, the search may include a review of public records, including deeds, mortgages, liens, and other legal documents related to the property. However, according to Patrick Curry of Allegiance Title Company of Arkansas in Fayetteville, “Unless specifically asked for, the title does not typically search for mineral or air rights. It is typically excluded in the title policy, on the exceptions pages.”
Air Rights
Air rights are generally important in densely populated urban areas where the demand for space is high, and the cost of real estate is expensive. Air rights allow the owner of the property to build structures such as buildings or bridges that extend into the airspace above the property. Air rights in Northwest Arkansas have not been a much of a topic to date, but as our population continues to become more dense, we foresee that air rights will become a more relevant topic.
Know Your Rights
Overall, understanding the different types of property rights is crucial for both property owners and buyers. When purchasing a piece of property, it’s important to truly understand the value and what you are purchasing that may attribute to that value. As the saying goes, “knowledge is power”— and in this case, it can also be financially beneficial. So, whether you’re buying or selling property, take the time to educate yourself about your property rights and make informed decisions that can lead to a successful and profitable transaction. And who knows? You may just strike it rich like some of the mineral rights owners in the Fayetteville Shale play.
Contact: Crew@nwalook.com
