Mineral rights such as oil, minerals, rocks, and gas are considered a financial investment. As you probably know, the access to the valuable resources you own can be leased or sold to a variety of interested buyers. You can retain your ownership by leasing the rights to these resources, or sell out completely and enjoy a large monetary influx. If you are seriously considering leasing or selling your mineral rights, here are few things to know:
Benefits of Leasing versus Selling Mineral Rights
If you have any hesitancy about giving up your mineral rights by selling out, consider leasing them to an outside party instead. You will retain ownership and can end the lease agreement depending on your initial contract, which gives you flexibility and control. Leasing your mineral rights can be a financially savvy move, because you will have a continual cash flow.
On the other hand, as a financial move you may consider selling your mineral rights entirely. A sale this large could give you the financial boost you need to move, renovate, purchase additional property, or invest in other opportunities. Selling your mineral rights will also keep you from having to worry continually about accounting and tax regulations. Selling your rights will also protect you in the event that your lease ran out, and you were not immediately able to find another suitable buyer.
The buyers who are interested in purchasing your mineral rights know that the sale can be a bit high risk depending on the amount of readily available resources. Your contract must be well written in order to limit or avoid any legal problems in the future. Either way, you do not have to lease or sell all of your mineral rights at once. You can choose to retain some of the minerals for future excavation or drilling.
Be Mindful of Government Regulations
Each state in the U.S. has differing governing regulations on the buying, selling, and leasing of mineral rights. Before making a deal with anyone, research the specific mineral rights policies that are in place in your state. You must be knowledgeable about your rights and restrictions as an owner and a seller. Compare offers and examine your potential buyer’s credentials and background. In addition, never be afraid to seek professional help as you prepare to draw up a lease or sales contract.
The Bottom Line
If you ultimately choose to lease or sell your mineral rights, you should have no difficult finding a buyer. Use caution when choosing whom you do business with, however, to ensure that you receive a fair value for your property. Be mindful of local restrictions as well as your contractual obligations.