Farm dream fading

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  1. #1
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    Farm dream fading

    My dream of owning my farm is looking less and less like a reality.

    The sellers are not being reasonable and we may never come to terms. Let me run the situation by you smarties here at DC for some feedback.

    The main sticking point involves mineral rights and a gas well. The property does not come with mineral rights and I'm OK with that as long as the price is right (and it is). So the problem is that there is an active gas well on the property that I'm trying to buy. The sellers want to retain the rights to the gas well and we would pretty much be stuck with the eyesore and not get any compensation out of it.

    If there was no gas well physically located on the property I'd be ready to sign but as it stands I'm not sure I want to do it. The sellers want to have their cake and eat it too while I would be left unable to control things and persons actually on my property.

    Does this sound normal to you all or am I right to think this is a steamy pile of doo they're trying to pull?

    One of my concerns would be what happens in the future? I want at least some say in what goes on on my own land, right?
    It is surely true that you can lead a horse to water but you can't make them drink. Nor can you make them grateful for your efforts.

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    Senior Member Array Geezer's Avatar
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    You will probably be making a BIG MISTAKE by buying any property without the mineral rights. In the future, they can lease out those rights, and presto - you have another well to enjoy. You'll not have any say, but you can enjoy their LONG term profits. Run, don't walk, away from it if they don't change their position. Another piece of property will come along - especially in this economy. Everything happens for a reason.

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    Member Array M203Sniper's Avatar
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    If you don't control the rights to all of your property is it really yours? I would argue NO and walk away from the sale. What did your real estate agent say?
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    I'd walk.
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    Doesn't sound like a good deal to me, but what do I know?

    Down the road a better farm will come along, with everything you want, that is the right deal.
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    VIP Member Array Eagleks's Avatar
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    "ALWAYS" have all of the mineral and gas rights.

    Ask, but typically, them having the "rights" also means you guarantee them access and that they can do anything required to the land around it , or anywhere else on the property if they want to drill another one, and any damage they do is your problem.

    People have been trying to buy the rights on ours for years.... oil wells in every direction of us. But, in reading the contracts... there are some things that money can't buy.

    If you bought it based upon them maintaining the rights :
    1) there would have to be a signed contract with a lot of limits, I'm sure they would never agree to.... no additional wells or drilling in the future, after X time the rights return to you, no disrupting the surrounding land, etc.
    2) it means if you sell it to someone, the rights will still stay with them .... and make it harder to sell. So, they would have to be really low on the price to consider it....

    The reason for limiting the "time" is, otherwise those rights can be passed on for generations.....

    There is some land in Pa, that was in the family for over 300 yrs, and in 1933 the family member owning it at that time leased to someone for 99 yrs..... and if not claimed within a certain period after the expiration then they take ownership. The DuPonts bought out the lease.... but guess what, I've already pointed out to my kids to file a claim on the land in 2032.... when the lease runs out. I'm sure, they aren't expecting that anyone would claim it nor be able to claim it, but guess what... we can ... to get it back in the family. It was originally owned by my 13th great grandfather in 1687, when he arrived here from England.

    Think ahead.
    Last edited by Eagleks; January 11th, 2012 at 07:37 PM.
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    To be perfectly honest,if they are in a position where they have to sell,I seriously doubt they will find a buyer on their terms,keep looking,anytime you try to force something to happen and have any doubts it usually turns up costing you somehow,either financially,physically,or mentally
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    Member Array JerryMac's Avatar
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    We had a similar situation, when we bought our place, they wanted to retain mineral rights, told them right up front that was not an option, if they wanted to sell, here is my offer n we go from there, there was no active well on the property, but i did not want anyone there panning for gold at their discretion, you either own and control your property, or you walk away......take all options such as that off the table, that is not the only piece of land for sale. Pstience will pay off in the end.
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    Distinguished Member Array Hoganbeg's Avatar
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    Sounds like potential trouble always hanging over your head like the sword of Damocles. You already know the answer.: you don't like the deal. If you buy anyway it will be like a thorn in your side which you can't get rid of. In this economic climate there might be better deals out there. Maybe you can negotiate a piece of the action for your trouble. Would that would make it worth your while? At what percentage does it become not worth it?
    Just some questions to ask yourself.

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    Well, when you buy land like that, the surface is what you are buying.
    When I looked at my property, ther was already an oil well on it(there are 4-5 within eyesight on adjoining property.)

    They will be reluctant , if not adament against you getting the mineral rights, especially at a price which would normally be considered fair for just the surface portion.
    The one that is on my property is producing oil, at a good capacity, regularly maintained, and sits far enough from the house that its not a bother.
    The oil company, is required, by contract,when/if the well goes out, to replace and put back, and take away everything the landowner wishes.(back to nature or leave the road in, or whatever).
    I say, if you want the property , to raise your family, in the quiet of the country, affording you to hunt, and do as you please, basically, go for it.
    You will seldom see property sell with the oil and mineral rights these days.
    Every piece you go look at, ask them if the mineral rights go with it, and I bet you 75-90% of the time they will say NO.
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  12. #11
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    There is nothing uniform about this issue from one state to another. In a state like Texas where oil wells have been drilled for decades, where water rights are a big issue, there are very very very complex rules of the road; some good, some not so good. But the realtors and the real-estate attorneys know the issues.

    You really should ask YOUR real estate attorney who will be writing and reviewing the contract to purchase (if it gets that far) to look at the existing deed(s) and contracts and advise you. It may be fine to proceed or it may be dumb as dirt. You can't know because you don't know your state's mineral laws, property laws, and laws governing the extracting companies.

    It is one thing to buy the property sans mineral rights, and even to buy the property with a working well that has some sort of easement allowing the gas producer to service the well-- if that is it, and all. It is another to wake up one day and find that several companies have decided to put several wells on your property and there is nothing you can do to stop it. Or that they are wanting to locate a new well in the middle of your living room.

    If you really want that land, I wouldn't necessarily let the one well get in the way or let the lack of mineral rights get in the way. I would however find a real estate attorney and have him review things before putting any "earnest money" or escrow money down; and let him write up the offer to purchase with all the appropriate contingents and protections that you need. Do this, consult a real estate lawyer, before getting into an irrevocable contract.

    Yours is a situation where relying on the word of the real-estate lady won't do. She represents the seller usually, and you have too much to lose if the gas well creates issues that can't be resolved before the purchase, and headaches after. You need someone looking after your interests, independently, on a fee for service basis.

    Also, since gas wells are spouting up like sprouts in parts of the country where the law and the courts have little prior experience in dealing with these matters, some extra caution is advisable.

    Good luck.

    P.S. I knew a guy who had 60 acres with full mineral rights. In theory all those wells on surrounding farms were not drawing from his basin. In reality, who knows. They can run pipe for miles underground. Around here they are supposed to have 160 acres under lease per well. That doesn't mean you aren't getting sucked dry without knowing it. OTOH, the law is very fine tuned on these matters here. It may not be fine tuned where you live. That is sort of what I would be worrying about. Like so many gun laws, there might not be clear answers to your situation in your state.
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  13. #12
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    I think all of the above comments have some merit. Mineral rights are usually severed from the surface where I've been, so that doesn't bother me a bit. Pretty typical. Hopyard's summary is pretty excellent.

    What kind of interest do they own in the minerals? A Royalty Interest? A Working Interest? If a Royalty Interest, you might be able to purchase the Interest for 3-5 years Gross Income (which is a Depletable Asset for income taxes), if a Working Interest, less. A lot depends on the likely life of the gas reserves and how old they are and where.

    As a landowner, the Working Interest owners will pay to restore the land when done, and pay damages if damaged, etc. Talk to a RE attorney in the area.
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  14. #13
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    I'd be looking for another place without all the hassle...contact a real estate attorney. A few bucks to understand the rules may save you a lifetime of troubles.
    Last edited by RETSUPT99; January 11th, 2012 at 05:08 PM.
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  15. #14
    Distinguished Member Array Chaplain Scott's Avatar
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    Also, have you contracted with a buyer's agent? If you approach the seller's Real Estate agent--the agent is NOT working for you, they are working for the seller!!! Contract with a buyer's agent--they work for YOU!!! They get paid by splitting the Realtor's fee with the selling realtor.......
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    Member Array gunsnroses's Avatar
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    "Reserving unto the grantor all mineral rights" is not the same as a blanket ingress/egress easement over your property. Is there a easement around the well and a access easement from the well to the nearest public right of way?

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