Important Things You Should Know Before Selling Mineral Rights

Mineral rights are characterized by the right to extract minerals from a property. Minerals are very valuable, because they have various purposes and they are finite resources. For this reason, selling mineral rights can be the very thing that grants financial security not just to yourself, but also your family.

But before you even consider selling your mineral rights, there are various things you need to know.

Know your minerals

Minerals can take on many forms, and they may differ in value depending on their use and abundancy. Minerals can include metallic materials, such as copper, gold, and iron. They can also include earth materials like coal, clay, sand, and stone, and oil and natural gases.

It is important to know the minerals you have in your property so you can check their value and know what kind of companies you have to deal with and what kind of extraction methods you will be exposed to.

Know your rights

They are called “mineral rights,” so the least you can do is to know the “minerals” and know whether you have the “rights” over them or not. A good way to determine your rights is by looking at the deed. If the deed has mentioned that the ownership is a “fee simple,” it means that you own both the surface and the mineral rights. However, the deed may also indicate that you do not own the mineral rights.

Know your financial options

You can sell or lease mineral rights. Either financial option has advantages and disadvantages over the other. For example, selling may result into bigger and faster cash, but may also put you subject to extremely high taxes.

Leasing may result into slower cash, but the money flow is consistent and may even add up as higher compared to the lump sum you can get from selling. But the downside is that you may not be as financially secured, because of fluctuating levels of extracted minerals and fluctuating values because of market factors.

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