In Pennsylvania, unpaid taxes on the surface will also divest all other rights associated with the land unless they are seperately assessed in a tax sale. My question is, if there was a non participating royalty interest (not seperately assessed) on a piece of land, and that land was successfully sold at a tax sale, would that NPRI be divested? Is there any distinction between a mineral interest and NPRI when it comes to PA tax sales? I'm thinking not, but would like to hear other opinions.
Dear Lowflyer,
What an interesting question. I would like to see a PA attorney give his opinion.
In all states that I am personally aware of the law, a non-participating royalty interest is a non possessory interest in the minerals and as such, if I were a lawyer, I could argue strongly that a NPRI would not be covered in a tax sale, particularly if the NPRI were created prior to the defaulting owner's possession. The mineral interest is a possessory interest in the minerals and would be treated in a different manner, such as you suggest.
How 'bout some PA folks out there?
I believe both types of interests involve ownership of the minerals. Thus, both considered a right "attached" to the property and would be extinguished. The only difference would be the NPRI holder does not participate in the actual leasing, receiving bonus money, delay rentals, etc.
Dear lowflyer,
That is the rub. Is an NPRI an ownership in minerals? I say no. It's interest is only derived when the minerals come to the surface and are produced, i.e. personality vs reality. Like I say, it would be a good debate to argue.
A very smart attorney told me one time that, at least in Texas, one can buy a piece of property with a thirty-year mortgage, sell any portion of the minerals or royalties the very next day, and then, almost thirty years later, miss the last mortgage payment and if the house goes into foreclosure the bank can go back thirty years in time and retrieve those minerals and/or royalties that had already been severed by the homeowner!
So I would say that, at least in Texas, depending upon the circumstances, an NPRI could potentially be divested from its apparent owner. For example, in the above example, if A sold to B then B conveyed an NPRI to C then Bank foreclosed on B before he had paid off his mortgage, then C would have to relinquish the NPRI. However, using this same example, if B conveyed the NPRI to C then actually paid off his mortgage in full then took out a NEW loan with the same property as collateral and defaulted on this second loan, in that case the NPRI is untouchable. In other words, the conveyance from B to C is only made official when the first mortgage is paid off. Most loan documents specifically state that no part of the Mortgaged Premises can be conveyed during the term of the loan with a Partial Release of Lien. Only once have I seen a bank sign a Partial Release of Lien for either minerals or royalties.
I have the same question, I'm in Texas, the land was bought in 1905 which was 6400 acres, by my grandfather and when he died my grandmother could not pay the land tax and it was sold in 1922 on the courthouse steps, we can not find where the minerals when with it. Where do we need to look? and is possible that my family still have the minerals rights?