I'm trying to help my elderly cousin sell her mineral rights so she can afford a decent assisted living facility for her remaining years. (She owns 1/4 interest in 446 ac in Brazos Co., Texas). However, her right to sell is in question, and I'm hoping some of you can give me the answer. She and a few other relatives (the Grantors) sold the surface estate in 1961, and they kept 1/4 of the mineral rights. She is now the last surviving Grantor. I have a copy of the deed. The clause that addresses the mineral rights reads as follows: There is, however, save and excepted and reserved to the Grantors herein, during and for the natural lifetime of each of the grantors and their respective present spouses, an undivided one-fourth (1/4) interest in and to all minerals, incuding oil, gas and/or other minerals in and under the premises and property hereby conveyed. That's it; the deed says no more about it. It does not say the Grantors are not allowed to sell their rights; and it does not specify what happens to the rights after the last surviving grantor dies. Do any of you know how to interpret this deed and what it means legally? Does my cousin have the right to sell her mineral rights? And what happens to her rights when she dies? Thank you so much for your help!
Dinah:
I would advise to seek the opinion of an oil and gas attorney in regards to the interpretation of the mineral deed. I would guess that these rights could be sold but make sure the document is correctly interpreted.
I think the entire document needs to be evaluated, but just from the quote you have here it sounds like they reserved a Life Estate. Granted you can sell a life estate, but the person who is buying it will only own it until your elderly cousin passes and then this is just a guess, it would pass to the Grantees in the document unless there is some other clause that deals with who gets the rights after the cousin passes.
For a "mineral buyer" this is not a very attractive situation unless they could be bought at a discounted price and it was already producing I am guessing.
It sounds like they retained a joint life estate. If so, if Texas follows the same guidelines as Wyoming, she should be able to transfrer the right to receive the royalties to another party. If she is the last surviving Grantor, it looks like she may have the 25% interest. The problem will be establishing a value based on her age and projected revenues. You definately need a Texas oil, gas and mineral lawyer to review this and tell you the bottom line. I doubt that she owns any mineral rights, but she should be able to sell her right to the royalties for her lifetime. Valuation is going to be a tough haul on this.
Good Luck.
Thank you, Charles, Lance, and Ray for the feedback! I did contact one attorney. He was not certain whether she can sell her rights. He said the deed was not specific enough (yes, he saw the entire deed). He said that it it would involve attorney's fees to research the matter or go through a proceeding to claim the rights, and he advised it would not be worth it that expense because the outcome is doubtful. I was just hoping to get some other opinions from other attorneys and/or landmen from this forum, in case they might be more familiar with this type of situation. Since we cannot afford attorney's fees to research or go through a proceeding, I guess I will just assume that the deed implies that this is a Life Estate and finding a buyer would be very difficult. So I guess I will focus on getting a lease instead. I do appreciate all of your responses!
Dinah, Lance is correct. If there are producing wells, you might have luck with a sophisticated buyer who is willing to take a chance, but expect them to offer a substantial discount. If no production, it will be hard.
Thanks, Wade. There is no existing lease, no existing royalties. There might be some producing wells in the area, but this property is not currently in on them.
Dinah,
I agree with previous posts that your cousin most likely owns a "life estate" in the minerals, which means that upon her death the interest she owned while living automatically transfers to the grantee in the 1961 (or their successor in interest).
To answer your question "can she sell her interest?," the answer is yes, she technically sell her interest in the minerals. However, it will be virtually impossible to find a willing buyer, because they will lose the interest they acquire from her upon her death. In effect, that buyer is making a calculated risk as to her life expectancy in much the same way a life insurer does (that, or they're just seriously misinformed as to what they're buying).
Thanks for your response, Andrew, and for confirming what seems to be the consensus here. And thanks to all of you who responded. It was helpful to get several opinions. Do you think that because this is likely a "life estate" that it would hinder my cousin's chances of obtaining a lease? If she obtains a lease, would the lease automatically transfer to the grantee as well?
That's a question for Buddy or another TX oil and gas guy, I only know the answer in Louisiana.
Thanks, Andrew. Do any of you Texas folks have any thoughts on my latter questions regarding a lease?
Dinah,
Since no has chimed in, I looked into your question. Both the life tenant (your cousin) and the remainderman (whowever gets the minerals upon her death) are required to sign an oil and gas lease in order for a company to drill on the premises. If they both join in the lease, the lease will survive your cousin and pass to the remainderman who also joined in the lease.
Andrew, so good of you to look into this and let me know! This is very helpful information. It makes sense that they make this requirement. So it seems that a lease is entirely feasible as long as the remainderman signs on too (assuming a company has an interest in this area). And it seems that the fact that it is a life estate would not hinder the chances of a lease. I appreciate your help, Andrew.
How do you claim mineral rights that are in receivership?
Kim, I don't know how to answer your question.
Kim Hartley said:
How do you claim mineral rights that are in receivership?
Pete, thank you for confirming that!
Pete Wrench said:
A life estate definitely would NOT preclude her signing a Lease, the Remaindermen are the Grantee of the deed reserving the life estate, or that person's heirs and assigns.
Dinah,
I found this thread and sent you a friend request. Weird, but this story sounds very familiar to the other side of mine. I may be the person on the receiving side at the end of the life estate. Please accept my friend request if you are still interested in discussing.
Thanks
Boris, I sent you a private message.
Boris said:
Dinah,
I found this thread and sent you a friend request. Weird, but this story sounds very familiar to the other side of mine. I may be the person on the receiving side at the end of the life estate. Please accept my friend request if you are still interested in discussing.
Thanks
I believe it is a life estate, but no, that should not hinder her signing a lease. And yes, the lease pertaining to the undivided 1/4 mineral interest WOULD "automatically transfer to the grantee" because the lease follows the mineral owner. Right now, the mineral owner is your cousin. When she passes, her heirs won't own the minerals (except in the highly unlikely scenario that her heirs are also the successors-in-interest to the Grantees in the 1961 Deed) because the minerals were reserved for a "term" in the 1961 Deed, a term ending when the last Grantor passed away. Due to the Open Mine Doctrine, any oil-and-gas company that did NOT contemporaneously, and preferably simultaneously, lease the Remaindermen would be fools.
Thank you, Pete. You and others on this site are so kind to help people like me who have questions. I really appreciate all the feedback!
And good news: My cousin DID sign a lease recently!