Jenna Keller, Attorney Feldman & Nagel, LLC in Colorado, is offering a free discussion session for 1 hour on Monday July 30th at 4 pm MST (5 pm CST).
We will be taking questions via email at [email protected] and will be posting the most common questions here with Jenna replying to as many as possible during the 1 hour time period.
We ask that as many people as possible submit questions before the discussion and we look forward to meeting back here on Monday. Save this discussion in your favorites or simply come back the MineralRightsForum.com on Monday. We'll make sure you can find us easily from our home page.
P.S. There is NOT a dial in phone number. All questions and answers will be shown here via the discussion.
All questions within this posting are answered with respect to Colorado law. The information is for general information purposes only. This should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided.
Please submit questions to [email protected]. I will be posting questions in the order they come in giving Jenna an opportunity to answer as many as possible.
After answering email questions, we'll open up the discussion for anyone to ask questions.
DON'T FORGET - you will need to REFRESH this page to see questions and answers as they are asked.
First Question is from Mr. Whitaker:
Jenna,
Would you give some general information regarding a company's rights, access and longevity
on ones property after allowing them to run a pipeline across your property?
Most importantly it depends on the written terms of the agreement you sign, and accordingly, it is advisable to include clauses that describe the width, type of access, and length of time. If you have an agreement that doesn't limit those items, then state law should be consulted. In Colorado, you may be able to claim an abandonment of a pipeline easement after non-use.
Question from Mr. Grover:
How do we reconcile the differing procedures and verbiage in drawing up deeds and
trust agreements in our state when the state in which the property is located does not
accept them?
When embarking on the drafting of deeds and trust agreements you should consult with an attorney licensed in each state where you own minerals. There are intricacies amongst state law, and I would caution against relying on an attorney licensed in one state to prepare documents encompassing another state. You might consider engaging an attorney or law firm licensed in multiple states covering the states where your interests lie, or at a minimum ensure that your hometown attorney consults with an attorney from the states where he or she is not licensed.
Reagan "R.T." Dukes said:
Question from Mr. Grover:
How do we reconcile the differing procedures and verbiage in drawing up deeds and
trust agreements in our state when the state in which the property is located does not
accept them?
From Mr. Jones:
I have a question regarding my current mineral rights and the ownership as it pertains to my
death.
I am part of two mineral lease holdings, one in Colorado and the other in Texas. Upon my death,
do my two sons automatically inherit my share holdings, with all rights, privileges, and benefits
--Is the sale of inherited rights a long term capitol gain? How would you determine the basis?
--Is there a general relationship of selling price to royalty number? to lease bonus?
--How long does it usually take to complete a sale?
Thanks for your consideration of my questions
With respect to Colorado law, mineral rights are transferred on the recorded records of the county where they are located. There is no automatic transfer. Upon your death, a probate will need to be completed in Colorado to effecuate the transfer. In Colorado, you might consider the use of a beneficiary deed which is executed and recorded during your lifetime that transfers the minerals to your designated representatives upon your death.
A sale of mineral rights and any resulting gain would be subject to income taxes and possibly capital gains just like any other asset. The basis can be determined by going back to your purchase. If no purchase price can be located, then of course the IRS would gladly accept $0.00. If you inherited the minerals, then it is possible that a stepped up basis would apply.
There is no set formula for price and it always comes back to what a willing buyer and seller agree to, but yes you might consider bonus offering, existing production, and the terms of a lease if one is in place.
The timing of a sale of mineral rights largely depends on the buyer and could take as little as a few days to several months. In any event, I would discourage the release of original documents until you have a check in hand. At minimum, consider the use of a title company to faciliate the transfer, or an attorney.
TiC Laws
Our executive rights holder is refusing to lease. I have called him to ask what his "game plan" is
and he has not returned my phone calls. What's my next step?
If phone calls go unanswered, the next step would be to send a written letter setting forth your requests and demands. You might organize as follows (1) what you are writing about, (2) what you are upset about, and (3) what you propose should be done. Send the letter certified or in some other manner so that you know it arrives. Include a reasonable deadline in the letter to encourage a prompt response. If a response is received, see what you can work out or find out why they won't lease i.e. his or her health is poor or they are worried about X. This should encourage a resolution.
From there, if you still do not receive a response or can't work things out, then you may be forced to hire an attorney. Ask your attorney to send a letter first to encourage a resolution and then ask the attorney about claims that you may be able to bring against the executive rights holder given your particular fact scenario.
Mr. Gall,
What is the best way to preserve mineral rights when several family members share the rights on
a single piece of property?
My preference in Colorado is most often for the family members to contribute their interests to a family limited liablity company otherwise known as a LLC. When a LLC is formed, careful consideration should be given to the family priorities such as what perecentage vote is required to sell or lease, who can be a member of the LLC (i.e. no spouses), who is the Manager (one family member or all), what happens when a member dies, and similar.
From Emily:
I would like the lawyer to tell me how to find out how to contact all the people who own shares
of my lease.
The county assessors in Colorado are a great source of information. While not all severed mineral interests may be taxed, you can in most instances locate at least a few other owners fairly easy. Increasingly, most counties also have their information online. If you have your legal description in hand, you can access your county's online records database by inserting that legal description and seeing what other owners show up. The county database will also likely have an address of the other owners.
If you recently purchased your property, the schedule B exceptions may also contact information on severed mineral owners or other leases that may give you some leads.
From Mr. Wommack
We have received a division order...what are our rights concerning fractional ownership the
operator has indicated we own versus what we feel is correct without spending a lot on legal fees
to challenge this?
First, you might explain why you think you own. In doing so, include copies of deeds, death certificates, or other documents that support your posiition. Also, ask the operator for more details and see if you can figure out where the disagreement arises. You might also ask if there is a certain document or deed that the operator would accept to correct to your liking. In any event, if you maintain positive and cordial communications, you are more likely to resolve without the involvement of attorneys.
Mr. Myrick,
If you are an unleased Colorado mineral co-tenant, and you send a letter clearly indicating that
you will join and pay your proportionate share of drilling, completing and operating, is the letter
sufficient, or do you need to sign an A.F.E. ? Obviously signing a J.O.A. is not obligatory.
If a hearing on forced pooling has not yet occured through COGCC, then I would wait to see what the lease offers continue to look like before committing to anything. Following a COGCC hearing to force pool and the desire to proceed as non-consent, I would discourage a letter or AFE offering up porportionate shares of costs, because such letter or AFE might be construed as offering something more than what you could have legally deducted as a non-consent owner. Additionally, I would be hesitant to sign anything seemingly providing an open-ended offer to contribute costs to a drilling operations as in most instances, I'm sure you have a limit to what you're willing to contribute or have deducted. Finally, if you do proceed as a non-consenting owner and have other assets, you might consider forming a LLC to hold your mineral interests to add some liablity protection.
Jenna,
Let's open it up to those watching. Ask any questions about Colorado mineral rights and Jenna will do her best to answer them in the next 5-10 minutes today.
Concur that the County Tax Assessor’s office can help locate the folks that are paying property taxes on the property around yours. But if you are part of a multi-fractured “mineral rights” division, you probably have to actually look at the County Records to determine who owns the mineral rights. That is what the oil companies do and are happy when large tracts of property are controlled by 1 or 2 owners with both property and mineral rights. Jenna will be able to tell us if Colorado Tax Assessors taxes all folks who have mineral rights (assumes royalty income). Once the Oil Company decides to move from Lease to develop a well, you may be able to gain more information by going to your RR Commission. Here in Texas, the companies file a W-1H when applying for a Drill Permit – that will show you the tracts of land (where they are, the size, etc.) in the Pooled Unit. The most valuable document I think is the “Certificate of Pooling Authority” (in Texas it is a P-12). Use that document (if you don’t know your neighbors) to see who is in on the Pool. You will then have to do heavy-duty Googling to match up the names with addresses if you want to write those folks. Folks that pay the tax bill for the Property Rights may not be the folks in the Pooled Unit for mineral rights and with a multi-fractured mineral right set-up, you will have some hard slugging’ or a bill to hire someone to discover it. If it is on-line, you guys in CO are really lucky!
Jenna H. Keller said:
The county assessors in Colorado are a great source of information. While not all severed mineral interests may be taxed, you can in most instances locate at least a few other owners fairly easy. Increasingly, most counties also have their information online. If you have your legal description in hand, you can access your county's online records database by inserting that legal description and seeing what other owners show up. The county database will also likely have an address of the other owners.
If you recently purchased your property, the schedule B exceptions may also contact information on severed mineral owners or other leases that may give you some leads.