Brand new to this forum. Thank you in advance for your guidance! We are in the process of offering on a home and acreage that is zoned agricultural. There is an existing gas and oil well (a “rabbit” well, we were told) with a lease in place by Ohio Valley Gas.
From my online research, I believe I understand that the purchase of the land will entitle us to the lease royalties. Would this mean we own the mineral rights?
Would it be on our title company and/or realtor to ensure the mineral rights are ours with the surface land rights?
Questions specific to Ohio: This lease term appears to be indefinite so long as the well is producing, which appears standard for Ohio gas/oil leases. Am I reading this correctly?
It appears Ohio Valley retained the right to tap a new well location if they chose to, with our “reasonable” approval. We are fine with the current well location, but another could prove complicating for our hopes for the land use. As we are not the original Lessors, would we have the ability to renegotiate any of the terms with the Lessee/Ohio Valley?
Lastly, as we’d be moving onto this land (3 acres) as a primary residence with our kids, are there abnormally high health risks (to ground water) etc. for which I should be requesting testing ahead of taking ownership?
This is A LOT of questions. Thank you in advance for steerage on any of them!
You need to have your own lawyer help you draft the purchase agreement and review the documents including title. He can help you add a clause to the agreement that the seller must own and transfer the minerals. If the seller does not own the minerals then you need to understand exactly what your rights are before you purchase. In many states, minerals are dominant and the surface owner cannot stop wells and locations, etc. There may or may not be local laws which will determine locations, and the attorney can tell you this. You and the oil company may not agree on what is reasonable and then have to resolve the dispute. Even if you end up with the minerals, the oil company is unlikely to renegotiate any terms (at least in my experience). Most title companies are only concerned about the title to the surface and will not research or guarantee the minerals. You may need a landman to help you trace the mineral ownership. Did the seller sign the lease? Has he sold the minerals since then? The realtor represents the seller and cannot give you a legal opinion about mineral title. This is going to be your home, so be careful.
This is really clarifying. Thank you so much for taking the time. We have a ten day clause in our offer to consult with a lawyer and make addendums in that time frame, so we will utilize that to do exactly as you laid out here. Thanks again for your time and help!