A QUICK GUIDE to
Transferring Ownership of Mineral Rights
Learn how to transfer ownership to another person or entity and get into pay status.
SELL YOUR MINERAL RIGHTS:
Why Mineral Rights are Transferred?
There are many reasons that oil and gas royalties and mineral rights need to be transferred from one person or entity to another. Most often it’s because the mineral owner passed away or because of divorce proceedings. However, mineral rights are also transferred before the death of a mineral owner (to avoid probate, or for estate planning purposes), when transferring into or out of a trust, or upon the sale of mineral rights. Let’s go over each of these situations briefly and then in detail.
After Death
Mineral rights may be transferred by deed (from the estate) or court order (probate) after the death of a mineral owner.
After a Divorce
After a divorce, mineral rights can be transferred by submitting the divorce decree and conveyances to the county (where the minerals are located) for recording.
Before Death
Mineral rights can be deeded or assigned to heirs before the death of a mineral owner, which can make it easier to wrap up an estate.
Into a Trust
Mineral rights must be deeded or otherwise conveyed to the trust in order to be transferred into the trust.
Out of a Trust
When a trust beneficiary passes away, the assets owned by the trust are usually sold or conveyed to heirs.
Selling Mineral Rights
Mineral rights can be sold to a family member or other buyer. The buyer will typically draft the deed and take care of the transfer process.
Mineral Rights Transfer Overview
Transferring the ownership of oil and gas mineral rights is quite easy, but it often seems daunting to new mineral owners. You might need to hire an attorney to draft the deed or assignment (which may require probate), the overall process is quite simple.
Three-Step Process
There are three steps to transferring the ownership of oil and gas royalties and mineral rights. Producing minerals will need to follow all three steps, but non-producing minerals only need the first two steps. Depending on the situation (death, divorce, trust, etc), the requirements may differ slightly).
1. Create Documents
Have an attorney draft a deed or assignment from the previous mineral owner (or their Estate or Trust) to the new mineral owner.
2. Record Documents
Have the document recorded with the county where the mineral rights are located (County Clerk or Register of Deeds).
3. Notify Operators
Provide the operators with a copy of the recorded conveyance document and request an ownership transfer.
After a Death
What happens to mineral rights when someone dies?
When a mineral owner dies, their mineral rights can be transferred according to their will or, in the absence of a will, through the laws of intestate succession through the probate process. Mineral rights usually transferred the same way a real estate (a farm or house) is transferred – by a deed from the estate or court order.
Inheriting Oil and Gas Royalties and Mineral Rights
Often, when heirs are notified that they will be inheriting mineral rights, they know very little about mineral rights. In fact, they may know nothing more than Uncle Joe owned an interest in an old oil well in Texas. It can be a challenge to find the necessary information to transfer the mineral rights and get into pay status.
How do you find mineral rights when you aren’t sure what you’ve inherited?
Hire a landman or an attorney. A landman is a professional who is usually hired by an oil and gas company to locate the people who own mineral rights under a specific tract of land. A landman can help you figure out what your relative owned and even guide you through the process of transferring the mineral ownership to the heirs.
How do you transfer mineral ownership?
Transferring mineral rights after death depends on whether the deceased had a will and whether or not the estate is in probate. If the deceased died in a state other than where the minerals are located, ancillary probate might be required before the mineral rights can be transferred or sold.
If this process is not followed, the beneficiary or buyer may be unable to transfer ownership and get into pay status. Not every state requires ancillary probate, but many do.
Consult an attorney about the laws in the state where the mineral rights are located.
We didn’t do probate. What now?
Depending on the state where the minerals are located, probate may be required. Some states allow small estate affidavits or affidavits of heirship. Check with an attorney about the requirements in your state.
Warning:
Even if the operator accepts an Affidavit of Heirship (AOH) and puts you into pay status, you may not legally own the mineral rights unless they were transferred by deed or probate. This can become a problem when selling the mineral rights at a later date.
Okay, Probate is finished. Now What?
Assuming the estate has gone through probate, this is the likely process that will follow:
Step 1: Create Conveyance Documents
Ideally, the personal representative or executor should have created a conveyance document transferring the mineral rights to the heirs. That conveyance has to be recorded in the county where the minerals are located.
Sometimes, probate records are recorded instead of conveyance documents. The requirements vary by state but will often include a certified copy of probate documents, the will, and a death certificate.
If the mineral owner had non-producing minerals (i.e., there are no active wells and, therefore, no royalty checks), the transfer is complete when the documents have been recorded with the county and returned to you.
Step 2: Have Documents Recorded
Send the original deeds, assignments, or conveyance documents to be recorded in the county where the minerals are located. Sometimes, this is the County Clerk, Register of Deed, or other official tasked with keeping the deed records.
Check with the county for the recording fee and, in some counties, the appraisal district should be updated so you receive future tax bills. You may also need to record a copy of the death certificate and probate documents.
After the documents have been recorded, the county will send the originals back to you. Keep these in a safe place for future reference. It’s also a good idea to scan these documents and keep digital files.
Step 3: Transfer Ownership
Once the conveyance documents, probate, or affidavits have been recorded with the county clerk (or whoever keeps deeds and title records), send copies to the companies that operate the wells.
After analyzing the documents for correctness and completeness, the operator will transfer ownership to the new owner(s) and send out division orders.
After you verify the information and sign the division order, you should begin receiving royalty checks.
The transfer process can take one to six months. You may need to follow up with the operator several times before receiving checks.
Every situation is different, and an attorney or a landman can help you navigate this often complex situation.
Image Description: Three generations of a family sitting on a sofa and smiling, which is symbolic of passing mineral rights from generation to generation.
Image Description: A married couple sit on opposite sides of a bed, clearly unhappy with their relationship.
After a Divorce
During a divorce, all property is divided between the two parties in the manner agreed upon or by court order.
Transferring Non-Producing Mineral Rights After a Divorce
After a divorce, mineral rights can be transferred by submitting the divorce decree and conveyances to the county (where the minerals are located) for recording. They usually go to the same agency that records titles and property deeds.
The county will return the recorded original documents to the new owner. Because there are no producing wells on the tract of land, the transfer of ownership is complete. The only thing left to do is keep good records of what you own while you wait (and hope) for someone to offer to lease your minerals.
Transferring Producing Mineral Rights After a Divorce
The first step of transferring mineral rights is the same for both non-producing and producing mineral rights: conveyances and a divorce decree must be recorded by the county where the mineral rights are located.
When you get the recorded documents back from the county, copies can be forwarded to the operator of the well(s). The operator will review the documents for accuracy before transferring the ownership and sending out new division orders. You will start receiving checks shortly after reviewing and signing the division orders.
This is the general procedure:
- Submit divorce decree and conveyances to the county for recording.
- Submit the recorded conveyance and divorce decree to the operator.
- The operator will review the documents and transfer the ownership, sending out new division orders.
- Review and sign the division orders (and W9)
Into or Out of a Trust
Mineral rights can be deeded (or assigned, in the case of ORRIs) into or out of a trust. Normally, this requires the help of an attorney to draft the documents.
How are Mineral Rights Transferred Into a Trust?
A trust needs to be “funded” by transferring your assets into the trust. We see a lot of cases where mineral owners have a trust, but they never deeded (or assigned) the mineral rights to the trust, and therefore the oil and gas royalties and mineral rights are still owned personally.
You may need the help of an attorney to deed your mineral rights into the trust. The same attorney who drafted the trust can probably draft a deed or assignment to convey the mineral rights into your trust. Or, you can hire an oil and gas attorney.
The Mineral Deed or Assignment of Overriding Royalty Interest will need to be recorded in the county where the mineral rights are located. There is usually a small recording fee ranging from $20 to $100). After recording your document in the county deed records, the original will be returned to you.
If there are no producing wells on the tract of land, the ownership transfer is complete. The only thing left to do is keep good records of what you own while you wait (and hope) for someone to offer to lease your minerals.
How are Mineral Rights Transferred Out of a Trust?
When the beneficiary of a trust passes away or a trust a closed, the assets are usually liquidated by sale or conveying the assets to the beneficiaries.
An attorney can create a deed or assignment that conveys the mineral rights to the new owners. The original deed will need to be recorded in the county where the minerals are located.
If there are producing wells on the property, each operator will need to be notified of the change in ownership. Operators do not know the ownership has changed unless you tell them. You will need to send a copy of the recorded deed to each operator and follow up with them until they have transferred the mineral rights and you receive a division order. Once you review, sign, and return the division order, the operator will start paying you.
Image Description: An attorney explains an estate plan to an older couple.
Image Description: An older and younger person hold hands, symbolizing the transfer of minerals (and other assets) from one generation to the next.
Transfer Before Death
Why Transfer Oil and Gas Mineral Rights Before Your Death?
You might be doing your heirs a huge favor by transferring your mineral rights before you pass away.
By deeding your minerals before you die, you could help your heirs:
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- Avoid probate (in some cases)
- Reduce legal expenses
- Reduce frustration and overwhelm
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Long-Term Care Planning
You may want to consider how owning mineral rights will impact your long-term care plans. In many states, there is a 5-year look-back period, so you may want to give your minerals to the next generation (or sell them) long before your may need assisted living or skilled nursing care.
Do your heirs want the mineral rights?
We see a lot of cases where the next generation does not want to own mineral rights. Some younger people do not want to profit from fossil fuels, while others just don’t want to take on the management of small mineral rights that have been fractioned over generations.
If your heirs are going to sell the mineral rights anyway, you may prefer to sell them yourself and use the money in a way that brings you joy.
Selling Your Mineral Rights
You can sell your mineral rights to someone you know (such as a family member) or to a mineral buyer, like Blue Mesa Minerals.
How do I Sell Mineral Rights to Family or Friends?
Many mineral owners want to keep the minerals “in the family”. Rather than splitting Mom’s minerals among four children, some families opt to have one of the kids buyout the others. This prevents the mineral estate from being further fractionated and devalued.
If you want to sell the mineral rights to a family member or friend, one (or both) of you will need to hire an attorney to draft the deed. Once the deed has been notarized, the original must be recorded in the county where the minerals are located. If there are producing wells, the operators need to be notified of the change in ownership.
Selling to a Mineral Buyer
It’s often easier to sell mineral rights to a mineral buyer rather than a family member. The mineral buyer will do all the work, saving you time, frustration, and legal fees. It shouldn’t cost you anything to sell your mineral rights, but if you pass away while owning them, your heirs will have to pay legal fees to transfer the ownership from your estate.
Image Description: A large mesa looms in the background of the desert landscape. The sky is purple from a looming storm.
Where We Buy Mineral Rights
We buy both producing and non-producing minerals in all oil and natural gas states. However, we are especially interested in Texas and Kansas mineral rights.
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We even buy minerals in more obscure states, such as Michigan and Illinois, which produce a very little oil and gas compared to other states.
Why Sell?
Why People Sell Their Mineral Rights
I am putting my affairs in order. I don’t want to burden my kids with the hassle of transferring ownership and managing small mineral rights. When my sister passed away, my niece and nephew had to hire an attorney to help them with the minerals. I don’t want my kids to go through that.
I inherited my mineral rights so they were sentimental, but I don’t really want to bother with managing them and filing extra tax returns. I decided to sell and use the money as a down payment on my house.
I had no idea how fast the oil production would decline. My checks are only 20% of what they were a few years ago. I should have sold my mineral rights when the wells were brand new and still generating huge royalties.
My oil wells have been producing for decades and the reserves are almost depleted. Once the wells are plugged, the value will be significantly lower. I’d rather cash out now.
I inherited mineral rights, but don’t want to be involved with fracking and fossil fuels. I would prefer to support renewable energy and do my part to reverse climate change.