Owning property is sometimes thought of as owning a “bundle” or group of rights. This means that ownership implies the ability to keep the entire bundle together or an owner may separate out some property rights from the others and convey (sell, lease, give, and so forth) them to another person.
Among the bundle of rights associated with property ownership is the right to use the land surface itself and the right to use the minerals beneath the land, which collectively are known as mineral rights. However, some landowners in Bayfield County may not own the mineral rights on their land. How can they find out? What are the implications if they do or if they don’t own them?
What are mineral rights?
Mineral rights is the term used to describe the group of rights to explore, develop, extract (mine), and sell minerals associated with a particular parcel of land. The mineral rights owner is the person who owns the minerals in and on a parcel of land and who is the person who ultimately can lease, sell, or otherwise convey the minerals to another person. Most commonly, the land surface owner and the mineral rights owner are the same person or persons, but sometimes they are not.
How are “separate” (commonly called “severed”) mineral rights created?
A person who owns land in fee simple has the authority to treat the mineral rights on that land parcel as property or a property right which can be given, sold, or otherwise conveyed (such as in a will) to another party. A landowner who owns both the surface and minerals in a parcel of land my separately convey the minerals to another party; thus, directly creating by this conveyance two property estates – a surface estate and a mineral estate – in the same parcel of land. Also, if the landowner sells the land they own, they may or may not include the minerals as part of the sale; thus, the minerals can be reserved or excluded from the sale. Such exclusion or reservation of minerals in a sale of land also creates two separate estates in the same parcel of land: a surface estate and a mineral estate. What distinguishes the two estates is the array of rights associated with each. For example, an owner of the mineral estate on a parcel of land had no right so use the land surface, except as would be necessary for his use of the minerals (see following).
What is a dominant estate? What is a servient estate?
In the situation where there are separate owners of the surface estate and the mineral estate in the same parcel of land, we typically consider one estate to be the dominant estate and the other estate to be the servient estate. The dominant estate includes the bundle of rights that are considered superior in any conflict of among the various rights. The opposite is the case for rights related to the servient estate. However, even rights associated with the servient estate are usually given consideration in any conflict among the separate group of rights or estates.
Is the “mineral estate” the “dominant estate?”
Though Wisconsin law is not explicit on this point, under generally accepted principles of English Common Law and implied within some Wisconsin Supreme Court decisions, an owner of a mineral estate is assumed to own them for a purpose, which purpose is the use of the minerals. That is, the mineral rights owner has the right – subject to all other laws pertinent to the intended activity or use -- to make use of the minerals … else why would he/she own them? Why would anyone create a separate mineral estate unless they either intended to use or otherwise control the use of the minerals? Therefore, the right of a mineral rights owner to develop and use the minerals is commonly assumed to supersede the rights of the owner of he land surface, except that the mineral rights owner is understood to be obligated to compensate the surface owner for damages to the surface estate caused by his/her use of the minerals. By use we mean all the rights of property ownership attached to the minerals.
What mineral resources are included in a mineral right?
Does it include mineral commodities like sand and gravel, for example, or is it restricted to minerals that are compounds of metals like zinc, copper, gold, or silver?
There is no easy answer to this question. The law varies from jurisdiction to jurisdiction, state to state, and where the law is not explicit, the intent, if discernable, of the parties involved in the legal activity that led to the creation of the severed mineral estate is often weighted heavily by the courts asked to adjudicate disputes based on this question. In some jurisdictions, the law or the decisions of the courts indicate that the courts must consider other owners’ rights, such that the extraction of sand and gravel, which arguably consumes the land surface, at least in part, is deemed to be part of the surface estate and not part of a separate mineral estate. Other jurisdictions have ruled, for example, that since low-grade coal was mined in underground mines at the time the separate mineral estate was created (in an example from the State of Texas), the even though modern mining is accomplished in large surface mines totally disrupting the land surface, the coal is considered to be part of the mineral estate. Unless specifically stated otherwise, hydrocarbons (oil, gas) and metallic minerals (gold, copper, and so forth) are considered to be part of the mineral estate.
What is a “Dormant Minerals” statute?
This is a statute created generally at the state level that treats severed mineral rights (the mineral estate) as a property right that is intended to be “used” and that its non-use over a certain time period may cause the interest in minerals to transfer by law to another party, usually the owner of the land surface. This concept of a “time limit” placed on the existence of a severed mineral estate was upheld by the U. S. Supreme Court in the Texas v. Short (1982) decision upholding the constitutionality of an Indiana statute . A law was developed by the Wisconsin Legislature shortly after the 1982 Supreme Court decision as a means to identify owners of severed mineral estates (who may not be local people or corporate entities, but who may reside elsewhere or even not be known or knowable) and to create a way to extinguish separate mineral estates that are now used over time.
Wisconsin adopted §706.507, Wis. Stats., known as the Lapse and Reversion of Interest in Minerals Law or, informally, as the “Wisconsin dormant minerals statute,” which allows for a severed mineral estate to exist as long as the minerals are “used” at least once in a twenty (20) year period. Under Wisconsin law, “use” is defined broadly as mining the minerals, recording a conveyance (sale, lease, transfer) of minerals, recording a public declaration of ownership by the mineral rights owner (statement of mineral claim), or by payment of property taxes on the minerals. If mineral rights are not used within a twenty-year period, then they are said to have “lapsed” and may be subject to transfer to the surface owner under circumstances describe elsewhere in this information sheet.
Do I own my own minerals? How can I find out?
Go the Registrar of Deeds’ office in any Wisconsin county in which the land you own resides. By checking the Tract Index, you can identify every legal document affecting title to the land you now own as far back as the land records exist. By tracing the history of your land title through time, you can identify documents that my separately create or describe the mineral rights and ultimately determine if a severed mineral estate was ever created in your “chain” of title. This search on your own can be done at no expense to you. Alternatively, a title company or a lawyer familiar with land records can do the searching for you and may provide you with a legal opinion on the existence of a severed mineral estate an who owns it. Of course, this alternative approach involves seeking professional assistance and is typically done at some expense to you.
If I don’t own the minerals on my land, is there a way I can buy them back?
A severed mineral estate is property with a set of legal rights and a severed mineral estate can be bought or sold just like any other property right. One can always contact the owner of a severed mineral estate and inquire about their interest the sale of the minerals. However, sometimes the owner of a severed mineral estate may not be known.
If I cannot buy the minerals back, is there some other way to obtain them?
If a severed mineral estate becomes “dormant” (not used in the last twenty years), the owner of the land surface may file a statement of mineral claim and claim ownership of the mineral rights on the property. The Wisconsin Dormant Minerals Statute provides for a process involving a three-year waiting period during which a mineral rights owner may come forward and contest the surface owner’s claim, by showing that the mineral rights are in fact not “lapsed,” but have been used at some time in the last 20 years. The Circuit Court in the county is the venue where any legal contest over such issues is judged. Ultimately, if the mineral are found to have indeed lapsed and have been lawfully claimed by the surface owner, the court is directed by law to award ownership of the minerals to the surface owner. In the situation where no mineral rights owner comes forward within three years following the filing of the surface owner’s original claim and the mineral rights had indeed been found to have lapsed, the courts upon the request of the surface owner are directed to declare the surface owner to be the lawful owner of the minerals and the two estates are re-united.
What are my rights as an owner of the land surface?
Typically, in those situations where the minerals are owned by another party and that partly wishes to develop the minerals, the surface owner is entitled to fair compensation for the loss he/she incurs as a result of the exercise of rights by the mineral owner. In Wisconsin, owners of severed mineral estates typically do not choose to ignore the concerns of surface owners, but choose to reach financial agreements with surface owners that result in permission to proceed with development.
The county owns the minerals on my property … How could that have happened? And is that a problem?
Large parcels of land were at one time owned by railroad and timber interests in northern Wisconsin and, in some cases, successors to these companies still exist today. In some circumstances, the land holdings were sold and the minerals retained by the original corporate owner. During difficult economic times such as the Depression of the late 1920s and 1930s, many acres of land were lost by surface owners due to their inability to pay property taxes; the lands became tax-delinquent and a tax deed was issued on these lands in the name of the county. Until 1994, a tax deed in the chain of title for a parcel of land re-united the surface estate and a previously severed mineral estate. Since the county is typically the new owner of the surface estate in this situation, the county came to own large tracts of land and with that land came the minerals, whether or not they had previously be severed. Subsequent sale of these lands by the county commonly resulted in another severance of the minerals, as it was common practice and sometimes mandated by law that only the surface rights were sold and the minerals retained as a separate mineral estate.
In 1994, the Wisconsin State Legislature created §75.115, Wis. Stats., stating that from that point in time forward, a tax delinquency proceeding on a parcel of land where a severed mineral estate exists does not re-unite the minerals with the surface estate. Essentially, the Legislature chose to change previous Wisconsin law so that a tax deed that occurs within the chain of title of a parcel of land from that time on would not result in the re-unification of a severed mineral estate with the surface estate.
Owners of land in the county where the county owns the mineral rights may wish to contact their County Board representatives to determine what interest the county may have in selling their separate mineral interest to the current land owner. If current ordinances require county property to be sold only via an open auction, for example, the County Board may want to consider whether or not it is in the county’s interest to continue to hold severed mineral interests owned by Bayfield County subject to the same ordinances governing the public sale of other county property.