Situation:
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.