Mineral-rich property can serve as a financial boon to its owners — particularly if the property in question is a hotbed of hard-rock minerals or hydrocarbons. It’s important to note, however, that mineral properties do not represent a monolith. There are several distinct types of mineral property, each of which is notably different from its contemporaries. If you’re unfamiliar with the most common mineral property types, the following rundown is sure to prove useful.
As anyone who specializes in mineral acquisitions can confirm, a severed estate can be rather tricky. A severed estate refers to a property whose mineral ownership is separate from its surface ownership. Furthermore, when the minerals and land are owned by two different parties, the result is a split estate. Certain landowners choose to split their property into surface interests and mineral interests, often making a handsome profit in the process.
As the name implies, a unified estate refers to a mineral property whose surface and mineral rights are owned by the same party. Unified estates are often homesteaded properties that have been owned by the same families for generations. In most cases, these properties have never been divided in any way.
Somewhat similar to a severed estate, a fractional estate refers to a piece of property whose mineral rights are owned by multiple parties. Like unified estates, many of these properties have been passed down for generations. However, in the case of fractional estates, they’re not owned by a single family member — but rather a set of them, with each stake holder claiming ownership of a certain percentage of the mineral rights.
Owning or leasing a mineral property can give way to tremendous financial rewards. However, before putting pen to paper, it’s imperative that you know which type of property you’re investing in. Learning about the various mineral property types will ensure that you’re able to make an informed decision when it comes time to buy.