Mineral Rights, Restrictions and Reservations

Many people take title subject to mineral rights or other restrictions. Most people ignore the details and some worry too much. Here’s the basics you should know about your land or property you are looking to buy.

Minerals – Many titles, especially in Northern Minnesota, are divided so that one owner has surface rights and another has mineral rights.  In most cases, the details are not that relevant as the likelihood of mining is so low.  If one were to exercise mineral rights, they usually have to compensate the surface owner by buying out their interest at fair market value.  As a result, owning a home over mineral rights is not a huge risk as they could not just drill next to you but instead would have to buy you out as the two uses could not normally co-exist.  If the parcel is near other mining operations, you should be careful to review the mineral reservation set forth in the deed as some have unreasonable repurchase agreements or terms.

Restrictions – Many parcels are sold with restrictions about the use of the property or what type of improvements are allowed on said parcel.  The first thing to know is that many restrictions automatically expire by statute in 30 years if not properly renewed.  The next issue is who, if anyone, can enforce a violation.  Is there a functioning homeowner’s association?  Does the restriction protect other properties?  Many restrictions are ignored as the Grantor is deceased or moved away and has no interest in enforcement.  On the other hand, if done to benefit a development, your neighbors could sue to enforce restrictions if they perceive the violation devalues their property.  One thing to note is that these are private covenants so you can’t expect the local zoning authority to enforce these rules.

Covenants – beyond restrictions that may limit what you may build on your parcel, covenants are often created to protect amenities that benefit your parcel.  Private roads, common lake access or common areas are all examples.  These covenants are set up in a variety of ways but again as a land owner you care about how they are enforced.  What are the dues collected to maintain these amenities?  What happens if someone doesn’t pay their fair share?  Are the dues sufficient to set up proper reserves to replace roads or parking lots when needed?  You want to confirm that there is legal association empowered to collect appropriate dues from all benefited parcels.  You also want to know if the Developer is paying their fair share and doesn’t control the association after a certain time.  Many associations simply don’t have enough owners to collect sufficient dues for when expensive repairs are needed.  Many covenants don’t allow for assessments and rely on voluntary payments.

As always, try to know the rules that matter before you buy!

Please send any request for topic suggestions to rene@breenandperson.com.  Although we cannot give you legal advice through the column, we can provide some general information that may be helpful for you to know.  Our purpose is to educate and we hope that you can take something new away from this column each time you read it.