Puerto Rico Subordination of Surface Rights Agreement is a legally binding contract outlining the relationship between mineral owners and surface owners in Puerto Rico. This agreement serves to prioritize the rights and interests of the mineral owner over the surface owner, particularly in cases of resource exploration, extraction, and development. Several types of Puerto Rico Subordination of Surface Rights Agreement exist, including: 1. Subordination by Mineral Owner to Secure Financing: This type of agreement is commonly used when the mineral owner needs to secure financing for mining activities. By subordinating their surface rights, they allow lenders to have priority over the surface assets in case of default or foreclosure. 2. Production Sharing Subordination: In certain cases, a mineral owner may enter into an agreement with an operator to develop and produce resources found in Puerto Rico. This agreement outlines the sharing of production revenues and sets guidelines for subordinating the surface rights to facilitate the extraction process. 3. Subordination for Specific Mineral Exploration Licenses: When a mineral owner applies for specific mineral exploration licenses in Puerto Rico, they may need to enter into a subordination agreement with the surface owner. This type of agreement ensures that the exploration activities have priority over other surface uses during the license period. 4. Subordination Agreement for Environmental Protection: In situations where environmental protection measures are crucial during mining or extraction activities, a subordination agreement may be formed to prioritize compliance with such requirements. This ensures that the surface owner acknowledges the importance of following environmental regulations, even if these actions temporarily restrict their surface rights. The Puerto Rico Subordination of Surface Rights Agreement serves as a crucial tool in balancing the interests of mineral owners and surface owners. It clarifies rights, responsibilities, and priorities to avoid potential conflicts and facilitate efficient resource development while protecting the surface environment.
Puerto Rico Subordination of Surface Rights Agreement (Subordination by Mineral Owner)
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FAQ
A mineral rights holder or subsurface rights holder may explore and exploit minerals such as natural gas, oil, and coal below the ground within the boundaries of their specific property. Commonly called mineral rights, these rights are real estate assets, which differ from the rights to the land surface of a property.
Mineral rights are automatically included as a part of the land in a property conveyance, unless and until the ownership gets separated at some point by an owner/seller. An owner can separate the mineral rights from land by: Conveying (selling or otherwise transferring) the land while retaining the mineral rights.
Severance by mineral deed occurs when someone who owns both the surface and mineral rights chooses to sell all or a portion of the mineral rights to another party. Another scenario is when the owner of both the surface and mineral rights sells the land to one party and the minerals to a different party.
Since mineral rights can be sold separately from the land itself, even if you own the land, someone else may hold ownership of what's below it. And because of the intrinsic value of what's below the surface, the land itself may come with a price tag much higher than otherwise seen in the area.
A property owner with mineral rights may explore, extract, and sell natural deposits found underneath the land surface. But surface rights only refer to exclusive rights to all physical property on the land.
A subordination agreement is one where the lending party agrees to assign the pre-existing lien a lower priority to a subsequent oil and gas lease. As a result, it is as if the lease had been executed and recorded prior to the lien.