Mineral Owner's Subordination (of Rights to Make Use of Surface Estate)
About this form
The Mineral Owner's Subordination form allows a mineral owner to relinquish their rights to use a specified portion of the surface estate of a property, typically for the exploration and extraction of minerals such as oil or gas. By completing this form, the mineral owner grants the surface owner exclusive rights to use the surface for their purposes, while reserving the mineral rights for exploration and production without disturbing the surface estate. This legal document is essential for clear delineation of land use rights between the surface owner and the mineral owner, differing from other mineral rights agreements by specifically addressing surface usage.
Form components explained
- Identifies the mineral owner and surface owner with their names and addresses.
- Describes the lands involved, including the legal description of both the mineral interest and the subordinated tract.
- Clarifies the rights being subordinated by the mineral owner regarding surface use.
- States the effective date of the subordination.
- Includes signatures of the mineral owner and an acknowledgment section for legal validation.
Jurisdiction-specific notes
This is a general form suitable for multiple states. Review and modify it as needed to reflect your jurisdiction’s rules.
When to use this document
This form is typically used when a mineral owner wants to grant a surface owner exclusive rights to the surface of a specific tract of land while retaining mineral rights. It is particularly relevant in situations where the surface owner plans to build, develop, or use the land for purposes unrelated to mineral extraction, requiring clear legal separation of rights.
Intended users of this form
- Mineral owners who wish to subordinate their rights over a specific area of land.
- Surface owners seeking to gain exclusive surface rights for development.
- Developers or property owners engaged in construction or land use that would conflict with mineral rights.
Completing this form step by step
- Identify the mineral owner and surface owner by entering their names and addresses at the beginning of the form.
- Provide a detailed description of the lands involved, including specific legal descriptions.
- Specify the portion of the land being subordinated (the subordinated tract) and ensure clarity on the surface rights granted.
- Clearly state the effective date for the subordination agreement.
- Sign the document and seek acknowledgment if required for legal validation.
Does this document require notarization?
Notarization is required for this form to take effect. Our online notarization service, powered by Notarize, lets you verify and sign documents remotely through an encrypted video session, available 24/7.
Avoid these common issues
- Failing to provide accurate legal descriptions of the lands involved.
- Not including an effective date, which may cause confusion about the timing of the agreement.
- Leaving sections blank, such as names and addresses of the parties involved.
Benefits of using this form online
- Convenience of downloading the form quickly from anywhere.
- Editability allows users to customize details easily.
- Reliability of ensuring compliance with standard legal formats.
Form popularity
FAQ
Mineral rights are ownership claims against the natural resources located beneath a plot of land. In the United States, mineral rights are separate from surface rights. 1feff Mineral rights are often "severed" from surface rights in states such as Texas, Oklahoma, Pennsylvania, Louisiana, Colorado, and New Mexico.
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.Conveying (selling or otherwise transferring) the land but retaining the mineral rights.
You can retain your mineral rights simply by putting an exception in your sales contract, provided that the buyer agrees to it, of course. If you sell your house with no such legal clarification, then those mineral rights automatically transfer to the buyer.
The IRS classifies the sale of mineral rights as a capital gain event, which is one of the most favorable tax treatments in the U.S. tax code.Cost basis is the original value of an asset for tax purposes, usually the purchase price.
When mineral rights are owned by a third party, it may affect your use of the surface in the future. Surface rights are subservient to mineral rights, which means the owner of a mineral servitude will be able to access and use the surface to extract the minerals from underneath.
Mineral rights are often sold separately from the land they are on. You may have title to the mineral rights on a property you own, or a previous owner may have sold or leased them in which case, they may not be yours to sell. But there is no need to abandon the idea of monetizing your mineral reserves!
As a mineral rights value rule of thumb, the 3X cash flow method is often used. To calculate mineral rights value, multiply the 12-month trailing cash flow by 3. For a property with royalty rights, a 5X multiple provides a more accurate valuation (stout.com).
Are inherited mineral rights taxable? The federal government does not consider inherited mineral rights taxable. Still, any income you accumulate from those rights does have to be reported on your tax return.
