Who Owns the Mineral Rights under your Home?

When Robert and Julie Davidson paid $255,385 in 2011 for their house at the Valencia Golf and Country Club in Naples, Florida, they didn’t know that they had, in essence, bought only from the ground up, and that their homebuilder, D.R. Horton, had kept everything underneath, says Reuters.

In golf clubs, gated communities and other housing developments across the United States, tens of thousands of families like the Davidsons have in recent years moved into new homes where their developers or homebuilders, with little or no prior disclosure, kept all the underlying mineral rights for themselves, a Reuters review of county property records in 25 states shows. In dozens of cases, the buyers were in the dark.

• In most states, sellers aren’t legally required to disclose to home buyers whether they are severing the mineral rights to a property.
• Builders sometimes flag the move in sales contracts or deeds and other documents they are required to file with local authorities.
• But buyers don’t necessarily review their paperwork very closely, especially if, as real estate agents say happens often, they don’t hire a lawyer to help them with the transaction.
• Severed rights are usually not factored into tax assessments.
• Thus homeowners who don’t own their mineral rights often end up paying just as much in property taxes as those who do — even though their properties are worth less.

D.R. Horton, the biggest U.S. homebuilder, is a heavy user of the practice. The Fort Worth, Texas, company has separated the mineral rights from tens of thousands of homes in states where shale plays are either well under way or possible. In Florida alone, the builder has kept the mineral rights underneath more than 10,000 lots.

Source: Michelle Conlin and Brian Grow, “U.S. Builders Hoard Mineral Rights under New Homes,” Reuters, October 9, 2013.