NOTICE OF LAPSE IN MINERAL INTERESTS
In accordance with the provisions of North Dakota Century Code Section 38-18.1-02, the interest in minerals of John Doe lying in and under the premises described are lapsed and are deemed abandoned; you are hereby given notice
What likely appears to many as legal "mumbo jumbo" can actually be worth a lot of money.
According to state statute, owning mineral rights on property isn't enough to guarantee that people will get a slice of the big pie if an oil company comes knocking. If the mineral rights are not utilized for a period of 20 years, they can be taken over by the current owner of the surface property.
"You see it a lot more if you just watch the paper with all the legal notices," said Aaron Vibeto of Vibeto Law Firm in Minot, who works extensively with oil and gas law.
Vibeto said that all the oil activity in the region has people hoping that they might own a chunk of land that an oil company will hit a "gusher" on, thus making them instant millionaires.
"And I think there's a timeframe coming that kind of coincides with the last big 'boom,'" Vibeto added.
"Surface owners are getting more vigilant about checking on the mineral rights," he said.
Mineral rights can be completely separate from surface ownership. Oil companies most often will approach the owner of the mineral rights on a site where the company feels might be a good spot to drill with an offer to lease the mineral rights. Commonly, a "bonus" up-front lease payment will be offered per acre, and then a royalty added for any product that might be produced from the well. Royalties are a percentage payment on oil produced.
Historically, one-eighth was the standard rate paid for oil and gas royalties, but according to literature published by the North Dakota State University Extension Service, rates of one-sixth and three-sixteenths have become more common as North Dakota develops into a major oil producer.
In addition, delay rental payments can be made to hold the lease if exploration is not set to take place right away.
All of this can add up to big bucks for sure. Vibeto said it's probably best to make sure your bases are covered.
"If they know where they may own surface rights, they should go to the county recorder's office and check," he said. Vibeto said having the exact legal description makes it even easier to check.
"Realistically, if you have a past relative who owned land and minerals, you should check the mineral rights."
At the Mountrail County Courthouse which has been like Ground Zero for oil activity for the better part of the last few years Joanne Stanley, county recorder, said that although she has had a few inquiries about the 20-year clause, it hasn't had a huge effect on business there.
It's just plain busy period.
"Every once in a while we get somebody who inquires," said Stanley. "We just tell them, 'File this statement of claim.'
"With all the media coverage, we've had more requests for people thinking their great-grandma must have had that stuff."
Vibeto said in order to take over mineral rights on their property, the surface owner has to send a notice to the last known address at the county recorder's office of the mineral rights owner. Also, the notice must be published in the official county newspaper where the property is located for three consecutive weeks.
If a person finds out that notice has been filed on property they owned, Vibeto said there is a chance the mineral rights owner can prevent the lapse of his or her rights.
According to the law, if a person "owns one or more mineral interests in the county in which the mineral interest in question is located at the time of the expiration" of the 20 years, they qualify for an exception to the law. Other exceptions include failure to preserve the mineral interest in question and recording a statement or claim within 60 days of the first publication of the notice.
"The determination of when the mineral interest was last 'used' can be a subject that may be disputed," Vibeto said. He said anyone who doesn't qualify for one of the exceptions should contact an attorney experienced in oil and gas law.
The process can surely be a bit complicated and time-consuming, but is probably worth the effort especially considering the price of oil
"Realistically, if you're talking 20 years, most people have moved," Vibeto said. "If there was a death involved, the estate should have been probated, but often that just doesn't happen.
"People have lost mineral rights they didn't even know they had."