Blogging Tulsa Real Estate: Real Estate is Like a Cake -- Fee simple explained in layman's terms

Real Estate is Like a Cake -- Fee simple explained in layman's terms

Real estate is like a cake.  When you own the entire cake, you own the land in fee simple, essentially from the top of the ground to the center of the earth.  When you own land in fee simple, you own the icing and the cake itself. 

When someone sells the land and retains the mineral rights, then it is said that they sever the mineral rights.  The surface owner effectively owns just the icing on the cake, which effectively means everything "from the grass roots up."  The mineral owner owns everything from "the grass roots" to the center of the earth. 

The pretty houses on the surface of land are like flowers on a cake.  Since it is not nice to mess up pretty flowers, in Oklahoma a new well cannot be spotted within 200 feet of a house.  However, you can build a house close to existing wells. 

Despite the fact that surface owners effectively own only the top few feet of land, they really own quite a ways down beyond the "grass roots." This probably amounts to tens of feet, but not hundreds of feet down. 

In Osage County, the landowners own just the surface.  The Osage Nation owns all the minerals. 

Generally in Oklahoma it is the surface owners who own the coal on the surface of the land and it is usually the surface owners who make agreements to have their properties strip mined for coal.  However, the deeper coal zones can contain coal bed methane, a fertile source of natural gas; therefore the mineral owners will own those coal beds.

When you buy a house in Oklahoma, find out whether or not you are purchasing it in fee simple.  If you are purchasing a property with mineral rights, your next question is, "What percentage of mineral rights are included?" 

If you do not own at least 50% of the mineral rights, then you cannot control what happens to your land.  It is incumbant upon all real estate sales representatives to explain this concept to anyone moving into Oklahoma from out of state. 

This concept is hugely important and is understood by most native Oklahomans in rural areas.  The emerging legal question is whether or not cities have the right to deprive land owners of their right to the minerals they own.

Homeowners should be encouraged to attempt to acquire the mineral rights to the land under them, because new technologies are making it much more cost effective to produce oil where heretofore it was not profitable. 

In short, try to get at least 50% of the mineral rights if you cannot purchase your property in fee simple.

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Debbie Solano, CRS, ABR, CDPE, CHMS, e-PRO, GRI, REOS, SRES
Coldwell Banker Select, Realtors -- Land & Ranch Division
4408 S. Harvard Avenue
Tulsa, OK  74135

Office:  918-712-4473

Cell:  918-724-8201

FAX:  918-712-4310

 

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Comment balloon 3 commentsDebbie Solano • August 16 2008 06:18AM

Comments

The "Not in my backyard" attitude has hindered energy production for the last thirty years, and now it is time for Americans to think of the good of the country and not just their private interests.  These people purchase property without the mineral rights on an active oil lease for a less than market basis because of those interests.

Posted by Ronald Adams almost 10 years ago

It is a sad situation and I think the problem will loom larger as royalty holders realize that their rights are being challenged.  Who are the royalty holders?  In many cases they are descendents of early landowners who worked hard to win over the land.  There are a lot of little old ladies in retirement homes in Texas and Oklahoma who receive royalty checks and depend on them for their livelihood -- even though they may be largely ignorant of where exactly that money originates.

Posted by Ronald: almost 10 years ago

Ronald:  Thank you for your comment. (I just responded to your comment, but put your name as the author instead of me.  I'll figure out this blogging thing eventually. )  My point essentially is that the royalty owners tend to be regular folks.  In fact, many people who may be descendents of royalty owners may not realize that they have rights to royalties.  That, however, will be the topic of another blog.

Posted by Debbie Solano almost 10 years ago

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