Can a seller keep the minerals when you buy Hill Country land?
Yes, if the contract says so. Say you find the right few acres outside New Braunfels, the price works, and then the listing side mentions that the seller wants to keep the minerals. That does not have to end the deal. It does mean the contract needs one more form, and you should understand it before you sign.
Here is one local detail you can check yourself. The Railroad Commission of Texas puts both Comal and Guadalupe counties in its Oil and Gas District 1, which is served from its San Antonio office. I come back to the Commission’s map near the end.
On a TREC contract, the reservation goes in an addendum. The resale contract, the farm and ranch contract and the unimproved property contract each say the same thing: any reservation for oil, gas or other minerals, water, timber or other interests is made in accordance with an attached addendum. For minerals, that addendum is TREC 44-3, the Addendum for Reservation of Oil, Gas, and Other Minerals. TREC’s form page describes it as the addendum used when the seller reserves all or a portion of the Mineral Estate, and the form itself says it is for use only in that case.
Start with what the form means by Mineral Estate, because it is broader than “the oil under the ground.” It covers the oil, gas and other minerals, royalty under any existing or future mineral lease, executive rights (the right to sign a mineral lease), implied rights of ingress and egress, exploration, development, production and drilling rights, and mineral lease payments.
It also leaves things out. Water, sand, gravel, limestone, building stone, caliche, surface shale, near-surface lignite and iron are not part of the Mineral Estate. The same definition does include the reasonable use of those surface materials for mining, drilling, exploring, operating, developing or removing the oil, gas and other minerals. If you plan to use the limestone or caliche on the land yourself, read that sentence closely.
What do the two boxes in Section B mean?
Section B says the Mineral Estate owned by the seller, if any, conveys to you unless the seller reserves it, and it tells the parties to check one box only.
- Box (1): the seller reserves all of the Mineral Estate the seller owns.
- Box (2): the seller reserves an undivided interest, written in as a percentage or fraction. The form’s note says that if the seller does not own all of the Mineral Estate, the seller reserves only that percentage or fraction of the seller’s own interest. The fraction applies to what this seller owns, not to every mineral interest under the land.
Notice the words “owned by Seller, if any.” A seller can only reserve what the seller holds. Some of the minerals may already belong to someone else, and the form allows for that. Its notice says the Mineral Estate affects important rights, the full extent of which may be unknown to the seller, and that a full examination of title by an attorney with expertise in this area is the only proper means of determining title to the Mineral Estate with certainty.
So treat the checked box as the seller’s position in this sale and find out separately who owns what under the land. If the seller checks Box (2), get the exact fraction in writing before you sign, and ask what the seller believes it owns to begin with. If the answer is “I’m not sure,” that is useful information, and it is a reason to have the title reviewed by an attorney who handles mineral titles before your deadlines get close.
What does Section C mean for the surface you are buying?
This is the box I would slow down on. The form’s definition of the Mineral Estate includes implied rights of ingress and egress, and Section C deals with that piece. It asks whether the seller does or does not waive rights of ingress and egress and of reasonable use of the property, including surface materials, that are part of the Mineral Estate for mining, drilling, exploring, operating, developing or removing the oil, gas and other minerals.
There are three ways this box can end up:
- “Does waive.” The seller gives up those surface rights for the minerals the seller keeps.
- “Does not waive.” The seller keeps those surface rights along with the reserved minerals.
- Left blank. The form says a seller’s failure to complete Section C is deemed an election to convey all surface rights described in it.
What Section C cannot do
The form’s note sets a limit. Surface rights held by other owners of the Mineral Estate who are not parties to your contract, including existing mineral lessees, are not affected by the seller’s election. So whichever box this seller checks, ask separately about any other mineral owner or existing lease on the property.
Before Section C gets checked, I would want these answered:
- Which box is checked, and does that match what both sides discussed?
- Is there an existing mineral lease on any part of the property?
- Does anyone other than the seller own part of the minerals?
- Where are you planning to build, fence, put in a driveway or drill a water well?
That last question matters because the seller may reserve all or only part of the mineral estate the seller owns, so read the reservation alongside the surface-use terms. My landman’s checklist for Texas land listings walks through the survey, easements and access questions that sit beside this one.
What lease paperwork should you see?
Two different clocks can apply, and they come from two different forms.
The first is in Paragraph 4 of the resale contract and the farm and ranch contract. Paragraph 4 opens with the seller’s statement that, except as disclosed in the contract, the seller is not aware of any leases affecting the property. Then the parties check all the lease boxes that apply, and one of them is Natural Resource Leases. Each contract defines a Natural Resource Lease as an existing oil and gas, mineral, geothermal, water or other natural resource lease affecting the property to which the seller is a party. If that box is left unchecked, compare that with what the seller has told you about leases.
When the Natural Resource Leases box is checked, one of two options goes with it:
- (1) The seller has already delivered copies of all the Natural Resource Leases. Read them before you sign, since this box says you have them.
- (2) The seller has not delivered them. The seller provides copies within 3 days after the effective date. You may terminate within the number of days written into the blank after you receive all of them, and your earnest money is refunded.
The second clock is in Section D of the mineral addendum. If the seller does not reserve all of the seller’s interest in the Mineral Estate, the seller provides you, within 7 days after the effective date, with the current contact information of any existing mineral lessee known to the seller.
Line both deadlines up with your option period so you are reading lease papers while you can still act on them. My option fee vs. earnest money guide explains how those two payments and their deadlines work.
How do you check the title and the map before closing?
Use the title commitment and the Railroad Commission map together.
On the title side, all three TREC contracts list “the exception or exclusion regarding minerals approved by the Texas Department of Insurance” among the exceptions in the owner policy. The seller furnishes the title commitment and copies of the exception documents within 20 days after the title company receives the contract. If they are late, the delivery time is automatically extended up to 15 days or 3 days before the closing date, whichever is earlier, and if they still are not delivered in time, you may terminate and your earnest money is refunded. The contracts also include a broker’s notice that the commitment should be promptly reviewed by an attorney of the buyer’s choice because of the time limits on the buyer’s right to object. My guide to what a title company does in a Texas purchase covers the commitment and the closing steps around it.
On the map side, the Railroad Commission’s Public GIS Viewer shows wells, pipelines and related features in a map view. You can search by street address, and its radius tool lets you pull the well data within a circle you draw around a location. Treat what you see there as a records check on mapped wells and pipelines near the tract. Mineral ownership comes from the title work. Look at the map before you decide where the house and the water well go.
Then bring it all to one conversation: the checked boxes, the lease papers, the title commitment and what the map shows. If you are still narrowing down properties, my buyer page explains how I work with buyers through the contract.
