Use the mineral deed download we provided to follow along. We have highlighted the text that needs to be changed. We will walk you through the deed from start to finish pointing out important things to look out for.
After Recording: This text at the top simply tells the county recorder where to return the mineral rights deed after it has been filed with the county clerk. This should be the buyer’s information as the final recorded mineral rights deed will be returned to the buyer.
Special Warranty: The type of warranty you are providing when you selling mineral rights is at the top of the deed. Ideally, you want a special warranty deed. A special warranty means you are going to warranty title during the time you owned it and not before. This important because it means you are only responsible for anything you did to cloud title while you owned it. A full warranty means you could be responsible for taxes a prior owner owed, etc..
Effective Date: Note that the effective date is the 1st day of the month in the month prior to when the royalty deed was signed. This is normal. Your royalty income is paid out on a lag. By putting the effective date a little early, this simply removes the question as to whether the buyer gets royalties going forward based on production month or check date. It’s industry practice that once the buyer completes the purchase, they get all royalties going forward and you keep all royalty checks received prior to closing.
$10 and other good and valuable consideration: When you sign the royalty deed, the purchase price is not public. To hide the purchase price, the buyer will place a default dollar amount here, typically $10. This does not mean that you only received $10 for selling. You receive the amount agreed to in the PSA (purchase and sale agreement) that you sign with a buyer. The PSA is an extremely important document. This document defines how you get paid at closing, adjustments, etc. When you list mineral rights at Texas Royalty Brokers, we walk you through the PSA and the mineral deed.
Legal Description: The legal description is important. You should make sure the deed is conveying only what you intend to convey. When you list mineral rights for sale at Texas Royalty Brokers, we help walk you through this as well to make sure it’s correct.
The rest of the deed is generally standard. However, the language will vary a bit from one deed to the next. If you intend to sell only oil and gas, and not include other mineral rights or land that you may own, be sure you fully understand exactly what is being conveyed.