Oil and Gas Mineral Deeds
What is a mineral deed?
A mineral deed is the document that is used to convey ownership of mineral rights from one party to another party. The mineral deed is the final step in the process of selling mineral rights. The mineral deed will be recorded at the county as proof that the ownership has transferred from one party to another.
Generally speaking, the mineral rights deed is a standard document. However, there are some basic things you need to understand about the mineral rights deed.
Important: If you received a mineral deed in the mail, and you want to sell, don’t sell until you get competitive bids. The reason is that you will be selling far below market value. Mineral buyers will send you a deed in the mail with an offer. These offers are rarely a good deal.
If you are going to sell, get a free consultation at Texas Royalty Brokers. We can help guide you through the process and ensure you get the best price.
Royalty Deed vs Mineral Deed
While there could be differences between a mineral deed and royalty deed, they are effectively the same thing. Regardless of what you call it, they do the same thing. A mineral deed and royalty deed each convey your ownership of oil and gas interests. These interests could be mineral rights ownership (physical ownership of the oil) or they could be overriding royalty interest (no physical ownership, but a right to the money generated).
All that matters is that you understand what your ownership is, and that the mineral deed properly describes what is being conveyed. Most royalty deeds are all encompassing. They will include language that covers are mineral ownership, overriding royalty, non-participaing royalty interest, etc etc..
For practical purposes, the terms mineral deed, mineral rights deed, and royalty deed are all interchangeable and mean the same thing.
Example Mineral Rights Deed – Free Download
Do you want to download a free mineral deed? You can use the link below to download a free mineral deed. This mineral deed is provided for reference only.
Note that the mineral deed download provided is just for reference. The mineral deed that was provided to you will look generally similar, but it may be slightly different.
Important Royalty Deed Terms
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.
The information we have provided here is surface level. Selling mineral rights is complicated and mineral owners are consistently taken advantage of. We are providing this information as a basic guide, but we highly recommend working with a professional.
At Texas Royalty Brokers we specialize in high value mineral rights sales exclusively in the state of Texas. We can help walk you through process. We’ll be there to review the purchase and sale agreement and mineral deed. More importantly, we will help ensure you sell for the highest price.
If you are thinking about selling we recommend reaching out for a free consultation. There is no obligation and no pressure. Simply fill out the form below.