Realtors... Is this legal?

Question

My husband and I bought a house recently. It was put under contract on May 5, 2008. In the real estate transaction, the mineral rights were conveyed to us. We closed the loan on June 11. In the period between the time we put the contract on the house and closing, the previous owners son (who was the executor of the estate) sold the mineral rights to an oil and gas company and the mineral lease has now been recorded in our county clerk's office. The warranty deed at closing did not "save and except" the minerals. We have been told by the gas company that the mineral rights are NOW ours... My question is.. was it legal for him to lease the minerals in the time between the making of the contract and closing? Any thoughts or insights would be appreciated.

Answer 1

This could possibly be a blessing in disguise...you need to do more digging before you freak out and sue someone.

My brother owns a property where the local gas company has tapped for natural gas on his land...you know how much he gets a month?  

$15,000...PER MONTH...yes, you read that figure correctly...fifteen THOUSAND dollars per month.

So before you flip out and "undo" the lease (which you very easily could do), you need to find out how much it PAYS YOU b/c YOU should be getting that money, not the previous owner.

My brother doesn't give a flip about any home damage, etc...b/c one year they have paid him more than his house is worth currently and he has a 10 year lease that must be paid out to him in full regardless if they keep the tap or not.

I am telling you this so you know the consequences if you try to "undo" everything...you could be sitting on a gold mine and not even know it.

Answer 2

Yes, it was legal for him to sign and enter into that lease, since he (the estate) owned the property at the time it was signed.  When it was recorded was irrelevant.  The fraud came when he signed the closing papers with you, with full knowledge that he was selling the mineral rights to you, and with full knowledge that he had leased them to another party.  And that is what your basis for lawsuit entails.  He sold to you what he had leased to someone else.

And yes, you DO need an attorney, and as quickly as possible.

Answer 3

This is a question for a lawyer, not a real estate broker. The answer depends on recording dates, your deed, and your state's local laws. The general rule is the first recorded instrument prevails, but don't depend on this. You need to have a lawyer look at your deed, and your title insurance policy.

Answer 4

For  an  issue  that  like ,  you  need  a  local  RE  attorney ,

But   you  must  not  be  too  serious  because  you  are  asking  here !

So ,  I'll  go  with ,  yes  it  was  legal  and   he  will  collect  the  royalties .

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Answer 5

Since they still owned the house, odds are it is legal.  Contracts fall out all the time and aren't considered final until the papers are signed.

Morally correct though? Probably not.

Answer 6

When did you record your deed?  If you had it recorded immediately, you would have the mineral rights.  If you recorded it after the son of the previous owners recorded it, that makes it trickier and you would have to go to court to fight it.

First to record usually gets dibs, though it is questionable that he entered into a lease with someone when the property was in the process of (or was already) being sold to a 3rd party.  There are laws against owners entering into a lease between the time they enter a contract for sale with someone and the time it closes, because your contract was for the land as it was during the time of the contract.  If there were any material changes to the property (and the addition of leasing the mineral rights would most certainly qualify as material) then you could sue him for breach of contract.

Answer 7

Get a lawyer, this is alot trickier than it may seem.  To guess at a few things, of course it was not legal for him to sell the mineral rights and neither tell you or include it on the contract.  However, he did so this so any lawsuit may be with the former owners, not the company to which he sold the rights.  

Since your deed was recorded before the other, and the recordation for the mineral rights was from the former owner this may make the mineral rights sale voided (as you seem to state) as so the company that bought the rights is the ones that lost out and must sue the former owner, but on this point I'm not sure.  However, if I were to illegal sell my house to 2 different people (don't laugh - it happens) then the one to record the deed first is the owner (and the other must sue the seller) so this leads me to believe the rights are still yours - but you'd still better go talk to a lawyer.

Also, the fact that an oil and gas company wants your rights leads me to believe there may be something very valuable down there so you'd better talk to the neighbors about whether they sold their rights and for how much as you may want to be ready with a course of action and sale price of your own; if the rights are still yours and you get approached about a sale.

PS - I didn't read your comments so carefully but you say the mineral rights deed was recorded after your sale, but which was recorded first - your deed or theirs.  If theirs was recorded first you may be out the rights (you still get proceeds from the rights but the sale is still valid), but gotta sue the former owner for damages.