North Carolina Department of Justice

North Carolina Department of Justice

North Carolina Department of Justice
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Watch out for fracking surprises when buying property

Thursday, April 19, 2012

 
Some North Carolina homebuyers have been surprised to learn that the mineral rights to their own backyards don’t belong to them, according to public comments and recent news reports. “Split estates” – where the mineral rights are reserved by the seller or assigned to a third party -- are relatively rare in North Carolina but common in some Western states like Texas and Colorado.
 
The issue has come up in North Carolina as the state debates whether or not to allow the practice of hydraulic fracturing, or fracking, to drill for natural gas.
 
Buying a home or piece of real estate without the mineral rights included can make it difficult to get a loan. It can also make the property worth less at resale, and can give the homeowner less say so about any future oil or gas exploration on the property. 
 
If you don’t own the mineral rights, someone else has the right to extract minerals, including oil and gas, from or through your property without getting your permission first or compensating you. Oil and gas rights can also be leased to energy developers, sometimes for periods of 10 to 20 years. 
 
If you’re buying a home or other piece of real estate, protect yourself from this kind of surprise by:
  • Reading all documents thoroughly, looking especially for information about mineral rights.
  • Asking the seller specifically if anyone else owns or has leased the mineral rights to the property.
  • Getting them to put what they tell you in writing.
  • Having your own attorney review your documents and represent you at closing.
 
As always, you can contact our Consumer Protection Division at 1-877-5-NO-SCAM or online at www.ncdoj.gov.