Subsurface Rights

Definition

Subsurface rights refer to the rights of a property owner to exploit, use, and enjoy the resources below the surface of the land they own. These resources, often classified as minerals, can include oil, natural gas, precious metals, and other valuable substances. Subsurface rights are sometimes synonymous with mineral rights and may be severed (split) from surface rights. When separated, two different entities may own the surface land and the subsurface minerals, leading to potential legal and transactional implications.

Examples

Oil and Gas Leases: A property owner may lease subsurface rights to an oil and gas company. This lease grants the company the right to drill for and extract these resources while the surface land may be used for other purposes, like farming.
Mining Operations: If a land parcel has valuable minerals underground like gold or coal, the subsurface owner could lease or sell these rights to a mining company, allowing extraction operations to take place.
Groundwater Rights: In some jurisdictions, subsurface rights might include the right to access and use groundwater for agriculture or consumption.

Frequently Asked Questions (FAQs)

What is the difference between surface rights and subsurface rights?

Surface rights refer to the ownership and usage rights of the land’s surface, including any structures on it. Subsurface rights pertain to the ownership and use of resources beneath the surface, such as minerals, oil, and gas.

Can subsurface rights be sold separately from surface rights?

Yes, subsurface rights can be sold or leased separately from surface rights. This separation is common in areas rich in mineral resources and can lead to different entities owning and controlling the surface and subsurface rights.

How do subsurface rights affect property value?

The value of subsurface rights can significantly augment the overall property value, particularly if the subsurface contains valuable resources like oil, gas, or precious metals. Conversely, the presence of these resources can also introduce complexities, liabilities, and operational disturbances for surface land use.

Do subsurface rights include rights to water below the land?

Water rights can be part of subsurface rights, but this varies by jurisdiction. It’s essential to check local laws to determine if groundwater is included in subsurface rights in a given area.

Surface Rights: Ownership rights to the outermost layer of a piece of real estate, including the housing construction, vegetation, and other permanent structures.
Mineral Rights: A subset of subsurface rights, mineral rights specifically pertain to minerals found beneath the earth’s surface.
Split Estate: A situation where the surface rights and subsurface rights of a single piece of land are owned by different entities.
Royalty Interest: The right to receive a portion of the revenue from the extraction of resources, usually expressed as a percentage and occurring through a royalty agreement.

Online Resources

Bureau of Land Management (BLM): Information about Federal subsurface mineral rights management.
National Association of Royalty Owners (NARO): Advocacy group for owners of mineral and royalty interests.

References

Clark, G., & Doréc, M. (2002). “Oil and Gas Law”.
Lowe, J.S., & Anderson, O.L. (2019). “Cases and Materials on Oil and Gas Law”.

Suggested Books for Further Studies

“The Law of Property” by Edward E. Chase and Julia Patterson Forrester.
“Oil and Gas Law” (6th Edition) by Patrick H. Martin and Bruce M. Kramer.
“Fundamentals of Land Ownership, Land Boundaries, and Surveying” by Don A. Wilson.

Real Estate Basics: Subsurface Rights Fundamentals Quiz

### Can subsurface rights exist independently of surface rights? - [x] Yes, subsurface rights can exist independently of surface rights. - [ ] No, subsurface rights are always tied to surface rights. - [ ] Only in special cases related to federal lands. - [ ] Only if a lease agreement is in place. > **Explanation:** Subsurface rights can be separated from surface rights, allowing for the independent ownership of these two components. ### What are subsurface rights primarily concerned with? - [ ] Agricultural use of the land - [x] Extracting minerals, oil, and gas - [ ] Constructing buildings - [ ] Managing water irrigation > **Explanation:** Subsurface rights are concerned with the extraction and use of resources like minerals, oil, and gas from below the land’s surface. ### What are mineral rights? - [x] Rights to minerals beneath the surface of a property - [ ] Rights to use the land's surface for any purpose - [ ] Rights to the water above and below the land - [ ] Rights to own the land’s vegetation and crops > **Explanation:** Mineral rights specifically refer to the ownership of the minerals beneath a property’s surface. ### Who typically manages subsurface rights in the United States? - [ ] The Environmental Protection Agency (EPA) - [x] The Bureau of Land Management (BLM) - [ ] The Department of Agriculture (USDA) - [ ] The President’s office > **Explanation:** In the United States, the Bureau of Land Management (BLM) manages subsurface mineral rights on federal lands. ### What is a split estate? - [ ] Jointly owned land by two parties - [x] Separately owned surface and subsurface rights - [ ] A state-owned piece of property - [ ] Community-owned coastal land > **Explanation:** A split estate refers to a situation where surface rights and subsurface rights of a given piece of land are owned by different parties. ### In what scenario might subsurface rights not be useful? - [ ] Properties in rural areas - [ ] Uninhabitable lands - [ ] Urban properties - [x] Properties with no extractable resources > **Explanation:** Subsurface rights are valuable primarily when there are extractable resources beneath the land. If no such resources exist, these rights have limited or no use. ### What entity often negotiates leases for oil and gas extraction on private lands? - [ ] Federal government - [ ] Local municipality - [x] Private companies - [ ] Consumer protection agencies > **Explanation:** Private companies typically negotiate leases with landowners for the right to extract oil and gas resources from private lands. ### What term describes the payment structure of a revenue share from resource extraction? - [ ] Earned Interest - [ ] Surface Rent - [ ] Land Lease Fee - [x] Royalty Interest > **Explanation:** Royalty interest refers to the percentage of revenue paid to the owner from the extraction of resources like minerals or oil. ### When selling land, how can a property owner protect their subsurface rights? - [x] By excluding subsurface rights from the sale - [ ] By attaching a higher sale price - [ ] By informing the future owner verbally - [ ] By conducting an environmental impact study > **Explanation:** To retain subsurface rights, the property owner must explicitly exclude these rights from the transaction. ### Can groundwater use fall under subsurface rights? - [x] Yes, in some jurisdictions - [ ] No, groundwater rights are always separate - [ ] Only in agricultural regions - [ ] Only on state-owned land > **Explanation:** In some jurisdictions, subsurface rights can include the right to access and use groundwater, but this varies by region and local laws.