Real Estate and Property Rights, a Cautionary Tale That Is a True Story

As a child I received a piece of advice from my mother. She told me never sell your mineral rights or your water rights on a piece of real estate you own. She also said don't buy a piece of land where those rights don't convey.

This may not be the kind of advice little kids usually receive from their moms, but it is very good advice.

My mom was the daughter of a farmer. People tend to think of farmers as ignorant rubes. In fact good farmers have to be pretty savvy about property legalities and scientific matters like soil conservation, plant propagation, animal care and biology, too.

As an adult I was a Master Gardener with our local county Agricultural Extension office. In my training course we learned that plants need somewhere between 16 to 18 minerals to be present in soil to grow. Most farms use fertilizers that include only 3 minerals, nitrogen, potassium, and phosphorous.

About 14 years ago I read the annual report of a large mineral company. In it they said that when they mined minerals from a piece of land it is so devoid of nutrients that without intensive efforts to restore the fertility of the land they have mined nothing will grow for 1,000 years or more.

Plants cannot grow without minerals.

Many less educated people who farmed in the US and other places sold their mineral rights to this company. They believed they could make money from the sale of the minerals and still farm the land they owned.

In fact the land became profoundly infertile after the minerals were gone. Worse still, the company knew what would happen.

Was it deceptive?

Of course it was.

Mom, the farmer's daughter, knew what she was telling me was important.

With oil producers, oil leases and "fracking" it's more important than ever. Ask yourself, "What will this do to the land?"

This is an important issue for other property owners, too.

Many developers of subdivisions and gated communities reserve the rights to minerals, water and other resources when they sell lots. It might be a real shock to look out the window of your dream home and see an oil derrick pumping away, or someone digging a mine.

To protect yourself find good legal representation and learn all you can about property rights. The risk is, you could discover a very bad surprise down the road, particularly as natural resources become even more scarce.