Florida Mineral Reservations and Real Estate | Lowndes
It is not uncommon to find mineral reserves in the chain of title of real estate properties located in Florida. When the State of Florida first ceded title to state-owned land, it was customary for the state to reserve an interest in all oil, gas, and minerals on the property. , including the right to drill, mine and excavate for them. These rights were not necessarily an issue if the property was used for agricultural purposes. However, if the property were to be developed, these rights raised significant issues for developers and their lenders who were not looking to risk a large investment in a property subject to third parties exploring or extracting minerals.
To release the entry fee and make the title marketable, one had to file an application with the state, pay a fee and endure a long waiting period. As Florida became more populated, this process retarded economic development. Accordingly, the state enacted a law identified in FS 270.11(3), stating that “The right of access to any interest in phosphate, minerals and metals or any interest in petroleum reserved in favor of the board of directors of the trust fund for internal improvement, the board of state of education, local government, water management district or other state agency is released for any parcel of property that is, or once was, a contiguous parcel of less than 20 acres altogether under the same owner.”
This law is invoked to extinguish the entry fee for parcels whose size qualifies them for this treatment. In these cases, the title insurance companies will state affirmatively in the title insurance policies that this law applies to release the state duty of entry. If a package is too bulky, you still have to ask the State to release its entry fee.
Florida properties are also sometimes subject to mineral reserves held by private parties, as opposed to the state. Usually reserved in deeds when owners have sold their properties, they will include an entry fee even if not stated in the reservation (unless such right is expressly waived).
There is no law in Florida protecting improvements if a private party exercises their right to enter your property to dig or mine. However, there is case law in Florida 1st2n/a and 5and District Court of Appeals ruling that a mineral rights holder may not abuse the surface estate to the point of unreasonably impairing or destroying its value. In addition, the mining rights holder is liable for damages to the surface estate owner for any unreasonable injury caused.
While this remains good law in these districts, it has not been decided at the Florida Supreme Court level. As in any similar situation, “unreasonable” injury and proper recovery would be questions of fact. In reality, it would be a costly inconvenience if the rights were exercised and the improved property was damaged, even if recovery from the exploring party was possible.
Florida’s Marketable Record Title Act (MRTA) may have the effect of extinguishing a private right of entry for exploration, mining, drilling, etc., in accordance with FS 704.05, even if the mineral reserves themselves remain. It is worth having a title insurer do the necessary analysis to determine if this applies. They usually don’t, except on request.
If the right of entry has been extinguished by any of the above laws, the title insurer should be able to affirmatively state in a title insurance policy that it does not There is no entry fee regardless of the existence of mineral reserves. This makes the title negotiable unless the property is used for mining. If this is the case, even if the entry fee is no longer applicable, all minerals mined by the owner would still belong to the party (if any) that held the mineral reserves.
Even though there is an entrance fee, some comfort can be had if the zoning of the property does not allow mining, excavation, drilling, etc. change.
Besides the risk of property damage through the exercise of mining reservations, there is also the commercial concern for marketability when you sell or finance the property. This could be a threshold issue for a buyer or a lender. Title insurance companies will not insure the right of entry unless it is expressly released by statute or in a registered instrument, so that is what generally must occur. An owner must often negotiate a release price with mineral reserve holders (sometimes difficult to locate) to remove the entry fee (if not the entire reserve). Most, if not all, buyers expect this from their sellers.
By consulting a real estate lawyer when buying or selling a property subject to mineral reserves, you can minimize their potential negative impact on the proposed transaction.