When purchasing a property, one aspect that often flies under the radar for many buyers is the ownership of mines and minerals beneath the land. In some cases, these rights are held by a third party rather than the property owner.
Understanding the implications of this can be crucial to making an informed decision, particularly where the property is being acquired for development purposes.

What are mines and minerals rights?

Mines and minerals rights refer to the ownership of the minerals (such as coal, metals, and oil) found beneath the surface of a piece of land. These rights can be separate from the ownership of the surface land. Historically, it was common for landowners to retain these rights when selling property, and they could then be sold or leased to third parties, often without affecting the ownership of the surface land.

Potential concerns for buyers

  • Legal implications: The separation of mineral rights from surface rights can lead to complex legal scenarios. For instance, if the property is to be developed or redeveloped, the construction of foundations beneath the surface of the land may amount to a trespass against the owner of the mineral rights. Consulting with a solicitor experienced in development work can help you understand these complexities and mitigate potential issues.
  • Insurance and financing: Some lenders and insurance companies may view the separation of these rights as a risk factor, which could affect your ability to obtain financing or insurance for the property. It is crucial to discuss these aspects with your lenders and insurers before committing to purchase.

Mitigating the risks

  • Title enquiries and due diligence: Conduct thorough title enquiries to understand who owns the mineral rights and what rights they possess. This should form part of the due diligence process carried out by your solicitor.
  • Negotiation and agreements: In some cases, it might be possible to negotiate terms with the third party holding the mineral rights. This could involve agreements that limit the extent of their operations, provide compensation for any disturbances caused to the surface land, permit the construction of foundations in the substrata, or result in the acquisition of the mineral rights simultaneously with the acquisition of the surface land.
  • Seek legal advice: Consult with a solicitor who has experience in dealing with mineral rights. They can advise you on potential risks and mitigation strategies specific to the circumstances of the proposed transaction.
  • Insurance: Look into obtaining indemnity insurance that covers potential damages or disruptions caused by mining activities. Some insurance companies offer policies tailored to properties with separate mineral rights.

Proactivity is key

While owning a property where a third party owns the mines and minerals can present potential risks, these can often be managed with proper due diligence, legal advice, and clear agreements. By taking proactive steps to understand and address these issues, you can make a more informed decision and enjoy peace of mind in your property purchase.

If you are considering such a property, weigh up the pros and cons carefully and seek professional guidance to navigate this complex aspect of property ownership. With the right approach, you can mitigate the risks and ensure that your investment is sound and secure.

If you or anyone you know would like advice in relation to this, or any other property related matter, please contact our commercial property team on 01206 835300 or via our online enquiry form.

Disclaimer: This guide provides general information and should not be considered legal advice. Always consult a qualified professional for personalised guidance based on your specific circumstances. The contents are based on the law as at the date of publication.