Many homeowners who didn't read the fine print in their real-estate contract have been finding out the hard way that they don't own the mineral resources under their property, which means a prior owner has the rights to the resources. Michelle Conlin and Brian Grow report for Reuters that when the companies come calling to extract the resources, homeowners have little say in the matter, and that's a growing concern in areas where horizontal hydraulic fracturing has opened deep, dense shale deposits for natural-gas and oil development.
Texas-based D.R. Horton, the biggest U.S. homebuilder, often employs this practice, Conlin and Grow write. The company "has separated the mineral rights from tens of thousands of homes in states where shale plays are either well under way or possible, including North Carolina, Alabama, Mississippi, Virginia, New Mexico, Nevada, Arizona, Oklahoma, Utah, Idaho, Texas, Colorado, Washington and California. In Florida alone, the builder has kept the mineral rights underneath more than 10,000 lots, a review of county property records shows."
North Carolina residents fought back, contacting state Attorney General Kevin Anderson, and D.R. Horton eventually agreed to return the rights to 700 homeowners, saying "it would suspend the practice of reserving the rights until the state legislature implemented a regulatory framework for fracking, which North Carolina is expected to allow in 2014," Conlin and Grow write.
Residents in Greeley, Colo., haven't been so lucky. When they found out that Mineral Resources planned to drill for resources it owned under their homes, they filed an appeal with the city; they lost 7-0. Two residents have since sold their homes, and two more have put their homes up for sale, one cutting the price by $50,000. Arlo Richardson, chief executive officer for Mineral Resources, told Grow, "We appreciate and recognize their concerns. But it doesn't change what the state of Colorado allows us to do."
Even if no one drills the land, there is still concern about its effect on homeowners, Conlin and Grow write. "Property-tax assessments don't take into account severed mineral rights. And 'lenders may not be willing to extend mortgage loans on property that is subject to intensive gas extraction activities,' according to a report last year by the North Carolina Department of Justice." (Read more)
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