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Understanding Texas Mineral Rights

Pump JackI get a lot of questions about mineral rights when my clients are buying and selling land here in Texas.  Let me take a second to say that, “I am not an attorney or a landman, nor am I an expert in mineral or surface rights”.   You must also know that mineral rights do vary from state to state and I will be conveying information that only pertains to Texas law.  Now, back to the story… In a real estate transaction, the Seller has to overtly assert their claim to their existing mineral rights in the promulgated TREC real estate contract in order to preserve those rights.  If the seller does not make a claim to the ownership rights, then they are automatically conveyed to the buyer.

Its been my experience that most of the time the seller doesn’t know for sure how much of the mineral rights they own.  Unless there has been a title chain of custody search, no one can say for certain, who owns what.  I can tell you that in most instances there will be more than one owner that has an interest in the mineral rights.  Over hundreds of years the mineral rights can get split up with each sale of the land.  You may find that the original owner of the land had a Spanish land grant, which gave him 100% of the mineral rights and in his will he subsequently gave each of his five heirs 20% interest in the property’s mineral rights.  Then those 5 heirs dilute their 20% among their heirs and so on.  You can see how this can get complicated over time to know who really owns what.

A buyer or seller can hire a representative to perform a “title chain of custody” search, which will shake out all of the parties that own an interest in the mineral rights of a given property.  These search experts are generally known as a “landman” or a “petroleum landman,”.  An oil and gas attorney is another resource for this type of work.  You can do it yourself if you have the time and patience, but I wouldn’t recommend going it alone on something this important.  You can hire a landman to go to through the title records at the courthouse of the county where the land is located.  Some ranches cover multiple counties…oh boy, this just got more expensive.  Depending on the complexity of the situation it could take days, weeks or months to figure out the ownership puzzle.  A landman charges anywhere from $300-$500 per day to search out the ownership, so you need to weigh out how important this information is to you.

Some of things that concerned me and are pertinent, given I live and sell real estate in the Texas Hill Country, is the quarrying of limestone, sand and gravel.  I haven’t met anyone that want’s the owner of the mineral rights to their land to come open up a quarry and start pulling out limestone and gravel.  After reading this state court ruling I feel better.  Although I’m not sure what limestone is considered to be valuable enough to make cement.  I reiterate my earlier advice…consult a landman or an attorney who specializes in mineral and surface rights.

In Heinatz v. Allen, 217 S.W.2d 994 (Tex. 1949), the Supreme Court was faced with a severance of the surface and mineral estates pursuant to a will, where “the surface rights exclusive of the mineral rights” were devised to one beneficiary and “the mineral rights” were devised to another beneficiary. The heir who obtained the mineral rights entered the property and began to quarry limestone. The surface owner objected and filed suit, claiming that limestone could not be considered a mineral for the purpose of the devise and, therefore, it belonged to the surface estate. In addressing ownership issues, the Court stated: In our opinion substances such as sand, gravel and limestone are not minerals within the ordinary and natural meaning of the word unless they are rare and exceptional in character or possess a peculiar property giving them special value, as for example sand that is valuable for making glass and limestone of such quality that it may profitably be manufactured into cement. Such substances, when they are useful only for building and road-making purposes, are not regarded as minerals in the ordinary and generally accepted meaning of the word.

My other concern was mineral rights that have been divided among different people, be it family, unrelated people or corporations.  It turns out that even if you own a fraction of the mineral interests in a property, you can do exploration on the land whether or not the other mineral co-owners want you to.  The co-owners can join in on your lease or make their own deal, but as a mineral owner, you do not have to have consensus of the co-owners to lease the land for exploration.  I have included a legal case which sets precedent in Texas law concerning co-owners or co-tenants.

The general rule is that any co-tenant who has the right to develop the mineral estate can do so even in the absence of consent from the other co-owners. In Willson v. Superior Oil Co., 274 S.W.2d 947 (Tex.Civ.App.-Texarkana 1954, writ refd n.r.e.), the court stated: Each co-tenant may enter upon the premises for the purpose of exploring for oil and gas and may drill and develop the premises. In the absence of a joint agreement, upon discovery of oil and gas, the producing co-tenant must account to the non-consenting or non-producing co-tenant for his pro rata share of the net profits, that is, the market value of the oil or gas produced, less necessary and reasonable expenses incurred in producing and marketing same; and if a co-tenant drills a dry hole, he does so at his own risk and without right to reimbursement from his co-tenant (in the absence of an agreement therefor) for the drilling costs. 31 Tex.Jur., Sec. 11, pp. 36-37; Burnham v. Hardy Oil Co., supra; Prairie Oil & Gas Co. v. Allen, supra; Earp v. Mid-Continent Petroleum Corp., supra.

I hope this brief look into mineral rights has been helpful to you.  If you would like to contact me about buying or selling property in Texas please contact me at Larry@BanderaTexasRealEstate.com 

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Larry Wood Wins 2013 FIVE STAR REAL ESTATE PROFESSIONAL AWARD

The good folks at Five Star Professionals contacted me with the “Great News” that I have been awarded the prestigious “2013 FIVE STAR REAL ESTATE PROFESSIONAL” Award and will be featured with the other Texas winners in the May 2013 issue of Texas Monthly Magazine.

I am thankful every day for all of my clients and all of the wonderful people that the real estate business affords me the opportunity to work with.  The team at Five Star Professionals is not allowed to disclose the names of the clients that nominated or voted for the award winners; however, if you see this and nominated me, I sure would love to hear from you and thank you personally.

I have developed so many great friendships with my clients and many of them are now my neighbors too.  It’s an awesome feeling to know that people really appreciate what I do for them and go out of their way to show me their appreciation with awards like this, or as in the past with a bottle of good bourbon, or culinary delights from Neiman Marcus.  I do my best for each and every person I represent whether they are buyers or sellers; and I am extremely grateful to know that my efforts do not go unnoticed.

Again, a very Big Texas Sized “Thank You” to everyone who had a hand in getting me this award.  It’s a real honor and a privilege to serve you.

Thank you,
Larry Wood
Five Star Professional Award

Texas Monthly partnered with FIVE STAR Professional to identify the real estate agents in the San Antonio/Hill Country area who provide exceptional service and overall satisfaction as indicated by clients, peers and industry experts. The 2013 FIVE STAR Real Estate Agents are a select group of fewer than 7 percent of all real estate agents in the identify the real estate agents in the  area.

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Dear Sellers “Get a Home Inspection Before you Sell”

If you are contemplating selling your home or already have it on the market, go ahead and pay the money to get your home inspected.  You and your REALTOR have worked really hard to get the offer on the table and then comes the Home Inspection report with a laundry list of problems you didn’t know about.  Nothing will kill a deal faster than a lengthy list of issues that need to be repaired.  Even a bunch of small items can turn off some buyers and you end up losing the deal.  In the Texas Hill Country you can have an average size home inspected for about $300.  A lot of my sellers say, “well the buyer should pay for the inspection”, and they will when the time comes, but believe me that $300 buys a lot of piecBandera Real Estate Home Inspectione of mind.   

After you get the inspection report you can fix that leaky faucet, sticking door, broken electrical outlet or whatever other problems the inspector finds and believe me they will find things you weren’t aware of.  By knowing the problems upfront, you may have just saved yourself the heartbreak of a deal gone south due to surprises you weren’t expecting.  Most all buyers are going to get the home inspected, but if you’ve already had an inspection done, then there shouldn’t be any surprises when they do theirs.  Remember though, the items you are aware of now, due to the inspection, that you opted not to fix need to go on your Home Owners Disclosure.  Its easier to address these issues up front than to try to negotiate them away later.  You may find items that you aren’t willing to fix and you can reflect that in the price upfront instead of having to renegotiate the price or the repairs later.  Think about it, once you have accepted their offer they are in a much stronger negotiating position later to demand either a decrease in the selling price to off-set the repairs, or a less than amicable deal for you in paying for the repairs.  This is a lose/lose position for you the seller.  Instead, bargain from a position of strength because you have either addressed the outstanding issues in your sellers disclosure, or you fixed them after your home inspection.

Good Luck and Good Selling Larry Wood                     http://www.BanderaTexasRealEstate.com

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Happenings in the The Cowboy Capital of

Happenings in the The Cowboy Capital of the World!  Please FOLLOW THIS LINK TO SEE THE WHOLE NEWS LETTER http://ow.ly/4wo9G

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TOP 5 THEORIES “WHY WEALTHY PEOPLE ARE MOVING TO TEXAS”

State of Texas

Surprise! America’s wealthy like warm weather and low taxes. That’s the takeaway from IRS data, analyzed by Forbes, on people moving between counties. Forbes looked for counties that the rich are moving to in big numbers.

I’m pretty sure that wealthy or not, most Americans enjoy warm weather and low taxes, but that’s just my own assumption.  What I am sure about is the correlation between no state income taxes and the influx of people moving into Florida and Texas. Florida has eight of the top 20 counties in the Forbes list, and Texas has four, which by the way are all located in the Texas Hill Country.  After accounting for property taxes, Robert Shrum, manager of state affairs at the Tax Foundation in Washington, D.C., says analysis shows that Texas has the fourth-lowest personal tax burden in the country, and Florida has the eighth lowest.

Top 20 Counties “Where America’s Money is Moving”

As a Realtor and professional gadabout I have developed several theories as to the comings and goings of people in the Texas Hill Country and I would like to share them with ya’ll.

Theory  1.Yankee Baby Boomers are tired of shoveling snow and are ready to move to where the sun shines more than it doesn’t, real estate is cheaper, hard earned retirement dollars go further and there is no state income tax.  (See Ted Nugent as the Poster Boy for this Theory)  I get a lot of calls from recent retirees from places like New Jersey, Michigan, Washington State and Pennsylvania, looking to make a move to the Texas Hill Country.  Yankee or not, Texas and Texans for the most part are generous and welcoming to Texas New-comers.

Theory 2. How many states can you really use to fill in the blank on this bumper sticker?

I wasn’t born in ­­­­­­­­­­­­­­­­­­­­­­___________ but I got here as soon as I could

Ohio, New Jersey, Arkansas?…I don’t think so.

Texas seems to be the only realistic answer.

Theory 3. If you’re going to live in Texas, don’t you want to live in the very best part of it?  I must admit for disclosure purposes that I was born in Odessa, Texas (a.k.a. great football but not the very best part of TX) and have lived all over this great state, but when I got in a financial position to choose where I wanted to live, I made a bee line to Bandera and the Texas Hill Country.  There is a lot of cool stuff to see and do in the Hill Country.  Rivers run all over the place so tubing and kayaking opportunities are aplenty.  There also seems to be an inordinate number of golf courses to people ratio in the Hill Country so tee times are easy to come by.  If you like wine, then you can keep a busy schedule visiting Hill Country wineries and vineyards.  Got a Harley?  Almost every road in Bandera County is designated a scenic route!  The list of things to do in the Hill Country goes on and on as demonstrated on the Facebook site 365 Things to do in the Texas Hill Country I figure there are a lot of native Texans like me that have made and continue to make this migration pattern.

Theory 4. With the advent of the virtual office and virtual commuting, more and more people from all over the world are able to work from anywhere with a good internet connection.  I know several people that have moved to Bandera because they can make the commute to work on the internet super highway; and depending on your location in the Hill Country, you can make it to either the San Antonio or Austin airport in one to one and half hours if you have to leave your Hill Country paradise.

Theory 5. I don’t think most folks want to spend their golden years in some crammed housing edition in Dallas, Houston or any other big city teeming with the hustle and bustle.  Nope, when you retire from the rat race I think you want to stretch your legs and spread your wings without hitting your neighbor in the mouth with your elbow.  That’s right, with age comes your increasing inability to put up with the traffic, noise, crime and all the other fun things the big city has to offer.  And where better to take up residence than the Texas Hill Country where the deer are plenty, the land beautiful, golf courses abound and houses far apart.

Well, these are my Top Five Theories for the migration of the wealthy to the Texas Hill Country.  If you would like to find out how you can join us in this Hill Country Paradise visit my website http://www.BanderaTexasRealEstate.com or call me at (830) 460-0889 and I will help you find you a great place to call home.


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Top 10 MLS Listing Tips

MLS Listing Tips

Top 10 MLS Listing Tips

1. Use the maximum number of Pictures your MLS allows you to upload.
(Funny side note; I recently saw an MLS listing in San Antonio that read, “Pictures tell a thousands words”, first of all the grammar is pretty bad, but the biggest laugh is they only loaded 5 pictures, so I guess they only got to tell 5000 words.)
2. Take good clear pictures of both the inside and outside of the house. If it’s only land, walk around and take lots of pictures from all sides of property, large trees, good views, fence, gates, cattle guards, roads, neighbors, etc.
3. When you take pictures, make sure the beds are made, counters are clean, lights are on, blinds are open, towels are hung, etc.

4. Make the most of the “Remarks” section. Put some time and thought into what features will sell this property.

5. Use spell check and read through it once or twice to make sure it’s right. (copy/paste your remarks and description into Word to check your grammar and spelling) This remark is from a current MLS Listing- “Cute 3 bedroom 2 bath modgular”
6. Add your plats, HOA report, disclosures, etc., to the Additional Information to make life easier for everyone.
7. List the actual names of the Elem, Middle & High schools instead of just Whatever ISD.
8. Add all of the neighborhood amenities; these can be a big selling factor.
9. Get the HOA and Assoc Transfer Fees correct, don’t guess.
10. Do inform people, don’t scare them.
In agent remarks I recently saw “BEWARE OF DOG”, it turned out to be a sweet little mutt named Dixie. I was expecting a Rottweiler or Pit-bull.

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Marketing property in The Texas Hill Country

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