There are two primary types of land ownership. This article discusses the important differences between a fee simple estate and a split estate.
The purchase of property can be a wonderful and exhilarating experience. Purchasing property, whether large or small, is a huge part of fulfilling what we call "The American Dream." For most people this type of transaction is relatively simple, for others it can become a little more complicated.
Those looking to purchase many acres of land or people looking at ranches for sa
e may have to consider the mineral rights of the property in which they are interested. In considering mineral rights they will need to become well-versed in the difference between a "fee simple estate" and a "split estate."
First we will discuss the "fee simple estate." In most countries, all mineral resources belong to the government of that country. Since these commodities belong to the government, it is not legal to extract and/or sell anything below the surface of the ground. Government authorization is required to extract any type of mineral. This was not always the case. Prior to commercial drilling and mining, ownership of mineral resources was granted to the person or organization that owned the surface. The person or organization had both surface and mineral rights. This complete private ownership is called a "fee simple estate." This is, of course, the simplest type of ownership. The person or organization has complete control of the surface, subsurface and the air above the surface.
Secondly, in "split estate" situations the surface rights and the rights to extract subsurface minerals are owned by different parties. How does this type of situation develop? Perhaps a commodity is discovered below a certain property. The "fee simple estate" owner can sell the rights to the subsurface commodity while retaining rights to the surface of the property. Why would a company be interested in the subsurface only? The company interested in purchasing mineral rights may be interested in extracting and selling the commodity but may not want the extra expense of purchasing the rights to the surface.
When a company purchases the mineral rights of a property it also buys the right to enter the property for the purpose of removing that mineral at a future time. However, the mineral owner must show regard for the interests of the surface estate owner and occupy only the portions of the surface that are necessary to develop the mineral.
Laws relating to surface and mineral rights and/or the transfer of these rights vary from state to state. If you are considering purchasing a large amount of property it would be a good idea to become familiar with these types of ownership. Any question about these laws should be brought to the attention of an attorney who can fully explain them.
In summary, a "fee simple estate" owner has complete control of the surface, air or any mineral below the surface of the ground. The owner has complete mineral rights. In "split estate" situations , one party has rights to the surface and another party has rights to extract subsurface minerals. In these cases the mineral owner must show regard to the interests of the surface owner and compensate them for disruption to the land.
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