Accepting an offer starts the mineral rights sale; it doesn't finish it. Between yes and payment, the buyer checks title to your mineral rights, you sign a mineral deed in front of a notary, the deed is recorded, and the money moves. Each step has a point where sellers lose time or money. Here is what happens and what to watch.
Step 1: the purchase agreement
Most buyers put the offer in writing as a letter of intent, offer letter or purchase and sale agreement. This mineral rights contract sets the terms the mineral deed must follow, so read it as carefully as the deed itself. It should state:
- The price, and whether it is a lump sum or a price per net mineral acre.
- Exactly what you're selling: the county, the tract, the mineral rights interest and the depths.
- How the price changes if title shows you own more or less than expected.
- The effective date and the closing deadline.
- Who pays for recording, title work and any curative work.
- How and when you'll be paid.
Step 2: the buyer's title review
The buyer confirms that you own the mineral rights you're selling. The two common tools are a runsheet and a title opinion.
A runsheet is a landman's list of every recorded document affecting your tract, in date order, with notes on what each one conveyed. It is faster and cheaper, so buyers often rely on one for smaller purchases. A title opinion is an attorney's written opinion, after examining the records, stating who owns what share and listing requirements that must be met before the buyer accepts title.
Either way, the buyer checks the chain of title to you, earlier reservations, existing leases, unit sizes, your net mineral acres, and whether you're being paid. This title review is usually the slowest part of a mineral rights sale. Buyers often compare their numbers with the decimal on your royalty check, which is why a recent stub speeds things up. Our guide on how to read a royalty check shows where to find it.
Step 3: curative work
The requirements in a title opinion are called curative. They fill gaps in the record so the buyer can rely on title. Common items:
- Affidavit of heirship. In Texas, a recorded statement of facts about a deceased owner's heirs becomes prima facie evidence of those facts once it has been in the county deed records for five years (Texas Estates Code §203.001).
- Probate. If the owner left a will or the family needs court authority, a probate case may be needed in the state where the mineral rights are, even if the owner lived elsewhere.
- Name affidavits, when your name on old records differs from today's, for example after marriage.
- Death certificates, marriage records and releases of old leases that expired but were never released of record.
Many buyers prepare curative documents themselves. Agree in writing who does the work and who pays for it. If your mineral rights are inherited, our pages on selling inherited mineral rights and Texas inherited mineral rights cover the usual paperwork.
Step 4: mineral deed, royalty deed or assignment
The document that transfers your interest depends on what you own.
- A mineral deed conveys the mineral estate: the right to lease, collect bonus and receive royalties.
- A royalty deed conveys only a share of royalties, with no right to lease or collect bonus.
- An assignment is used for leasehold interests, working interests and overriding royalties.
The buyer usually drafts the mineral deed. A mineral deed form found online can leave out depths, accrued payments or the effective date, so compare any deed with your purchase agreement line by line. State practice shapes the wording. A mineral deed in Oklahoma usually describes land by section, township and range. A mineral deed in Texas often cites a survey and abstract number.
What the mineral deed should say
- Your name exactly as it appears in your chain of title.
- The exact interest sold, as a fraction or in net mineral acres. If you're selling part, the mineral deed must say which part.
- A full legal description of each tract, not just the county name.
- The depths or formations included, if the sale isn't all depths.
- Whether it conveys accrued and suspended royalties, meaning money already earned or held before the effective date.
- The effective date. Checks lag production by months, so this date decides who keeps checks that arrive after closing.
- The type of warranty you're giving.
Warranty, special warranty or quitclaim mineral deed
The warranty in a mineral deed is your promise about title. With a general warranty deed, you promise to defend title against all claims, including defects created before you owned the minerals. With a special warranty deed, you promise only against claims that arise by, through or under you. A quitclaim deed, or a deed without warranty, passes whatever you own with no promise at all.
If you inherited the mineral rights and don't know their full history, ask whether the buyer will accept a special warranty. It limits your exposure to problems you couldn't have known about. An oil and gas attorney can review the mineral deed if you're unsure what you're promising.
Step 5: notarization and recording
Sign the mineral deed in front of a notary, who completes the acknowledgment. In Texas, a deed conveying real property can't be recorded unless the grantor signed it and acknowledged it or swore to it (Texas Property Code §12.001). The buyer then records the mineral deed in each county where the mineral rights are, usually with the county clerk or recorder. Ask for a copy showing the recording information, such as the instrument number or book and page.
Step 6: how payment works
In a mineral rights sale, how you're paid matters as much as how much. The common methods carry different risks:
- Wire at closing. The buyer wires funds when the signed mineral deed is delivered, or a title company releases the deed once funds arrive. This is the lowest-risk method. Confirm wire instructions by calling a number you already trust, never one from an email.
- Bank draft. The buyer sends a draft with the mineral deed to your bank. The draft is paid only if the buyer approves title within the period it states. Until it's paid, your signed deed should stay with your bank and should not be recorded.
- Escrow. A title company or attorney holds the deed and the money and releases both when the conditions are met. It adds a fee but protects both sides.
- Paid after recording. The buyer records the mineral deed first and pays later. This carries the most risk: you no longer own the mineral rights and are relying on a promise. Avoid it unless a neutral escrow holds the funds.
The rule underneath all four: don't let a signed mineral deed out of your control unless the money is in hand or a neutral party is holding it.
How long closing takes
A mineral rights sale with clean title, where you're already receiving royalties, can close within a few weeks. Probate, missing heirs, unreleased leases or tracts in several counties can add months. Ask each buyer for a target closing date in writing and what happens if it slips.
After closing: operators and taxes
The buyer sends the recorded mineral deed to each operator, usually with a transfer order that directs the operator to pay the new owner. Checks may keep coming to you for a few months. Whether you keep them or forward them depends on the effective date in your mineral deed.
On taxes, the IRS instructions for Form 1099-S list an interest in surface or subsurface natural resources, such as ores or other natural deposits, among the property types that don't require 1099-S reporting when the sale isn't tied to a sale of the land itself. So you may not receive a 1099-S for a minerals-only sale. The sale can still be taxable; a tax professional will tell you how to report it.
Red flags in a mineral rights sale
- Pressure to sign within days, or a deadline far shorter than the title review the buyer says it needs.
- A catch-all clause that conveys all your mineral rights in the county, not just the tract you agreed to sell.
- A mineral deed that covers more acres, depths or interest than the offer described.
- Blank spaces in the mineral deed, or a legal description to be added later.
- A request to sign a deed before the price and payment method are in writing.
- Recording before payment with no escrow, or a draft whose terms let the buyer record first.
- Wire instructions that change by email.
- Any fee you're asked to pay the buyer to complete the sale.
The best protection in a mineral rights sale is a second and third offer. Read how mineral rights buyers differ, decide whether you should sell your mineral rights at all, and if you're ready, get offers from buyers active in your county.