Adam Ferrari: 5 Things to Know when Selling or Leasing Your Mineral Rights

States like Colorado, where mineral deposits are often found, allow landowners full use of their property’s surface and everything else underneath. As a landowner, providing mining and industrial companies with the rights to your subsurface estate could be an excellent way to gain profit.

According to Adam Ferrari, these are five things you need to know to get the most out of your property:

1. Determine the extent of your ownership

Not all landowners have rights over subsurface estate. If you have a “fee simple” deed, then you should have no problem with ownership. Check your deed to ensure that you are indeed the owner of your land. Look for phrases like “subject to” and “less and except” as these indicate your limitations as a landowner.

2. Determine how much your rights are worth

Your profit will depend on factors like the geology of your estate and commodity prices. You can commission a licensed geologist to appraise your property. This will give you a better idea of what your estate is worth and prepare you for negotiation with the company.

3. Decide whether to sell or lease

You can either sell or lease your property. If you sell, you get a lump sum profit and fast, but anything that happens afterward is out of your hands or control. Leasing only gives you royalties on all profits made by the company. It’s a longer-term, riskier strategy that doesn’t give you as much upfront profits as selling, but it supports a more sustainable cash flow.

4. Consider how it affects the surface

Determine how the mining company’s activities will affect the surface of your land. Ask authorities what the law says about your dominance as a landowner—do you still get to make demands or will you relinquish everything to the company?

5. Research the company

The world is not perfect and there are companies out there looking for quick money, even if it means compromising the welfare of landowners. Learn as much about the company as you can. Adam Ferrari says you should look for any instance of wrongdoing and factor your findings into your final decision.

As landowner, you have much to gain from your property, especially if it is rich in mineral deposits. When negotiating with the company, try to get the most profit without compromising your rights.