Transferring Mineral Rights by Tenant in Common

Full question:

My two brothers and myself and own a fraction of the oil, gas, mineral rights to an old family farm, the rest being held by cousins and an uncle as tenants-in-common. Our uncle wants to transfer his entire interest equally to my two brothers and myself. What document would record this transfer? Would it be filed with the recorder of deeds? Would there be any taxes or additional fees involved in this transaction? It is not necessary to specify what percentage of ownership my uncle has, merely to indicate that the ownership has passed to my brothers and myself.

• Category: Oil Gas and Minerals
• Date: 04/07/2025
• State: Pennsylvania

Answer:

Typically, a deed has to be recorded for the mineral rights in the county and state where the mineral rights are located. In many areas the sale of mineral rights are recorded in the government record in a separate deed book or database than the sale of surface property. Therefore, the deed to the surface property might not mention mineral rights that have been sold away.

An overriding royalty interest is a royalty interest carved out of the working interest created by an oil and gas lease. It is an interest in oil and gas produced at the surface free of the expense of production and its duration is limited by the duration of the lease under which it is created. Exceptions to the well-settled rule that an overriding royalty interest has no duration beyond the life of the underlying oil and gas lease it burdens exist where there are (1) express provisions in the document creating the nonoperating interest that require the overriding royalty interest to apply to "extensions or renewals" of the lease, or (2) assertions, supported by the evidence, that a fiduciary or contractual duty exists between the holders of the operating and nonoperating interests.

An assignment of an interest transfers an interest in a property from one party to another. The receiving party is the ‘assignee’; the transferring party is the ‘assignor’. Whether the overriding interest was properly assigned to the new leaseholder will depend on the terms of the contracts involved. It will be a matter for the court to determine based on all the facts and circumstances involved.

Some courts will find implied covenants in oil and gas leases to develop, protect, and manage the property. However, a violation of an implied covenant will not automatically terminate the lease. Overriding royalty interest owners have no obligation or responsibility for developing and operating the property.

A deed is the written document which transfers title (ownership) or an interest in real property to another person. The deed must describe the real property, name the party transferring the property (grantor), the party receiving the property (grantee) and be signed and notarized by the grantor. In addition to the signature of the grantor(s), deeds must be acknowledged to be recorded and acceptable as evidence of ownership without other proof. A valid deed must be delivered and accepted to be an effective conveyance. Most states assume delivery if the grantee is in possession of the deed. The deed also must be accepted by the grantee. This acceptance does not need to be shown in any formal way, but rather may be by any act, conduct or words showing an intention to accept such as recording the deed. To complete the transfer (conveyance) the deed must be recorded in the office of the county recorder or recorder of deeds in the county in which the real estate is located.

There are many situations in which it may be desirable to add or delete a person's name from a deed, such as adding or removing a spouse, child or sibling. A person can only be deleted from a deed with their approval, i.e., they must execute the deed (sign and have their signature notarized).

Joint tenancy is a form of ownership by two or more individuals together. It differs from other types of co-ownership in that the surviving joint tenant immediately becomes the owner of the whole property upon the death of the other joint tenant. State law, which varies by state, controls the creation of a joint tenancy in both real and personal property. Joint tenancy property passes outside of probate, however, it may be severed so that the property becomes part of one person's estate and passes to that person's heirs. A joint tenancy between a husband and wife is sometimes known as a tenancy by the entirety. Tenancy by the entirety has some characteristics different than other joint tenancies, such as the inability of one joint tenant to sever the ownership and differences in tax treatment. In some jurisdictions, to create a tenancy by the entirety the parties must specify in the deed that the property is being conveyed to the couple "as tenants by the entirety," while in others, a conveyance to a married couple is presumed to create a tenancy by the entirety unless the deed specifies otherwise. Each joint tenant has an equal, undivided interest in the whole property. All joint tenants, and their spouses, must sign deeds and contracts to transfer or sell real estate. A joint tenant may convey his or her interest to a third party, depending on applicable state law. This conversion would in effect terminate the joint tenancy and create a tenancy in common.

Tenants in common hold title to real or personal property so that each has an "undivided interest" in the property and all have an equal right to use the property. Tenants in common each own a portion of the property, which may be unequal, but have the right to possess the entire property. There is no "right of survivorship" if one of the tenants in common dies, and each interest may be separately sold, mortgaged or willed to another. A tenancy in common interest is distinguished from a joint tenancy interest, which passes automatically to the survivor. Upon the death of a tenant in common there must be a court supervised administration of the estate of the deceased to transfer the interest in the tenancy in common.


I am prohibited from giving legal advice. The answer will depend on the exact nature of the right owned and who the facts involved. In the case of a purely financial interest, such an an overriding royalty interest, it may be possible to transfer by assignment. I suggest you call the county recorder's office in the county where the property is located, as procedures, taxes, and fees vary by county.