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Problems With Mineral Rights Leasing
As many people dealing with mineral rights probably knows, mineral rights leasing comes with problems and setbacks. These problems are not easily resolved either, and takes time to overcome. Nevertheless, they can still be solved and taken cared of.
One problem that both parties would have to gloss over mineral rights transactions are the legal procedures. This would include the mineral rights lease and terms of agreement. The wording of the lease agreement has to be very clear to both parties to avoid future disagreements. Problems and disagreements especially arise when the moment comes for mineral extraction. Mineral extraction has such heavy requirements like the expansive use of the land and surface, not too mention the amount of damage it can cause for the surface owner.
This is one of the main reasons why seeking legal help is needed when negotiating with a mineral rights lease. It is also advisable for both parties to have sufficient knowledge on the subject. Respect for the terms in the lease is also needed from both parties. The lease agreement should contain specific details if needed to ensure that there will be less, if not none, disputes in the future.
Legal issues aside, other problems can arise from mineral rights transactions. Damages to the land and property are the main concerns when mineral extraction is underway. It is not only during the extraction, too. Damages to the surface can appear years after the mining and extraction is complete. This would certainly be a headache for owners of fee simple estates. The effects and damages of mineral extraction can ruin the property and will become a problem for the subsequent owners of the area. Take note that the effects can appear many years later, and by this time the mining company may already be gone. No one would then be held responsible and any repairs to the damages would be a burden for the remaining owner of the property.
Aquifers and water supply can also come under fire with mineral extraction and mining. Places where underground extraction takes place are outside of the service of public water supplies. The people would have to content themselves with water wells for water. If the extraction is below the aquifer units tapped by the well, most probably the aquifer would be damaged by the extraction and the water water would drain into deeper rock units. This would lead to a temporary or permanent loss of water supply.
What is important in mineral rights leasing is that all the parties involved should understand wholly what they’re getting into. Mineral rights extraction can cause the surface owner many disadvantages, not only in the present time but also in the future. Legal representatives or lawyers should take care to research carefully and make sure their clients understand the agreement and terms.
When in the midst of negotiations, the leasing terms and agreement is what is to be focused on. Again, both parties should have legal help and should also have full knowledge of the terms. Understanding the risks and the many possibilities in the future is also part of the process. Business such as this naturally have its big problems, and while still early the parties involved should make adjustments.
Four Essential Tips For Seller Financing
Seller financing has become an increasingly popular way for property owners to convert real estate into an income stream. Its especially useful when potential buyers may have trouble meeting traditional qualifications. A seller financing agreement is handled like a loan for some of or the entire purchase price but instead of lending the money, the financer manages a promissory note for the amount of the loan. This makes seller financing an excellent option in a stagnant local market or in cases where the seller would prefer to treat the property as an ongoing investment without becoming a landlord. The seller may also benefit from a number of tax incentives. A seller-held note does entail fairly strict responsibilities, however. Mortgage note buyer DMO Direct Funding notes four particular characteristics that are universal to successful seller financing.
Competitive Interest Rates: As the seller, the interest rate is completely up to you, subject to applicable laws. Charging too high a rate makes it difficult to get interested buyers, but charging too low a rate provides little or no benefit for the seller. Since youre not an institution you can charge a lower rate than a bank without taking a hit on your returns, but those returns should still be comparable to other investments. A financial advisor can point you to key indicators like T-Bills that will help you set your rate.
Prudence: Successful seller financing is as transparent and safe as possible. That means that as the seller, youve run a full credit check and you have accurate records relating to the property, including recent improvements and any past property inspections. You should also welcome the buyers investigations into the property. When these precede the signing you prevent future arguments about the property. Finally, make sure that the property is fully insured. Skipping these steps is the source of a great deal of grief for many would be seller-financers.
Legal Representation: You should never enter into seller financing without consulting a lawyer who specializes in real estate. You are responsible for the integrity of the financing documents and dont want to be surprised if a malformed clause cuts you off from payments or worse yet, unintentionally runs afoul of the law. A lawyer should also be in easy reach in case there is any future dispute over the note.
Long Term Perspective: You should be able to track how the seller-held note fits into your overall finances over its entire term. That means you need to consider what might happen in an emergency when for one reason or other, payments arent coming in. Do you have the will and advice on hand to initiate foreclosure? Do you anticipate significant medical or tuition expenses in your future? Be prepared. Fortunately, if youve managed your note reasonably well you can sell it to a mortgage note broker. The notes seasoning and terms will greatly influence its value.