Buried Treasure – Mines And Minerals And Your Land
As a Land Owner you may presume that you own not only the surface of your land, but also everything ‘right up to the heavens and down to the centre of the earth’ (or if you want the Latin term to impress at your next pub quiz night ‘Cujus est solum, eius est usque ad coelum et ad inferos’). Generally speaking, in modern legal terms that presumption would be correct subject to limitation. If we take the ‘ad coelum’ doctrine at face value, then as the surface owner, you are also the owner of any minerals that are beneath the land and thus, you would be the only person entitled to exploit them.
Certain subterranean geological substances are in fact very useful and thus quite valuable and because of that, for centuries it has not been entirely uncommon when transacting land for the Sellers to retain the Title to those valuable minerals when selling off the surface land – a process known as ‘severance’ i.e. when the ownership of the minerals are separated from the ownership of the surface.
Furthermore, there are some commodities that are so valuable that the ordinary system of ownership is simply disapplied altogether. Coal is an example whereby pursuant to the Coal Industry Act 1994 most unworked deposits of coat are actually owned by The Coal Authority. Oil and natural gasses are owned by The Crown as are any gold or silver mines.
It is important therefore, when you are buying a parcel of land (particularly if you want to build on it or develop it in some fashion) that you understand what you are actually buying – are you indeed buying everything betwixt heaven and hell or are you buying the surface land only? Your Legal Advisor will be able to assist you here, particularly as severance can occur by several means not just by a transfer where the Seller retains Title to the minerals underneath. There can be statutory severance and Crown grants that might apply and indeed, from the early 17th Century there were various processes which could allow for minerals to be vested in the Lord of the Manor and whilst that might sound quite archaic, the passage of time alone does not necessarily save you from risk.
Lack of ownership of your mines and minerals underneath your property is not the only point of consideration – bear in mind that often when mines and minerals are severed from the Title to the surface, other ancillary rights are also granted to those mineral owners to allow them to benefit from their retained ownership. The most common would be:
– a right to ‘work’ those minerals, because without that right the mineral owner would have no ability to extract them if they ever wanted to do so;
– a right to break the surface of the land or to extend underground workings (wherein the minerals would not be extracted by breaking the surface). The former position of breaking the surface is of course something that might concern you as a surface owner, after all if you want to develop your land to build a brand new house, it would be a disaster if you were to then find that the owner of the minerals underneath was going to come along and extract minerals by working the land that your lovely new house sits on.
Some reservations do include obligations for the mineral owners to pay compensation to the surface owner for damage caused. That does not necessarily mean however that you would receive the full diminution in the value of your property in this situation and so what might be payable is something that you would want to have properly investigated.
There may also be other less drastic, but equally difficult issues that arise as a result of a reservation like this – case law makes it clear that constructing a pipe through mines and minerals owned by another is an actionable trespass just as it would be if you were to place a pipe across the surface of another person’s property. This would give rise to a claim against you in damages, so you would need to consider carefully whether any subterranean works that you intend to do as part of your development (e.g. building a basement, sinking service pipes or the like) would in some way trespass on property that you do not own.
Bear in mind that the damages you could end up liable for in trespass could be quite costly – the mineral owner is able to recover such sums as they would hypothetically have been paid to allow the works to go ahead, so they could be a ransom particularly if key to your development plans.
Accordingly, the lack of ownership of mines and minerals can be a big issue for Developers in particular, but there are actions you can take at an early stage to help mitigate risk. Should your legal investigation of Title identify any issues which sever the mineral from the surface or grant rights over mines, then further questions must be asked:-
• Can the owner or the beneficiary of those mines and minerals still be identified?
• Is it clear what minerals are affected?
• Consider undertaking an invasive geological survey to understand which substances are actually beneath the land and at what depth. Look to a specialist Minerals Surveyor if needs be to advise on whether those substances can be classified as minerals;
• Think about your Development and what can be built without disturbing those minerals – if only a small area of your site is affected then could that area be left as public open space for example;
• There is a possibility that insurance may be able to help, although you would need to check the policy very carefully and you cannot rely on insurance to indemnity you and resolve all issues; and
• As a very last resort, you may even want to consider approaching the mineral owner (if they can be identified) to see whether a deal can be struck to allow your Development to proceed. Such things always come at risk and of course this would be a commercial negotiation and thus any premium payable would likely impact on your overall profitability.
The overarching principle is always to keep in mind your ultimate goal – if you are developing a property for onward sale to third parties will those Purchasers or Tenants be put off by these issues? Will the cost erode your profitability sufficiently so as to render the Development worthless to you?
In depth and detailed due diligence is always a sensible precaution and if you have concerns, engage with your legal advisors openly.Business, Commercial Property, General, News, Residential Property Conveyancing