Picture this: you are sitting on your front porch overlooking your 200-acre farm on a warm June evening. The cotton-candy sky is beautiful, the kids are playing in the yard, and the lightning bugs are starting to speckle the field in front of you. What is on your mind – layered cake? A bundle of sticks? Probably not, but you may be surprised to hear you are sitting on both!
Right this minute, you are sitting on a layered cake, and if you have rented or owned property, signed an oil and gas lease, granted a pipeline right-of-way, or have dealt with any type of property ownership, you held at least one stick. Instead of the German chocolate cake, you may be picturing, think about the layers of the Earth you are sitting on being your cake. Instead of chocolate cake and caramel and coconut icing, the layers of your cake may include topsoil, subsoil, coal, shale, stone, gold, stone, gas, and oil. The “layered cake” you are sitting on may be less appetizing than a chocolate, caramel, and coconut confection but is more valuable.
So, what if a person approached you to rent a house on your farm? Or a company approached you to put an oil and gas pipeline across your field? Each of those rights – the right to possess the property you lease to a renter or the right to cross your property with a pipeline – are sticks you may dole out of your bundle of sticks to be held by another. Not only is real property layered like a cake, but the rights associated with property ownership can be visualized as a bundle of sticks, each of which can be sold, assigned, gifted, or divided by the owner to another person, company, or entity.
Because of the often-splintered nature of the property rights (bundle of sticks), sometimes within each layer of that layered property cake, landowners must understand the history of their property and what rights may have been severed from the bundle in the past. Stay tuned for future posts discussing specific types and examples of those separated sticks and how they may impact mineral rights ownership.
Blog By: Attorney Katherine Kimble – Your litigation attorney focused on Property, Oil & Gas, and Mineral Law Attorney.