What our clients say

We got to work with Richard, and it was clear to us he had experience and confidence in our case. We were impressed also by the speed, regularity and efficiency in the communications we had.

Rights to Mines and Minerals: Implications for Conveyancers and Landowners

Introduction

For the purposes of property law, the term mines and minerals is defined in Section 132(1) of the Land Registration Act (“LRA”) 2002 and includes any strata or seam of minerals or substances in or under any land, and powers of working and getting any such minerals or substances. Therefore, in simple terms mineral rights are the rights to exploit, mine or produce minerals or other extractive resources below the surface of property. The person who owns those rights can sell or lease them separately from the property on the surface of the land.

Ownership of Mines and Minerals

There is a long established common law presumption that mines and minerals are part and parcel of the land and it is therefore presumed that the landowner of the surface also owns everything below the surface, including any mines and minerals. There are however important exceptions to this rule in relation to gold, silver and petroleum which belong to the Crown and coal which is vested in the Coal Authority.

The common law presumption may be rebutted by showing that severance has occurred indicating that the title underneath the land is severed from the title on the surface. Ascertaining severance is not always a simple task as the methods used are mainly historical. For example, severance might have occurred a long time ago so the surface owner may not even be aware of it and it may be difficult to establish it. It will only be unequivocal if a registered title expressly includes title to the mines and minerals, which unfortunately only a few do. Therefore, having an absolute title is not sufficient for conveyancers and landowners to satisfy themselves that mines and minerals form part of the title.

Severance can be established in one of the following ways:

  1. The rights may be granted to the Crown as previously mentioned.
  2. The owner of these rights may sell or lease them to someone else.
  3. In the case of former copyhold or manorial land it is possible that these rights are reserved to the manor. Copyhold land was land held from a manor who allowed locals to occupy and work in the land in return for some form of consideration, including labour. In 1926, all copyhold land was converted to freehold but the presumption was that the title only included the surface land. As a result, the rights to mines and minerals were reserved to the lord of the manor.
  4. These rights may have been dealt with by an Inclosure Act or award. These series of Acts and awards created legal property rights to land that was previously considered ‘common’ and was under collective control. If land was the subject of such an Act or award, it is possible that the ownership of the mines and minerals may have been dealt with separately from the surface land and the landowner is not likely to be aware of the situation.
  5. These rights may also have been established through custom and practice. This is particularly the case in some areas where there has been a lot of mining activity such as Cornwall and the Forest of Dean.

Registration of Mines and Mineral Rights

Under Section 4(9) of the LRA 2002 the registration of mines and mineral rights held apart from the surface land is not compulsory unless there is a registrable disposition of these rights in accordance with Section 27 of the same Act such as a transfer, a lease of more than 7 years and so on. It is however possible to make a voluntary application at any time to register the title of mines and minerals separately. It would indeed be difficult for the landowner of the surface land to object to such an application as the onus is on the surface landowner to adduce evidence which proves that they in fact own such rights.

In some situations, there are entries on registered titles stating that the minerals are ‘excepted’. These entries are useful in ascertaining severance but it is increasingly important for conveyancers to be vigilant with the drafting of such entries. The main reason for this is that a right to work the minerals must be added for the entry to have value and clear wording is crucial if a right to break the surface is also required.

Another risk that surface landowners face provided that severance has not occurred is that they may lose the protection of the Land Registry indemnity, which offers compensation where a registered title is incorrect. Paragraph 2 of Schedule 8 of the LRA 2002 provides that no indemnity is payable in respect of mines and minerals unless there is a specific note in the register that title to them is included.

Overriding Interests

They way these rights came about over the years meant that it had been easier to deal with them as overriding interests, originally in the LRA 1925 which has been repealed and replaced with the 2002 Act. In the LRA 2002 Paragraphs 7, 8 and 9 of Schedule 1 provide that certain classes of mineral rights override first registration. These include interests in coal or coal mines and certain associated rights pursuant to the Coal Authority Act 1994. With reference to land to which title was registered before 1898 they also include mineral rights created before 1898 and in relation to land which was registered between 1898 and 1925, they include mineral rights created before the date of registration of the title. Under Schedule 3 of the LRA 2002, the above categories also override a registered disposition.

The manorial rights to minerals in copyhold land previously mentioned, are also overriding interests. Paragraph 5 of Schedule 12 of the Law of Property Act 1922, which has been repealed, provided that manorial rights include the mineral rights of lords of the manor in copyhold land. A change in the law provided that 12 October 2013 was the cut off point for the registration of manorial rights which was previously done by way of a caution in unregistered land and by way of notice in registered land. If such interests had not been registered before 13 October 2013 their overriding status is lost so that a future purchaser of registered land may acquire the land free of that interest. However, the liability remains with the proprietor up and until a first registration or a registrable disposition occurs.

Potential Risk of Trespass

A landowner who does not own the mines and minerals beneath the surface is at risk of a trespass claim from their owner if works are carried out below the surface including installing foundations, underground services and other groundwork as such work will involve going through a minerals stratum. If a successful claim is brought by the owner of the minerals it may lead to liability for damages or an injunction to stop work. In Bocardo SA v Star Energy [2010] UKSC 35 the Supreme Court held that the drilling of oil wells by an oil company which did not acquire ancillary rights amounted to trespass. This case also made it clear that the level of compensation to a landowner for access should be limited to the loss suffered and not the profit made by the exploration. Owners of mineral rights are increasingly more prepared to bring court action and conveyancers should therefore consider the ownership of minerals from an early stage in their due diligence.

Overcoming the Risk

Title Indemnity Insurance is a simple and relatively inexpensive option for landowners. In the case of a development a policy can be obtained for the construction phase and for the individual purchasers after the construction. It is important that developers and landowners do not attempt to obtain the mineral owner’s consent to the works or to negotiate a purchase as insurers will not provide protection once the rights owner has been alerted to the development.

Another way of minimising the risk is understanding the title that is being offered and ascertaining whether severance has in fact occurred. This may involve analysing historic deeds and other documents.

An attempt to seek an indemnity or warranty from the seller may not be fruitful as the seller will probably not be willing to provide one and even if it is provided it is unlikely that it will stretch to individual buyers in the case of a development.

Fracking

Fracking, or shale gas extraction is the process by which natural gas which is trapped into shale rock is released when water and other chemicals are pumped into the rock at high pressure. As the renewable energy sector is developing the UK government has been supportive of the exploration of shale gas. This process has been criticised by landowners as it creates problems including mineral rights, contamination, trespass and decrease in property value.

The Crown owns the mineral rights to oil and gas pursuant to Section 2 of the Petroleum Act 1998 leaving landowners with minimal negotiating power. The Infrastructure Act 2015 (“IA 2015”) deals with issues of access and trespass in relation to fracking. Before the Act, fracking companies were required to get permission from landowners or obtain a court order granting them rights, failure of which would amount to an actionable trespass even if there was no damage to the property. As a result, fracking operators needed a licence from the Secretary of State and had to negotiate access rights with landowners.

Section 43 of the IA 2015 created new rights of use for the purposes of exploring petroleum or deep geothermal energy provided that the land is landward and deep level – at least 300 metres below sea level. Section 44(1)(a) specifically refers to fracking as being a right of use. Section 44 further provides that this right of use should not leave the deep-level land in a different condition than before such as leaving infrastructure or substances behind. The operator is deemed to have been given the same power as if a right was granted by the landowner, meaning that compliance with other regimes relating to petroleum is still required and the right does not relieve the operator from any liability or obligation they would have been subject to if the landowner granted them this right.

There is provision for the Secretary of State to make regulations requiring companies to make payments in return for the right of use under Section 45 IA 2015. The multinational chemicals company INEOS has already proposed to give 2% of future revenues to local communities and 4% to landowners.

Share this article:Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someonePrint this page
The following two tabs change content below.

ELS Law

ELS Legal is a legal firm based in the City of London. We are located in the historic and traditional street of Ely Place near Holborn. Established in 1290, Ely Place is today the home of many modern and forward looking legal firms.

ELS Law

Latest posts by ELS Law (see all)

Leave a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>