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Land/Property Development

Mineral Rights - the risk of an underground ransom strip

There is a certain pride in owning freehold land. It is hard to stomach the idea that other people have rights over, or indeed under, a beloved family home or a valuable development. So exactly what do you own when you buy a property, and what rights exist under it?

  • The limits of your ownership

      The position was once that you owned everything below and above your property - an invisible pillar in the earth stretching from the molten core to the edge of space. This idea tied in rather well with the idea of your home as your castle, but did not tie in quite so well with the advent of air travel. Back in 1978 the courts ruled that a landowner could not sue an aerial photography company for trespass after their plane flew over his estate. Now the practical rule is that you own the land above your property as far as is necessary for the reasonable use and enjoyment of your land.

      The more recent case of "Bocardo" tested the rules downward. A mining company drilled diagonally down out of their permitted area and under a homeowner’s land in search of oil, and he sued. The company argued that he would never have been able or willing to use the land thousands of metres below the surface, so the same principles applied as for air travel – but this argument was refused. The position could change, but in principle you still own your land all the way down.

  • Lost mining rights

      As your solicitor looks into the legal title of your property before you buy, they will normally be able to determine whether the ownership of minerals has been sold on in the past or retained by another landowner. However the situation is not always that simple. Some land that today is freehold in fact used to be "copyhold". Essentially this was when a landowning Lord of the Manor gave an owner some rights in the land but reserved others, normally including ownership of minerals. On the 1st January 1926 copyhold land was abolished, and the land became freehold. However the mining rights (amongst others) were not automatically given back to the freehold landowners.

  • Avoiding the pitfalls of lost rights

      When mineral rights have been separated or lost it often creates a kind of deadlock – where the owner of the rights does not have the right to enter the land to work it without the freeholder’s permission, but the freeholder does not have the right to dig into the land, as this would constitute a “trespass to minerals”. This can be a huge problem for a developer seeking to put in foundations, and can even make land unviable for development. It can likewise create problems on a smaller scale for landowners who may, for example, want to put in a basement under their home.

      If the mining rights are lost it may be tempting to assume that anything valuable under your land would have been identified already - after all, the likelihood you are living above a goldmine is pretty slim. However it is risky to make assumptions about what substances under your land will qualify as minerals. In 2008 the case of Coleman confirmed that whether or not a substance is a mineral can come down to expert evidence and local conditions rather than just how rare or expensive it is. Even substances such as clay or shale could potentially be considered minerals in some circumstances.

      If the mineral rights have been lost, the first option is to secure mining indemnity insurance. Never approach the owner of the rights first, as most insurers will then refuse to grant a policy; the risk of the owner asserting their rights will have dramatically increased. If a policy is expensive or unavailable and the owner of the rights can be located then it may then be possible to negotiate a purchase of the rights, or permission to carry out the work.

      It is best to deal with mineral rights issues early on in a transaction – once you are bound to buy the land the owner of the rights will essentially be able to dictate their price, and effectively hold any development to ransom.