Mineral Rights and Northern Michigan Land
Working in the remote land business in Michigan’s Upper Peninsula (or, simply the U.P. as we locals call it), an issue that I see increasingly arising is whether mineral rights are included, or available, with parcels of land. The Upper Peninsula of Michigan has a long history of mining and exploration dating back to the 1800s. In fact, the City of Houghton was first proposed as the state capitol due to the rich copper deposits found throughout the area and the population and influence that resulted. With rich native copper mines of the western U.P., high grade iron ore deposits within four different iron ranges, two former producing gold mines in the central U.P., and countless other small scale historical mines; this area is no stranger to it’s mining heritage. Much time has passed since the hay days of Michigan mining, and currently there are only two operational mines (iron ore).
With the high commodity prices in the recent past, a renewed effort has been launched to further explore the area’s potential for economical mineral deposits. With this renewed interest more attention has been placed on mineral rights (who owns them, and how to find out who owns them, etc) by folks looking to purchase recreational land in this remote winter wonderland. This was further exaggerated by a recent discovery of a nickel ore body called the Eagle Deposit.
Now, I happen to work full time as an Exploration Geologist in addition to working as a remote land specialist with Northern Michigan Land Brokers. I am frequently asked by buyers, sellers, landowners, and even other real estate agents; about mineral rights… or mineral title as I like to call it.
In Michigan, mineral title can become severed from the surface title and is recorded separately. Almost all mineral title in Michigan is owned by large mining companies, timber companies, or the State itself. It has been this way since back when the first copper deposits were discovered many, many years ago. As I stated before, the recent discovery of a nickel deposit has renewed the folk’s interest mineral issues. This is, in part, due to the local opposition of a possible new mine. Some are misleading landowners into believing that a mining company can simply discover minerals on your land, bulldoze your buildings, and blow a hole in the ground – with out so much as a friendly phone call if they hold the mineral title. That is simply not how things work these days (or how it ever worked for that matter).
The vast majority of individual landowners in the U.P. do not own their property fee simple. That means that mineral title has been severed from the surface and held by a different entity. Not owning mineral rights in no way affects your ability to enjoy the land any use it any way you choose (within the laws).
In some cases mineral rights are not desired and ad significant liability to the owner. For example, if you were to own (mineral title included) say, 160-acres of recreational land in the Keweenaw, an area with countless historical mines. You would be responsible for capping any old mine shafts and/or fencing any caving grounds currently on your property, or that should ever appear in the future. Plus, you hold all the liability if anything should arise from those aforementioned issues. You may think – what are the chances of an old shaft or caving grounds being located on my property? Well, better than you might think in a region with such a rich mining history. In short, that can mean an additional cost and liability that most folks, myself included, would rather not deal with.
Another issue many folks bring up is that they wish to own the mineral rights in the hope that one day the World’s largest gold deposit will be discovered beneath them, and they will be rich overnight. I can assure you that if you own the surface above that deposit (if it exists) you will be well compensated. Any surface disturbance (tree cutting, roads, etc) the mineral owner may cause, if any, must be returned to original condition and/or compensated for. Finally, the chances of any economical deposit being located under any given property are slim to none. I can speak from experience on this one. Only 1 in 100 targets identified for evaluation look interesting after a look around on foot, of those only 1 in 100 are ever drill tested, and of those only 1 in 100 prove to be an economical deposit. For the traditional landowner, if mineral title is included – fine. But, if the mineral title isn’t included – don’t sweat it.
There is one final issue to address when considering a land purchase in this area. If the seller of a property wants to “sell” the mineral rights for an additional sum – be weary. As an Exploration Geologist, I recently evaluated a mineral title package offered by a large timber company. The mineral package included +50,000-acres of mineral title for approximately $200,000, or roughly $4/acre. After looking into things, we passed on the offer. As a real estate agent, just last week I saw a listing for 120-acres of land for sale. Of this 120-acres, the seller “believed” that 40-acres of mineral title was owned by him. For this 40-acres of mineral title, he was asking an additional $10,000, or $250/acre. I know that area well, and I have absolutely no exploration interest there. It’s needless to say what my advice to a buyer would be on that offer (not to mention the “believes” he owns the mineral rights… that is another story for another day). Without a good buyer’s agent, the seller just might dupe someone into paying that extra $10,000, or he could be using it as a bargaining chip to get a better price down the road, or he could know something about “what’s in them thar hills”… the first two scenarios are much more likely.
View my Michigan Land for Sale on LandSaleListings.com.
David M. Huey
906 362 6695
Northern Michigan Land Brokers
100 North Third Street
Marquette, MI 49855