Mineral Rights and Surface Rights

If you own land, you presumably received a document that says “Status of Title” for that land. Many titles include a line that says: “Excluding all mines and minerals” or “Subject to the reservations and provisos contained in the grant from the Crown”.

This means that you have the exclusive surface rights to that property, but you don’t have the right, with a few exceptions, to profit from minerals or oil on your property. The Crown has retained those rights. The rights you have as the owner of the property are the rights to use the surface of the land.

The Crown can, and does, lease those rights to mining, oil and gas companies. Some recent media reports in south-eastern Manitoba have drawn attention to the fact that this may occur without notice to the owner of the surface rights.

How does this affect you? To extract the underground resources, mining companies have to access the resources through the surface.  Accessing through the surface affects your rights as the owner of the surface rights. Oil and gas companies often install wellheads and pumps, roads, and power lines to access the oil.  Mining companies may have a mine-site, and depending on the type of mine, a mine-shaft to access the underground minerals, and hydro lines for power to the mine. Sometimes companies will perform test drilling to determine if the ground contains enough of the natural resource to warrant further development. All of these activities would affect your otherwise exclusive right to use the surface of the property

Additionally, if a mining company has leased the mineral or oil rights to your property the subdivision may require the leaseholder’s approval. Subdivisions of the property require the approval of the leaseholder because they have an interest in the land. While a subdivision may not physically affect the leaseholder, it can affect the leaseholder’s rights. The subdivision legally divides a property into new titles and boundaries which, by itself, doesn’t affect the leaseholder. However, if the subdivision creates a new road or lane, the Crown will receive title to that land free and clear of all encumbrances. The leaseholder needs to approve, because they lose the rights to the mines and minerals under the road when the title to the road is transferred to the Crown.

If a leaseholder is on or are disrupting the surface (digging mineshaft, building an access road, or producing by-products or tailings that end up on the surface) then the owner of the surface rights should have an agreement, typically known as a Surface Rights Agreement, with the mineral rights leaseholder. The Surface Rights Agreement should outline how the leaseholder will access the land, how much compensation the surface rights holder will receive as compensation, and to what state the leaseholder will restore the land. If the surface of the land is used for production, such as grain or canola farming, the owner will want to be compensated for the lost income.

How to deal with the circumstances of these situations can be very fact specific. If you think you may be in a situation where mineral rights to your property have been leased please contact our office for further advice.