“Is There Gold in Them There Hills?”
State Legislature Considers Bills Aimed at Modifying Treatment of Mineral Rights
Two separate pieces of legislation have been introduced in the State Legislature over the past year that, if passed and signed by the Governor, would have an impact on real estate deals across the state.
Senate Bill 288 introduced during the last legislative session would essentially provide for the automatic reversion of mineral rights to the fee owner of the real property if the owner of the mineral rights has not paid taxes due on the mineral rights for 20 years.
House Bill 974 introduced earlier this year would amend O.C.G.A. § 44-2-31 to include the following language: “Every deed conveying lands recorded on or after July 1, 2008, shall include a disclosure that the conveyance specifically includes or excludes mineral rights.”
Practical Consideration: Both bills seemed to have stalled in their respective committees for the time being. However, if passed, HB 974 would have a dramatic effect on the cost of real estate closings. Since every deed would have to specifically include whether or not mineral rights are included in the conveyance, a 100 + year title search may be required to determine the existence of a mineral rights reservation (this is due to the fact that most of the mineral rights reservations occurred pre-1940, some prior to 1900). This could potentially cause the cost of a title search for a “simple” real estate transaction to increase to $1000.00 or more since both the fee title chain and the mineral interest title chain would have to be certified.
SB 288, on the other hand, would be a welcomed change to the law, in that it would likely eliminate the need for a costly quiet title action or petition for declaratory judgment to clear a mineral rights reservation that was made long ago and has been long forgotten. The owner, however, would only lose the mineral rights if they have not paid taxes on the rights within the statutorily defined time period.
While both bills seem to have stalled, anyone with a stake in real estate should pay close attention to the status of both of these pieces of legislation.
