Mineral rights are defined under Section 132 of the Land Registration Act 2002 as any seam of minerals or substances in or under any land, and the rights to work and mine any such minerals or substances.
The owners of mineral rights can differ from the landowner. This can be revealed within the title deeds of the property with an entry confirming that the minerals are ‘excepted’. Ownership can even be registered at the Land Registry under separate titles.
However, purchasers of land are at risk because the Land Registry indemnity (where the Land Registry will pay compensation if the title deeds are incorrect) does not apply to mineral rights unless the registered title specifically says that they are included; which is extremely rare. Therefore even if there is no entry registered on the title, minerals are not necessarily included.
Is this all Mines and Minerals?
The Crown Estate was formed in 1066. After the Norman Conquest all land belonged to the King, William the Conqueror.
Regardless of ownership, all gold and silver within the land of Great Britain belongs to the Crown. Oil and gas within the land of Great Britain is also vested in the Crown by the Petroleum (Production) Act 1934.
Most interests in coal are vested in the Coal Authority.
Why can mineral rights cause problems for developers?
During house building activity such as installing foundations, if a developer damages or removes any mines or minerals under the surface which belong to a third party they could be found guilty of trespass. This could lead to the developer having to pay damages, compensation, or an injunction being granted to stop work on the site to prevent future trespasses.
This could also affect future plot purchasers from being able to obtain lending, as mortgage providers may see the exception of rights as a risk to their investment.
Housebuilders will also need the Coal Authority’s consent to any proposed movement or removal of coal.
Mines and Minerals Insurance
The most common solution to this legal issue is indemnity insurance. Whilst insurance will not fix the problem, it can address some of the cost implications as listed below. Housebuilders and land owners should not approach the owner of the mineral rights to obtain their consent to the works or to negotiate a purchase as insurance providers will be unlikely to offer cover where the owners of the rights have been alerted to the development.
- Damages and compensation
- Settlement monies and costs
- Loss in market value
- Demolition costs
- Defence costs