Weird legal question.

Please let me know what you think about this situation.

We recently purchased a land locked piece of property in the Houston area and then purchased a smaller tract to provide access. The combined tracts were approx 40 acres. We listed the property with a Realtor and accepted an offer from an out of town (but not out of state) buyer.

First the buyer wanted to put something like $100 down as earnest money. We wouldn’t sign the contract until we had $15,000 (5%) at the title company.

After the title commitment came in the buyer sent over an assignment to switch the contract to an attorney in the same town. Supposedly they were going to develop the property together. Before we signed the assignment, the attorney objected to the title commitment on the grounds that we were not conveying mineral rights. I have never heard of that being a legitimate objection to a title commitment.

The buyer (through the attorney) then requested that his earnest money be returned and proclaimed that he was canceling the contract on the grounds that we failed to timely cure title objections. I have bought literally hundreds of vacant properties, I don’t recall ever taking title to mineral rights.

The contract was on a standard TREC (Texas Real Estate Commission) form for unimproved property. Has anyone else ever heard of this as a viable objection to title?

I see several posts here about leaving yourselves an “out” in the contract when you make an offer. I was just curious if this had come up before. I’d probably let the guy have the money back if he hadn’t lied about his intentions.

I’m not a lawyer, but think you are in a contract with the original buyer per the original terms. If the buyer assigns the contract, they are assigning the right to buy per the agreement. The new buyer can’t just come in and start renegotiating because you weren’t in a contract with them.

Best bet is to get an attorney on your side and hold the original buyer to the contract. They won’t get their earnest money back until you sign off.

Isn’t it assumed that title to land includes all minerals unless they are expressly reserved? Does your current title specifically exclude mineral rights to your land?

I think you have an issue that should be resolved by your attorney.

I have talked to my attorney’s and they agree with me. I am entitled to the earnest money, but of course I’d have to sue to get it.

I think that the assignment was a ploy to get me to cancel the original contract because that is what the title company would have asked for. I just wish the guy would have come to me and said that he couldn’t afford to close or that he wasn’t able to get his financing lined up. I would have given him his money back. In fact, I probably will anyways because otherwise I’ll have to go through another title company which is a headache.

It’s really a blessing in disguise because now we are going to develop the property into residential lots and probably make more money. It just pissed me off that the guy lied about his intentions.

We’ve done a lot of things right with this tract and probably even more things wrong. Maybe I’ll tell the whole crazy story if I get some time this weekend.

What did your attorney tell you about the mineral rights? Do they convey with the title or not in your specific case?

I do not own the mineral rights. I plan to talk to a different atty about this on Monday. Not because it matters that much; just because I’m curious.

I’ll report back.