South T Bar Ranch is a cautionary tale for Coloradans. Beware the split estate.
Colorado law allows for surface rights of land to be split from sub-surface mineral rights. Most commonly, conflict arises in Colorado’s natural gas-rich Denver-Julesburg Basin, where the Front Range sprawl north of Denver has landed subdivisions above mineral rights owned by major corporations planning or already using hydraulic fracturing to extract the gas.
South T Bar Ranch, located northwest of Cañon City, could become a nightmare situation for homeowners compared to the problems presented with hydraulic fracturing. Even modern uranium mining — known as ablation — causes a significant disruption to surface land, although companies claim it is safer and less problematic than pit mining.
Global Uranium and Enrichment, which owns the mineral rights below the 5,200-acre gated community, has received the necessary permits to begin exploratory drilling for uranium. If the company plans to proceed and extract deposits of uranium, landowners are legally required to provide the surface access necessary for the operation.
The blame for this scenario is twofold: a lack of due diligence by land buyers and a lack of disclosure from sellers, Realtors, and title companies.
The possibility of uranium mining on this land should have significantly reduced the value of these parcels from the outset. In other words, the land should have sold for a reduced price compared to other parcels in Fremont County where homeowners owned their mineral rights.
In this instance, it was homeowners in 2008 who gathered together their mineral rights and sold them to a company that was later purchased by Global Uranium and Enrichment. Subsequent landowners missed out on the windfall from that sale.
A simple disclosure could have avoided all this heartache. We’re not saying homeowners wouldn’t have still purchased the land, but at least they would feel less blindsided or would have had the knowledge needed to negotiate a better price on the land.
Colorado’s Contract to Buy and Sell Real Estate does include IN ALL CAPS an oil, gas, water and mineral disclosure. However, the disclosure only informs people about the risk of split estates; it doesn’t include specific information about whether the land being purchased is split from mineral rights. The clause merely encourages the buyer to “seek additional information.” Most buyers get the contract to buy and sell just before closing.
Title companies also do not trace the mineral rights separately, which really is an astounding lapse in the expensive services the title companies perform. Homeowners are on their own to research the ownership of mineral rights using county records or to hire an attorney to research the title and deed for them.
Where should the onus of due diligence fall?
The current system places too much of a burden on potential buyers. Colorado law already has strict rules for the disclosure of water rights and water sources, and the law should be updated so that disclosure of mineral rights is treated the same. Potential land buyers should be able to quickly see in the real estate listing whether land comes with water and minerals. The point of sale is too late to warn a potential buyer that the estate may or may not be split.
The website for the South T Bar Ranch now includes a disclosure about the split estate and the possibility of uranium mining. More homeowner’s associations, metropolitan districts and other entities should take similar steps to help potential buyers make informed decisions.
Unfortunately, it’s too late for the owners of South T Bar Ranch, who bought after the mineral rights deal in 2008 and failed to learn of the split estate through their Realtor, title company, or other investigations.
People who profited off selling the mineral rights feel vastly different about the potential for mining operations than those who purchased their property later and will not see a windfall from the operations. Some may have failed to negotiate for a reduced price, given the potential for mining.
Global Uranium and Enrichment is only seeking permits to drill wells exploring uranium deposits at this time. The possibility of an actual mining operation is still years away and will require a separate permitting process. It’s possible nothing will come of this exploration, and homeowners will be spared from having mining operations in their backyard (or nearby).
Coloradans can learn from this lesson, and those who learn they are already on a split estate, can make an offer to buy the mineral rights back before market conditions lead to exploration and extraction near their home.
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