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31st May, 2019
Carrying out thorough due diligence on a property or piece of land is, of course, an intrinsic aspect of any property transaction. There are many pitfalls, whatever the type of property being purchased, its price or location. The majority of issues are usually discovered at the title investigation stage, when it is not too late to make further investigations or take remedial action. One example is where the owner of the surface of the land does not own the mines and minerals beneath it.
Who owns what?
Ownership of freehold land includes the airspace above it and everything below, to the centre of the earth and The Law of Property Act 1925 defines “land” as -
“land of any tenure, and mines and minerals, whether or not held apart from the surface, buildings or parts of buildings.”
There is a presumption, therefore, that ownership of land extends to all mines and minerals lying beneath it, with the exception of coal which is owned by the Coal Authority, and gold, silver, oil and gas which are owned by the Crown.
This presumption can be rebutted by evidence that rights in mines and minerals have been severed from the surface land, which may be apparent from a property’s title deeds but not always.
Historical origins …..
Historically, separate ownership of mines and minerals arose in one of several different ways: on conversion of ancient ‘copyhold’ tenancies to freehold; through custom and practice in parts of Cornwall, Derbyshire and the Forest of Dean; when land was inclosed in the 18th and 19th centuries; and by landowners of large estates (e.g. lords of the manor) retaining ownership of them when selling land.
... And current-day problems
Sometimes, it is obvious that mines and minerals are no longer attached to the surface land. You may see the following entry in the Land Register or old title deeds –
“The mines and minerals together with ancillary powers of working are excepted with provision for compensation in the event of damage caused thereby.”
Unfortunately, the absence of such wording is not conclusive proof that mineral rights have not been severed although it may be difficult to prove their existence. In addition, the title deeds may simply record the existence of the rights without details about the type of minerals, depth or extent.
Where does this leave you?
The expression “ancillary powers of working” indicates that the minerals owner has the right to dig up the surface land and remove the minerals. This may compromise the stability of the land, leading to subsidence, which is bad news for landowners, developers and future plot owners.
The minerals owner may have to pay compensation for any damage caused by working the mines and minerals, which will be of some minor comfort to a landowner but compensation is not always available and will not generally provide an adequate remedy for a developer. Laying foundations, installing subterranean services and constructing infrastructure can all result in an actionable trespass if a minerals layer is disturbed or removed, whilst excavating soil could amount to theft. And an aggrieved minerals owner might apply for an injunction to stop works, jeopardising the success of a development project.
How to minimise risks
We carry out mining and environmental searches as part of our standard due diligence on a property acquisition. These may flush out existing ground stability issues which could indicate past mining works and enable a developer to take appropriate remedial steps.
We will also carry out a search of the Land Registry’s index map on every purchase of development land, which will reveal whether any mineral titles have been registered with a separate title number. If so, we will carry out the necessary due diligence to establish the extent of the owner’s rights as far as possible. However, this search will not confirm that there is no separate title so unless the Land Register states that mines and minerals are definitely included in the main title (which is rare) then you cannot be certain that no such rights exist, although our local authority search will reveal any existing planning permissions for minerals extraction.
One option is to employ a researcher to look into the origins of the mineral rights. For example, unlike rights arising from other sources, rights belonging to a lord of the manor do not prevent the construction of roads, services or buildings, whilst details contained in lost title deeds may reveal that the minerals owner has no right of access to the surface land. However, this type of enquiry can be costly and still ultimately prove inconclusive. Apart from anything else, a developer still has to reassure plot buyers that their gardens will not be dug up in the future.
What can you do in these circumstances?
Is all hope of development lost if mines and minerals are separately owned? The answer is no. As with many defects in title, the most common solution is to take out indemnity insurance, subject to obtaining acceptable quotes and checking that you can meet any assumptions and conditions imposed by the insurer. It is imperative that any policy covers not only damage caused by the minerals owner but also any potential damage to the mines and minerals that you may inadvertently cause or authorise.
The viability of a development will be in grave jeopardy if the minerals owner were to obtain an injunction to stop work so having insurance will provide a backstop against which to negotiate a solution which will hopefully allow the development to continue and subsequent plots to be sold.
If you want to apply for indemnity insurance, it is essential that you do not contact the minerals owner, as this will preclude you from being able to obtain insurance.
This is a complex area of law so please contact a member of the Commercial Property team if you require any further information or assistance with mines and minerals rights.