So I got these letters asking to buy mineral rights from me. What mineral rights? Scam or real?
November 30, 2009 5:55 PM   Subscribe

So I got these letters offering to buy my mineral rights - for land in a state I've never been to, that I had no idea I owned and in fact can't imagine that I do own. Scam or preposterously possible?

I got two letters today: one for me and one for my elderly aunt, using a c/o me address, which in itself sets off a few alarm bells, since she doesn't actually live with me anymore and we've only used my address for her in a couple of places: the hospital, the drugstore, etc. The letters are from a company called Enerlex, Inc, in Broken Arrow, OK. Googling has turned up their website and pages of businesslike results without anything that looks overtly underhanded. The letters are almost identical but not quite. Both of them had a document called a mineral deed enclosed and a postage paid return envelope. Both of them also had bank drafts attached.

Here's the text of my letter.

Enerlex, Inc., is currently purchasing mineral interests in Latimer County, Oklahoma. We would like to extend and offer to purchase the mineral interest that we believe you own in the above captioned county for $1,050. Two bank drafts totaling that amount are attached below.

If this offer is acceptable, please find enclosed a Mineral Deed, which needs to be signed, notarized and returned in the self-addressed stamped envelope. After you have returned the properly executed and notarized Mineral Deed to our office, please place the endorsed drafts in your bank for collection. Once the Mineral Deed has been received by our office, we will begin our title examination. Please note that the draft for $150.00 is yours regardless to cover the expenses and notary fees.

If you prefer, you may hold the drafts, thereby forgoing a collection fee at your bank. In that case, we will send a check for $150.00 immediately and a check for $900.00 upon completion of the title examination.

We would appreciate a reply within fifteen days of your receipt of this letter. After 15 days Enerlex reserves the right to rescind this offer. If you have any questions, please contact me at (800 number) or by my e-mail address listed below.

My aunt's letter is exactly the same except a) the amount is substantially more, although not, like, millions and b) my letter was signed in blue and hers was signed in black. Both of the mineral deeds are exactly the same.

I would just toss these, assuming they are some strange and convoluted Oklahoma version of a Nigerian 419 except for the fact that my mother died a year and a half ago. The estate was pretty simple and there was no mention of land or mineral rights or anything like that but I did inherit part of her IRA and some of her portfolio and, after removing the bulk of my inheritance to buy a house, I've left the rest of it alone and remained sadly ignorant of all things concerning money and finance (that is a whole other AskMe question for another time.) Is it possible, therefore, that these mineral rights do in fact exist and are part of my inherited IRA or invested (with Schwab, FWIW) money? I thought that was all less tangible stuff like stocks and bonds and, you know, that kind of thing. Is it possible that I inherited them without knowing about it? And where would my aunt have gotten these things? And, how did they find me and, more to the point, how did they find her? Any information would be great.
posted by mygothlaundry to Grab Bag (11 answers total) 3 users marked this as a favorite
Years ago, my ex-wife and I received a similar letter.....and it turned out to be legit. She inherited the rights from an aunt via her deceased father. The company leased our rights for a few years. We were able to negotiate a higher lease rate than what they initially offered. Be cautious, however.
posted by rtodd at 6:02 PM on November 30, 2009

What does the deed say? Although I've never seen a "mineral deed," every other deed I've seen has specified the exact location of the property that is the subject of the transfer. I would start there - see where this property is, who in your family might have owned it, etc. If you look at the county website, you can probably find property tax info and possible even basic chain of title information for free right on their website. I'd start there.
posted by MrZero at 6:14 PM on November 30, 2009

Sounds like these are deeds, not leases, so any rights you might have would be gone once you sold.

Can you call the county registry of deeds where the property is located and see if you know anyone in the chain of title?
posted by palliser at 6:16 PM on November 30, 2009

If I were you, I'd contact a land man in or around Latimer County and find out if your interest there could produce income. The offers to buy your rights are sometimes a fraction of what royalty interest you'd be making.
posted by Addlepated at 6:26 PM on November 30, 2009

You might run this by the attorney who handled your mother's estate, even though you don't think there was any land or mineral rights involved in her estate. Since your aunt's potential gain is larger than yours, maybe your aunt would agree to pay any cost for having it checked out.
posted by Snerd at 6:37 PM on November 30, 2009

This isn't necessarily underhanded or weird. It sounds like a title insurance thing, making sure the rights are bought out, even if they don't actually exist. My grandma got something similar for a few grand on a property that she didn't know anything about that somebody was buying. It's safer for them to find anybody who may have a claim, and buy it out, rather than losing the property in a lawsuit a few years down the line.

I bet it's legit, and that they're looking for oil. I would run it by a lawyer to be sure everything looks ok, and follow basic scam avoidance behavior (let the check clear for 3 months to avoid returns, don't send money, etc).
posted by cschneid at 7:30 PM on November 30, 2009

Best answer: These are very likely to be legitimate. I own a bunch of random mineral rights in the state of Texas and get letters like this out of the blue from time to time. They find you via the property records. It's probably a low-ball offer from a consolidator who has a better idea what the property might be worth than you do.

Your mineral rights, if they exist, are essentially a piece of real estate. You don't own surface rights or land, but you own the minerals underneath it (or more commonly, a tiny fraction of the minerals under a big piece of land). It's more like property than an IRA or mutual fund account. The ownership record will be filed in the county deed office. There will also be associated property taxes. And if you're lucky your aunt or your mother's estate may have a record of ownership or property tax payments. If the land is already producing oil or gas, then whomever is doing the production owes you royalties (typically 1/6 the proceeds). Your family may own other mineral rights too, more than the offer letter mentioned.

Now's the time to ask your aunt or other relatives if they know anything about the properties, or remember paying property taxes in Oklahoma. It may be worth looking up the details of your grandparent's estates, in all likelihood your grandfather owned some mineral rights that got split between his daughters.

Inventorying and identifying these properties is a lot of work. Officially you're supposed to go to the county office and research deeds. Property tax records are one shortcut, as is a friendly property tax clerk. Estate filings are another shortcut. Worst case you could hire a landman to research your ownership for you, but that's not worth the expense if the ownership amounts to $1000 or so. Another possible resource is the National Association of Royalty Owners.

Try to find out the family story behind your mineral rights, it's probably interesting. I learned all about a great-grandfather who took slivers of mineral rights in exchange for some country lawyering.
posted by Nelson at 7:55 PM on November 30, 2009 [1 favorite]

One thing I forgot in the "possible scam" category: it's common for the contract for purchase to not include the real price. The letters I've gotten have often been of the form "sign this contract and we buy your rights for $10, then look in the desk drawer where we sign the contract and you'll find a check for $3500". It sounds shady, but it's common practice to hide the true purchase price from the property records. I've never done a deal on these terms, but don't take those terms as a sign the buyer is a crook. (Or at least, no more crooked than anyone else.)
posted by Nelson at 7:58 PM on November 30, 2009 [1 favorite]

It's probably a low-ball offer from a consolidator who has a better idea what the property might be worth than you do.

Keep this in mind if you intend to pursue this further. A family member who has similar mineral rights went to a third-party consultant who (for a fee) produced a detailed report indicating just how poor an offer it was. If the consultants estimates are anywhere near accurate the initial offer was many orders of magnitude less than what the rights were worth.
posted by Adam_S at 8:14 PM on November 30, 2009

Best answer: I work with county recorder offices on a daily basis; oil has been big in North Dakota, and companies buy a county's digital records lock-stock-and-barrel for the purpose of identifying land whose mineral rights remain in the hands of individuals and are unencumbered by liens. It is entirely possible that this is legit -- Enerlex seems to do this as their primary business -- but even if it turns out you do own or control the land in question, do not sign the rights away willy-nilly. The letter should only tell you that you might control an asset, and you need to figure out first what that means. Find an abstractor certified for the county the property is in, or contact the local county recorder / register of deeds directly. It might cost some money, but it sounds like you've got an opportunity for profits, so pay for good help when you can. Also, I think somebody above said, a deed means the property is gone; a lease means you continue to own the property and receive rents for their rights to pump or mine out what's under the ground. More first hand knowledge: people I know who have owned and leased their mineral rights have sat on oil fields for the past two decades, getting pennies a year. Recently, they've been getting thousands a year -- that's what Enerlex is hoping for: you think you're better off with $1,000 in your pocket than $10 quarterly, when mineral rights are poised to be highly profitable soon.
posted by AzraelBrown at 7:19 AM on December 1, 2009 [1 favorite]

Oh, one last thing in re-reading -- as it is possible for Enerlex to buy the mineral rights regardless of who owns the land above, it is possible that you control the mineral rights while the property above belongs to somebody else, and that may be why you didn't find any deeds in her estate; she may have sold the land and filed a deed which explicitly excluded mineral rights, thus keeping those rights in her posession without leaving any specific paperwork behind. That's the kind of thing I'd want to exploit if I were a company like Enerlex: finding exclusions in deeds that nobody bothered to follow up on. Keep that in mind when you talk to an abstract office or the county recorder -- you might pay them a hundred bucks to tell you that the property is owned by somebody else, but they never checked who owns the mineral rights. Mineral rights and property ownership can be, and often are, completely separate issues of property ownership, and require different research methods to track down.
posted by AzraelBrown at 12:09 PM on December 1, 2009

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