State Nonferrous Metallic Mineral Leasing
Real Estate Terminology

Defining the mineral estate, surface estate, and severed estate

The state may lease its mineral interests (mineral estate) for mineral exploration and development according to Minnesota Statutes 93.25 and Minnesota Rules 61.25.0100-.0700.
Minnesota Statutes, section 93.25 »
Minnesota Rules, parts 6125.0100-0.0700 »

Mineral estate

A mineral interest is an estate in real property that is referred to as the mineral estate. The mineral estate includes, among others, many different metal ores, coal, oil, natural gas, gemstones, silica sand, and dimension stone. The mineral estate consists of the following:

  • the right to use as much of the surface as is reasonably necessary to access the minerals,
  • the right to execute any conveyances of mineral rights,
  • the right to receive bonus consideration,
  • the right to receive rentals, and,
  • the right to receive royalty.

The mineral estate owner has the legal right to convey any or all of these five mineral rights.

Surface estate

Like a mineral interest, the surface interest is an estate in real property. Fee simple ownership of the surface estate means that the owner enjoys all the rights that one can hold in the surface. However, the term surface estate can mean a number of different rights in the surface including the right to sell, lease, mortgage, donate, subdivide, or grant easements over the surface and the right to a stream of benefits from agricultural production and natural resource development of the surface. The rights can be granted for a period of years, a day, year, lifetime, or be inheritable.

Severed estate

A severed estate occurs when a property owner severs the mineral estate from the surface estate. Doing so, thereby creates two separate ownership interests that can be conveyed separately from one another (e.g. Owner "A" can sever the mineral estate, convey the surface estate to Owner "B" and later convey the mineral estate to Owner "C"). In Minnesota, severed mineral estate owners are required to register their mineral estate by recording a Statement of Severed Mineral Interest according to Minnesota Statutes, section 93.52.
Minnesota Statutes, section 93.52 »

State law requires that the State retain the mineral rights whenever it conveys real property. Thus, a severed mineral estate is created when the State conveys real property. After a conveyance by the State a private party owns the surface estate and the State owns the mineral estate according to Minnesota Statutes, sections 16B.286, 93.01-93.04, 94.14. »

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