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One of the key, if rarely considered, questions for any developer after purchasing a site, is exactly what it is the Seller owns. Typically, this will involve deducing the precise location of boundaries, and confirming whether the ownership of specific parts of the land is or has ever been disputed.
What also has to be considered however, is the land beneath the developer’s feet and the potential ownership of any mines or minerals under the site.
This is an issue, because some sites have a reservation or ‘exception’ in place in respect of mines and minerals. , What this means is that any mines or minerals located beneath the surface of the site effectively remain the property of a third party.
The title of the property will not necessarily contain a reference to who owns the mines and minerals, but such a reservation is usually noted on the title register. A separate freehold title may also exist in certain circumstances.
Although mines and minerals are presumed to be included in the title register of land, this should not be taken for granted unless they are specifically mentioned.
It is important to note that the ownership of the rights to mines and minerals does not automatically mean that the owner in question has the right to break the surface of the land to access the minerals or construct a mine; such rights of working will need to be specifically reserved (this is usually outlined in the title register if so).
In the absence of the right to working on the surface, then the right to extract minerals from beneath the surface of the site will be restricted to work taking place under the ground.
The Risks of Reservations
If the site you’re developing does feature a reservation or exception in respect of mines and minerals, then there’s a chance that the simple act of developing and building any property could result in you being guilty of trespass.
This is because the foundations of any development could interfere with minerals below the surface over which you do not have any rights.
Funding a development on land where a reservation applies could also be difficult, because lenders might fear the owner of the minerals taking action if they feel you have trespassed on their property.
The owners of such rights to the mines and minerals may be able to:
(a) Claim against you, once you commence/complete development, for breach of their rights to the mines and minerals, limited to those mines and minerals that cannot be recovered by reason of the development;
(b) Seek damages and compensation for the trespass by any foundations;
(c) Obtain an injunction to stop the proposed development, either indefinitely or pending the resolution of the claim against you.
If a claim was brought, there could be a potentially protracted litigation motivated by opposition to a development which could be costly and time consuming. Furthermore, if there is strong opposition to the development from people with the financial and other wherewithal to put up a serious fight, using a right to mines and minerals will be another route to preventing the development from proceeding. The other risk is that although the owner of the rights may not be entitled to break the surface of your property to access the minerals and construct a mine, they could attempt to do so from adjoining land if they own that land, or gain permission from the owner.
This would put any properties on your land at risk of subsidence, although any damage caused would be likely to result in you being able to make a claim for compensation.
How to proceed
The first step to take when purchasing land is to conduct a Search of the Index Map at the Land Registry (known as a SIM search), in order to establish whether mines and minerals have been registered separately.
It is also prudent to ask the seller whether the owner of a reservation has ever made use of or acted upon the rights they have. Indemnity insurance against having to pay damages for trespass or to deal with any other enforcement of the minerals and mines reservations is also a worthwhile consideration.
The more research you carry out before taking out this insurance the better, since the precise wording of any reservation, such as a mention of the assumed value of the minerals or the precise depth of digging which constitutes trespassing, will impact on the cost and scope of your insurance.
You may be tempted to contact the owner of the rights and attempt to purchase them together with the land, but this carries a big risk. If the owner refuses to sell the rights then the very fact that you contacted them will usually result in an insurer refusing to offer an indemnity policy.
In all cases it’s clear that the more information you can gather on the land you wish to develop, the better your position will be both now and in the future.
If you are considering developing a new site and would like to discuss minerals and mines reservations in more detail, please speak to Jonathan Rowley, an experienced Associate Solicitor in the Commercial Property team here at Ansons on 01543 466660 or email firstname.lastname@example.org