Your Frickin’ Frackin’ HOA Rights!

guest blog by Deborah Goonan

Did you know that when you purchase a home — either new construction or resale — you might not own the rights to mineral resources beneath that home? If not, then you must take the time to read Reuters 2013 Special Report: US Builders hoard mineral rights under new homes, linked below.(1)

It may seem unbelievable, and might never have crossed your mind, that the builder of your home would write into the deed and sale agreement that mineral rights would not convey to the homeowner. What this means is that if there should be oil, gas, gold, or any other valuable resource lurking in the soil beneath your home, you would have NO rights to compensation for withdrawal of those resources. In fact, whoever holds those mineral rights — be it the developer or an energy company that has acquired those rights from the Developer — has the legal right to drill under your property and take those minerals, whether you like it or not. And because you don’t own these rights, you won’t be making any money on the deal, even though you’ll assume all the risks involved during the drilling or “fracking” process that is sweeping across the country.

And quite often, the developer does not openly disclose that the buyer gives up property rights, including mineral rights. Most buyers find out either at closing or thereafter. The fact that most new construction is part of a homeowners’ association makes it easy for the builders to bundle these mineral rights and then lease or sell them to a third party, often without the homeowners’ knowledge or explicit consent.

Below, you can follow links to two June 2015 reports on fracking: one from the EPA concluding that contamination of water supplies is “isolated,” (2) and another news release from the University of Pittsburgh, citing a study of the correlation between proximity of pregnant women to fracking activity and lower birth weights of their babies (3). But there are literally hundreds of news reports, and dozens of studies have been done on the subject. The oil and gas industry and the EPA tend to downplay the risks, while environmental activists tend to play up exposure to human health risks as a result of air, soil, and groundwater pollution.

For all of these reasons, when homeowners in North Carolina and Florida became aware of developer mineral rights hoarding practice, they demanded action from their Attorneys General. In both states, homebuilder DR Horton agreed to return mineral rights to homeowners in 2013. (4)

In Colorado, developers such as Lennar have incorporated mineral rights companies (5) as subsidiaries of their homebuilding corporation. In Weld County, drilling activity has been going on for several years just outside of Rinn Valley HOA. A 2011 report features Rinn Valley homeowners who have lived through the noise and disturbance of gigantic heavy equipment during the 24/7 drilling process, within 500 feet of their back yard. Now homeowners have to contend with unsightly tanks and round-the-clock trucks that collect gas, oil, and wastewater and haul it away. It’s way more intrusive than most homeowners ever imagined. (6)

Plus, there may be hidden risks. A CBS report on Colorado’s 2013 flooding highlights flood waters wreaking havoc on tanks at drill sites – tanks containing oil and toxic chemicals used in the fracking process. (7) Some of those tanks sat mighty close to Rinn Valley. Could fracking activity, combined with flood damage, have played a role in soil and foundation problems for Rinn Valley homeowners, where Lennar is currently involved in construction defect disputes? Maybe. Maybe not. Hopefully there will be some competent experts working on behalf of homeowners to determine the extent and cause of these defects.

As a home buyer, the best way to protect your interests is to thoroughly research the developer and to hire a competent real estate attorney to represent your interests from the point you sign a sale agreement through closing. Your attorney can examine the deed and provide title insurance, disclosing any irregularities to you before you get to the closing table with the moving van already packed to the gills. Do not allow the developer’s or mortgage lender’s title company to represent you at closing!

References:

1 Reuters Special Report: US Builders hoard mineral rights under new homes

2 EPA study shows Marcellus Shale fracking doesn’t cause widespread water pollution

3 Study cites lower birth weights near fracking – Pitt health study finds correlation

4 DR Horton Returns Homeowners’ Mineral Rights

5 Lennar Colorado Minerals LLC incorporate 2011

6 Gas drilling and fracking occurred adjacent to Rinn Valley Ranch (2011)

7 CBS News report on Colorado flooding and its effects on fracking sites (Video)

 

Please follow & like us :)

About

Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

1 thought on “Your Frickin’ Frackin’ HOA Rights!

  1. Pingback: Your Frickin’ Frackin’ HOA Rights! | Independent American Communities

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.