The basic rule of property ownership is that the owner of land owns up to the heavens and down to the centre of the earth. Following this common law presumption, mines and minerals are presumed to be owned by the surface landowner, unless it is shown that they have been severed and therefore in separate ownership.
As mines and minerals can be a valuable commodity, it is not uncommon for them to be severed from ownership of the surface. In certain areas of the country, particularly the north, separate ownership of mines and minerals is frequently encountered. Severance can be effected in different ways, including by express transfer, historic enfranchisement procedures, Crown grant and by statute.
Establishing title
The Land Registry guarantee that the register is a conclusive record of land ownership does not extend to mines and minerals under the property, unless it is specifically noted in the register that mines and minerals are included. That note is infrequently encountered, and without it, no compensation is payable to the owner of the surface land if a third party claims ownership of those mines and minerals or establishes a right to remove them.
That makes it even more important to take steps when investigating title to land, particularly land intended for development, to investigate the potential for mines and minerals to be separately owned. Determining whether they are, however, is not straightforward. Although some titles include a note that the mines and minerals are excepted, many titles remain silent on the extent of ownership.
There is no compulsory requirement to register freehold title to mines and minerals, except where there is a registrable disposition (for example, a transfer of the mines and minerals). This means that, in many cases, there will be no separate registered title to the mines and minerals and a property solicitor’s usual search of the Land Registry’s index map of property ownership will therefore not reveal a separate registered title.
Options for developers
So why is it important to investigate whether mines and minerals are separately owned? Separate ownership poses potential risk to developers who wish to develop land unencumbered by the subterranean interest. The key risk is that the developer trespasses into the mines and minerals through construction of foundations, resulting in disputes and potential legal action.
The risk can be mitigated by assessing the depth at which the mines and minerals are located. This is a simple process where the depth of the mines and minerals is expressed in the title deeds, but frequently such detail is absent, and intrusive (and expensive) exploratory works may not clarify the position with sufficient certainty.
Developers, therefore, often find that a deal to acquire the subterranean interest is the quickest and most certain solution.
With increased frequency, the owner of the mines and minerals may offer to grant a developer an easement to develop into the mines and minerals as an alternative to selling its title to them outright.
This approach should be considered with caution and may be unsatisfactory for developers (particularly developers of residential housing) for several reasons. These include the following:
- It is unclear whether an easement to build will be satisfactory to lenders, and in particular whether it satisfies the requirements that title be “good and marketable” for the purposes of the Council of Mortgage Lenders Handbook, without extensive qualification. This may be raised by future plot purchasers and indemnity insurance may also be required as a condition of plot sales. This could lead to delays with development/onward sales, and, at worst, the frustration of future sales altogether.
- It is uncertain whether councils, water, and other utility companies will insist on the mines and minerals owner being party to statutory agreements both for the purposes of authorising the works and their subsequent adoption. Certainly that would be logical in relation to any subterranean works, given that the relevant authority would ordinarily insist on every relevant freeholder being party to the agreement. A similar concern applies to easements that services operators – telecoms, electricity, gas – might require to be granted as part of any development.
- The terms of the easement would need to be very carefully drafted to ensure that it is sufficiently wide to permit all development envisaged. What happens if development proposals change over time? Is the easement still sufficient? A particular consideration here is what reservations the mines and minerals holder retains and what effect they could have on the adequacy of the easement terms. For example, is the mines and minerals owner permitted to undertake mining activities in the land benefitting from the easement? While planning permission would be required for any mining activities, an outright transfer of the mines and minerals would avoid this risk altogether.
- The nature of an easement is capable of changing over time, either through modification or outright discharge, if various requirements are met. While this may be low risk (and the developer long gone by the time this could be relevant) it is not possible to state definitively that an easement will endure for all time.
In order to avoid these potential problems, developers should press for title to the mines and minerals to be sold to them, either completely, or to a certain depth that will comfortably accommodate current development proposals together with sufficient leeway for future alternative plans.
Where an easement is insisted on by a mines and minerals owner, developers need to consider what interest the mines and minerals owner is expecting to retain that they would otherwise lose through an outright transfer, and the negative impact that any retained interest could have on any future development.
David Goy is a legal director in the real estate division at Shoosmiths LLP
