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F I S C A L I M P A C T R E P O R T

SPONSOR Bandy

ORIGINAL DATE

LAST UPDATED

3/06/07

HB HM 48

SHORT TITLE

INFO TO PUBLIC ON EFFECT OF MINERAL

LEASES

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

House Memorial 48 requests the Superintendent of Insurance and the New Mexico Real Estate

Commission to study the conflicts arising from the existence of both surface and mineral rights,

as well as the disclosure practice of title companies, and adopts measures to inform purchasers of

real estate of the existence of mineral leases and the effect of any such lease.

FISCAL IMPLICATIONS

None identified.

SIGNIFICANT ISSUES

PRC notes that owners and lessees of mineral rights have common law rights to drill or

otherwise gain access to their minerals. Conflicts arise when the owner of the “surface" real

estate is either unaware of these “access" rights of mineral owners/lessees or is unaware of the

existence and third-party ownership of oil, gas and other minerals beneath the land.

House Memorial 48 – Page

2

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

HM 48 is related to HB 925, which would require all title insurance policies issued in New

Mexico to include copies of all recorded oil, gas and mineral leases relating to the insured

property.

In addition, HB 827 and SB 960 would establish rules for surface access and compensation

agreements between surface owners and mineral rights owners.

OTHER SUBSTANTIVE ISSUES

PRC reports that the scope of the searches and examinations performed by title companies prior

to issuing title insurance policies does not usually include a search of mineral rights. Recorded

mineral lease documentation can be extremely voluminous and complex and often involves

searching the records of the State Land Office in Santa Fe, the U.S. Bureau of Land

Management, and county in which the property is located. Parties that want to know if mineral

leases exist on a property normally hire oil and gas “Landmen" and attorneys to perform this

search.

BE/nt