Exclusion of mines and minerals: the considerations

Reservations of mines and minerals have come into sharp focus over the last year, and pose a new challenge for developers.

Minerals owners such as the Church Commissioners and the Crown have made a large number of applications around the country to register their titles to mines and minerals arising from ancient manorial rights. These have given rise to new entries reserving minerals and need careful consideration.

The background to these applications is that after 12 October 2013 a purchaser of registered land will not be subject manorial rights unless they are protected on the title. Sometimes a notice of the rights will be entered on the title but where a minerals owner can show good evidence of title to the minerals, it can apply to register the minerals with a separate title - and we have come across a number of these applications. This type of application can be made at any time.

The risk with a reservation of mines and minerals is that the minerals owner may allege trespass if the foundations interfere with the minerals. Plot purchasers may be concerned about the risk of the minerals being worked in the future and possible subsidence, even if the reservation makes it clear that the minerals owner cannot enter the land to extract or cause any damage to the surface land.

If a title contains a reservation of minerals, it is important to carry out a search of the index map to find out if the minerals have been registered under a separate title. This separate title will provide details of the minerals owner.

A developer may be tempted to approach the minerals owner to find out if it is prepared to sell its title to the minerals under the site but there is a serious danger in taking that step. If the owner is not prepared to sell - or sell at the price acceptable to the developer - the developer would not be able to obtain mining indemnity insurance. This is because insurers do not permit contact with the owner.

It is important to obtain the full detail of the minerals reservation from the Land Registry as the precise wording may help to reduce the cost of the insurance. For example, the reservation may stipulate that it relates to minerals at a particular depth and sometimes the depth is as low as 200 feet.

In another example, we agreed with the Land Registry that they would add the wording from the 1904 deed that the mineral owner was not permitted to enter the surface of the land to work the minerals or cause any subsidence to the land or of the buildings on it.

The combination of depth of minerals and no ability to enter the surface means there should not be a risk of trespass from putting in foundations. In spite of this, we agreed an indemnity policy that covers both trespass and subsidence as it should give greater comfort to plot purchasers - although the premium is lower due to the wording of the reservation. In this example, we obtained the policy even though the minerals owner was known, as it had registered the minerals with a separate title from the surface owner.

We have advised a number of clients facing applications for registration of mines and minerals. If you would like further information, please contact Gavin Le Chat or Craig Downhill.