Maryland AG Issues Warning On Mineral Rights Lease Conflicts With Mortgages

Maryland Attorney General Douglas F. Gansler has warned landowners that signing a mineral rights lease could conflict with some requirements of their federally approved home or farm mortgage. Gansler advised landowners to always check with their bank or lender before entering a mineral rights lease.

According to Gansler, landowners in Western Maryland, whose properties sit above the gas-rich Marcellus Shale formation, may be particularly vulnerable. A New York Times article published last week drew attention to conflicts that arise between mortgages and mineral rights leases. In some instances, a mineral rights lease can cloud property title and breach the terms of federally backed mortgages.

"Marylanders need to protect themselves from unintentionally putting their homes and farms at risk," Gansler said in a statement. "If a mineral rights lease is on the table, take it to your bank or mortgage lender first and have them sign off on it."

His warning to landowners comes as Maryland works to determine if permitting natural-gas drill sites that use the extraction process known as hydrofracturing or "fracking" can be done without adverse impacts to public health, safety, the environment and natural resources. Gansler's office has created and distributed two landowner educational publications titled, "Leasing Your Land for Natural Gas Drilling – Tips for the Landowner" and "Dormant Minerals Interest Act – Questions and Answers."

A third publication addressing mineral-rights leases and mortgage issues is in development. That publication will address the risky and complex relationship between mineral rights leases and federally regulated mortgages.

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