HispanicBusiness

It was when he was finalizing the purchase of his new home in Durham, N.C., last month that Danny Conyers first heard the words "mineral rights" brought up.

Conyers said he was told at the closing of the purchase of his home in the Swann's Mill development of northern Durham that D.R. Horton Inc., a Texas-based national home building company, would be keeping the mineral rights connected to the property.

The company was retaining the rights to oil, gas, water, petroleum, natural gas, coal and other materials located in or under the property or that could be produced or extracted from it.

While Conyers said he was OK with it, he wasn't sure others in the same situation would have known what was happening.

"(There was) no explanation of what that is, I just happened to know what they were talking about," Conyers said. "For the most part, it's a foreign language, and like I said, (the buyer is) in closing, which means their focus at that point is closing," he added.

Other properties in Swann's Mill and in other developments have been sold without the mineral rights, according to county land records. D.R. Horton has sold properties in the Ashfield Place, Brightleaf at the Park, Carillon Forest, Keystone Crossing, and Swann's Mill developments while retaining those rights. Officials with the company could not be reached for comment for this story.

The company also has transferred mineral rights to a subsidiary, DRH Energy Inc., in some cases. There are records showing the company giving the Colorado-based subsidiary the right to drill, explore, produce and remove resources 500 feet below the surface of some properties.

When he worked at a small building company, that wasn't something that Nick Tennyson, the former mayor of Durham who is now the executive vice president of the Home Builders Association of Durham, Orange and Chatham Counties, did, he said.

"And I hadn't heard of anybody doing that," Tennyson said.

It's also not something that Carey Ewing, a Durham attorney who works on real estate issues, has seen in about 20 years, she said. She said she had concerns for the re-sale of properties whose mineral rights have been transferred or retained if horizontal drilling and hydraulic fracturing, a natural gas extraction technique known as "fracking," is legalized in the state.

"My concern is, if they come on and do any fracking next to, or on, these people's property, what's going to happen to the marketability?" she said. "Will they be able to sell those properties? What's going to happen to property values?"

Ted Feitshans, an extension associate professor at N.C. State University, said he wasn't aware that "anybody worried" about property mineral rights in the state until the recent interest in natural gas extraction.

In a law passed last year, state legislators required the N.C. Department of Environment and Natural Resources to look into directional and horizontal drilling and hydraulic fracturing in a study of the state's oil and gas resources.

The department has released a draft of that report that said hydraulic fracturing could be done safely in the state if the right regulations are in place. The final report is due to state legislators May 1.

Feitshans said he has given presentations to landowners about oil and gas rights in Lee County, where he said land has already been leased for oil and gas production. He said he was asked to make those presentations through the N.C. Cooperative Extension Service, the external education arm of N.C. State and N.C. A&T State University. He said newspaper advertisements had shown up soliciting leases in that area.

Brandon King, an associate with the N.C. Cooperative Extension Service, said he's been tracking recorded mineral rights leases in Lee County, and he believes there hasn't been "some major boom and wave of leasing activity," although some older leases have now expired.

"What I found (was) there was just as much, or more, recorded as there were 10 years ago, as there is now, in Lee County," he said.

Feitshans said the practice in the industry is generally to lease a property's mineral rights, and there is legislation in the state imposing conditions on the leasing of those rights, he said, such as requiring notice of entry to a surface property owner.

Feitshans added that there are "quite a few things" that property owners need to consider when leasing their mineral rights, including possible impacts on a property owner's ability to get new financing, or on an existing mortgage.

"There's a lot of potential for unintended consequences for landowners who lease their property," he said. "They need to thoroughly evaluate their options before they sign anything."

Noelle Talley, a spokeswoman for the N.C. Department of Justice, said in an email that the Attorney General's office is aware of actions D.R. Horton has taken related to mineral rights. She added that the office has "not received complaints directly, but (the N.C. Department of Environment and Natural Resources) has shared public comments related to consumer protection issues."