If you are working on a development project, there is a good chance you will encounter a minerals reservation at some point. It is one of those issues that can catch developers off guard, but with the right approach, it need not derail your plans. We have prepared a practical guide to understanding what minerals titles mean for your project and how you can deal with them to ensure that the project can progress.
Where You Will First Spot Them
The first place a minerals title typically surfaces is in the title sheet for the land you are looking at. You might see a brief note such as "the minerals are excepted" or a more detailed reference to ancillary working powers or reservation of minerals below a specific depth. In Scotland, the title sheet may direct you to the underlying deeds for the full details regarding how the minerals are held.
What all of these entries have in common is that part of the land beneath the surface is owned by someone else. In effect, the minerals owner holds a separate property interest directly beneath the surface of your land.
Watch Out for New Minerals Titles
A minerals title can appear at any time. If a mineral owner applies to register their interest, the Land Register of Scotland will not notify the surface owner. This means you could complete your due diligence early in a project and miss a minerals title that is registered later, so further title checks should be carried out before any land agreements for the project are completed.
A legal report search should be obtained, as this will reveal any application for registration of a minerals title once it is received by the Land Register of Scotland. If a transaction has been running for a while, it is worth repeating that search shortly before completion of any land agreements for the project, particularly if the site is located in an area where mineral interests are more common, for example in the Scottish Highlands or South Lanarkshire.
Key Conditions to Check
When you find a minerals reservation in a title, there are several points you need to take into consideration, as they will directly affect your project:
- Does the minerals holder have to pay compensation for damage caused by working the minerals? If not, your project could (subject to planning permission and any necessary environmental permits being obtained to work the minerals) be disrupted without any financial remedy.
- Can the minerals holder enter the surface? This is a significant concern if you are planning development work.
- Is the reservation limited to underground mining, or does it extend to surface working as well?
- Does the surface owner need the minerals owner's consent before building or developing? If so, identifying and contacting that owner becomes an early priority.
- Does the minerals holder have the right to dig or sink pits? This raises ground stability concerns that your engineering team will need to factor in.
What You Can Do About It
Your next steps will depend on the circumstances and the nature of your proposed development, but we have set out below some practical considerations for developers:
Information Gathering
A developer should seek to gather as much information during the early stages of a project regarding the potential presence and ownership of minerals beneath the development site. This should include obtaining a coal mining report and examining the title sheet and historic deeds if necessary. Additionally, they should commission a site survey of the geology of the site in order to confirm the location, value and depth of any minerals. Taking these steps at an early stage will assist the developer in identifying potential risks and in planning the development accordingly.
Negotiating a Deal
Where there is an identifiable minerals owner, particularly one with a registered title or a protected interest, it will be necessary to come to an agreement with them in relation to the minerals. Even if the minerals owner is unlikely to work the minerals themselves — opening new workings requires both planning permission and an environmental permit, which may be difficult to obtain — building foundations, cables, or other infrastructure into excepted minerals constitutes encroachment in Scotland. As a result, you will need to agree terms with the minerals owner, typically through a minerals agreement or minerals lease.
In these contracts, developers commonly pay royalties for minerals extracted and used, either as a percentage of revenue or, more often, at a fixed rate per tonne.
Title Indemnity Insurance
The alternative is title indemnity insurance which is often a suitable option where the minerals owner cannot easily be identified, where the description of the minerals and working rights is unclear, or where the minerals are very unlikely to be worked in future. However, it is important to note that a condition of such an insurance policy would be that the developer has not made any approach to the minerals owner, and therefore it cannot be used as a fallback if you fail to reach a deal with the minerals owner.
Keep your Pre-registration Deeds
Even after registration, older title deeds can be a valuable source of information, particularly when the Land Register of Scotland entry is incomplete. They may contain details you need to need to trace the current minerals owner.
Looking Ahead
It is worth bearing in mind that minerals are not solely a historical issue. They underpin most of the built environment and modern infrastructure, and they are increasingly important for new technology. Lithium, for example, is being prospected for in England as the UK seeks to establish a domestic supply of critical minerals for green technologies. Both the UK and Scottish Governments recognise the importance of safeguarding minerals reserves for future supply, so this is an area where the regulatory landscape may well evolve.
To conclude, minerals titles are not something to panic about, but they are something to take seriously from the outset. Early investigation, the right searches, and a clear understanding of the conditions attached to any reservation will put you in the best position to keep your project on track.
