Fee interest definition
/What is a Fee Interest?
A fee interest is the legal possession of both the surface and mineral rights for a property. Someone who holds a fee interest has all legal rights to a property, and so can retain it, sell it, or lease it. The owner of a fee interest may choose to sell the surface rights, but retain the mineral rights – or vice versa. An oil and gas firm does not usually acquire a fee interest. Instead, it seeks leasing arrangements with the owner of the mineral rights associated with a property that allow it to drill wells and produce oil and gas. These arrangements typically require the company to bear the costs of drilling and production, while the owner of the fee interest receives either a fixed payment or a share of the resulting production.
Example of a Fee Interest
Jane owns a 100-acre ranch in Texas, which includes both surface rights (for farming or ranching) and mineral rights (to extract oil or gas beneath the land). She has the legal authority to lease the mineral rights to an oil company for exploration or development, while continuing to use the surface for agricultural purposes. Alternatively, she can sell either the surface rights or mineral rights separately if she chooses. In this scenario, Jane's fee interest grants her comprehensive control over the property, including both the visible and subsurface aspects, as long as she retains both sets of rights.
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FAQs
Is Fee Interest Ownership Perpetual?
Fee interest ownership is generally perpetual, meaning it lasts indefinitely unless the owner chooses to sell or transfer it. Unlike leasehold interests, it does not expire after a set term. This permanence makes fee interest the most complete and enduring form of property ownership.