by Lisa Sorg
The N.C. Attorney General's office sent a letter yesterday to lawyers for D.R. Horton about how the homebuilder notified prospective buyers that their properties would not include the mineral rights.
As the Indy reported on April 4, D.R. Horton, one of the nation's largest homebuilders, assigned the mineral rights of at least 425 properties in the Triangle to its energy subsidiary, DRH Energy.
By stripping the properties of the mineral rights, homeowners cannot control the mining, drilling or fracking activities beneath their properties. In addition, many banks and financial lenders, including the State Employees' Credit Union, Freddie Mac and Fannie Mae, will not back mortgages on properties that don't have mineral rights or on which the owners have signed leasing agreements to drilling companies.
The letter to D.R. Horton, written by Assistant Attorney General of the Consumer Protection Division, Lynne Weaver, states that it is "unclear when disclosures are first made to home buyers" about the mineral rights.
Weaver goes on to ask that D.R. Horton provide "a description of all oral and written disclosures" about the rights, and copies of any documents containing the disclosure.
The Indy has a received Horton sales contract from a local attorney; we are reviewing it. Check back for details.
Update: 11:34 a.m.
The Indy has obtained a copy of a sales contract for a spec home in Brightleaf at the Park. (The redactions came from the source, not the Indy.)
In the first paragraph, it states that the seller is conveying the property except for the mineral rights. However, Carey Ewing, a Durham real estate attorney, told the Indy that "most homebuyers don't read the sales contract" and that D.R. Horton sales agents could be intent on "getting a signature on the bottom line."
In fact, a homebuyer interviewed by the Indy last week said there had been no discussion of the mineral rights during the sales process; another homebuyer told the Indy she learned only at closing. Only one person was knowledgeable about mineral rights because a family member in another state had leased some property for energy drilling.
Ewing also said that if a homebuyer does not hire an attorney, he or she often uses the seller's attorney—such as a lawyer representing D.R. Horton—because doing so can save on closing costs. "What is the obligation of the seller's attorney to the buyer?" Ewing asked.