by Lisa Sorg
We received an email today from D.R. Horton, one of the nation's largest homebuilders, explaining its disclosure policy about mineral rights. NC_Retention_of_Mineral_Rights_Fact_Sheet_1_.pdf
"D.R. Horton requires that its mineral rights reservation be disclosed to prospective homebuyers multiple times throughout their purchase experience," the document reads in part. "D.R. Horton also currently requires closing attorneys paid by D.R. Horton to conduct closings to provide a separate written disclosure for the buyers, discuss the disclosure with them and have the buyer sign the disclosure prior to closing."
As the Indy reported April 4, D.R. Horton has granted the mineral rights to at least 425 properties in the Triangle to its energy subsidiary, DRH Energy. That means DRH Energy can explore, drill, or mine for natural gas, oil and other hydrocarbons beneath those properties—starting at 501 feet—and would collect any revenue from the sale of those sources. If North Carolina legalizes fracking, which seems to be on the fast track after a bill
However, that's not the only downside for property owners or prospective homebuyers. Many financial lenders, including the State Employees' Credit Union, will not back mortgages on properties without the mineral rights included.
Although D.R. says it requires full disclosure of its mineral rights policy, that doesn't mean those disclosure are actually being made. One homebuyer interviewed by the Indy said she had never been told about the mineral rights; another said she was told only at closing. Other media have reported similar stories of homebuyers who felt they had not been fully informed of the ramifications of the severance of their mineral rights.
The N.C. Attorney General's office had asked D.R. Horton to explain its policy; it is expected Horton's comments and further analysis will be part of a fracking report due to the Legislature in early May. D.R. Horton wrote in today's document that it is working with the AG's office and the N.C. Real Estate Commission regarding concerns raised about this issue. "We are cooperatively reviewing our disclosures with them," the statement reads. "D.R. Horton intends to require an additional disclosure in a separate written document to be signed by our buyers prior to a contract."
And apparently D.R. Horton knows some legal shift is on the horizon:
"We expect that the adoption of a comprehensive regulatory framework by N.C. officials will result in lenders having fewer concerns or revising the standards for their loans. Regardless, D.R. Horton will continue to accommodate mortgage lenders' concerns in connection with their loans."
On Wednesday, a state senate committee chaired by Bob Rucho proposed lifting North Carolina's ban on fracking. There are several troubling provisions in the bill, including the invalidation of local ordinances prohibiting fracking. Town and city councils in Carrboro, Chapel Hill, Creedmoor, Durham and Pittsboro have passed resolutions that in some form oppose fracking.