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Jesse’s Story of the Day

Home builder holds mineral rights from hundreds of Washington consumers

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When you are buying property, it’s easy to think you own all of it.  But for D.R. Horton, one of the nation’s biggest home builders, the company owns not just the land, but also the water and mineral rights under it.

The company will own those rights after customers buy their home forever.

Thurston County couple Jonathan Russell and Darius Massoudi learned that the hard way.

Their home builder D.R. Horton, also has a company called DRH Energy, and it owns the mineral and water rights under their home and hundreds of others across the company’s 42 communities in Washington.

“I immediately got extremely upset because I don’t think that they ever directly disclosed that fact to me,” Massoudi said.

“It can pass from hand to hand and if you ever wanted it back, how much work would it be to track down who it went to?” Russell said.

A look at available county records in Western Washington shows more than 3,000 properties in King, Pierce, Snohomish, Thurston and Clark counties have a DRH Energy mineral deed attached.

Real estate attorney Christopher Thayer said the water rights are especially problematic.

“Giving up your water rights for water underneath your home may not seem like anything particularly significant when you’re buying the property,” Thayer explained.  “But in the future, as we have more and more people, and there’s still the same amount of water, water is going to become a more and more precious commodity.”

All DRH Energy needs to do is get a state permit, and then it can start exploring for water.  If you try to sue them in court to stop, you’ll find out you signed that right away, too.

“This contract contains an arbitration clause, so you don’t get to go to court,” Thayer explained.  “You have to go before a private arbitrator. You are waiving the right to a jury trial.”

State Representative Laurie Dolan said she’s not happy with the situation, and said she wants to write a bill on this subject.

“The disclosure part needs to be big, bold.” Dolan said.  “People need to know what they are giving away when they sign that document.”

In the meantime, Darius and Jonathan decided to fight for their rights.  Darius wrote Representative Dolan and he demanded his rights back from one of the Texas-based home builder’s lawyers.

“She told me that this is a common practice,” Massoudi said.  “This is what developers do.”

That is the case for some Washington properties.  Some developers have purchased and built on land where water and mineral rights are kept by another party.  But in Massoudi’s case, the land and mineral rights are owned entirely by the builder.

Massoudi said the company did not offer to return the rights during the call.  But after complaining to the AG’s Consumer Protection Division, the company relented.

“I then ended up asking for the Attorney General’s office to intervene and they did,” Massoudi explained.  “And it was only then that they ended up returning the rights to us.”

In a response D.R. Horton says it discloses mineral rights multiple times in the home purchase process, including ithe Purchase and Sale Agreement, the homebuyer’s title insurance commitment and in the deed to the home buyer.

All Darius and Jonathan want now is for all D.R. Horton homeowners to have what they currently enjoy: Full rights and maximum happiness.

“It makes me very upset that, you know, we ended up getting our rights back,” Massoudi said.  “But they think it’s appropriate to be reserving these rights across the entire state of Washington when I’m confident that the majority of people in this state would not be comfortable with that.”

In 2012, The North Carolina Attorney General got involved and helped return the mineral rights to more than 700 D.R. Horton home buyers.  One year later, Florida Attorney General Pam Bondi approached the company and it returned the mineral rights to 18,000 homeowners.

We sent all of this information to Washington Attorney General Bob Ferguson. We are awaiting his response.

D.R. Horton told us it has and always will transfer all mineral rights to concerned homeowners.  The company’s full statement is below:

It is common practice in Washington for landowners, both public and private, to reserve mineral rights prior to transferring ownership of the land, and it is not uncommon for D.R. Horton to acquire land where a previous owner has already reserved the mineral rights. Many master-planned communities in the state were previously owned by timber, mining or railroad companies who retained mineral rights prior to selling the land to others for residential development. Thousands of homes in the Puget Sound have mineral rights owned by someone other than the homeowner.

Regardless of who owns the mineral rights, any mineral exploration and production can only be conducted in accordance with state and local laws and regulations. D.R. Horton’s reservation of mineral rights does not grant anyone the right to access the surface of a homeowner’s lot to explore, mine or extract minerals.

D.R. Horton intends for its homebuyers to be fully aware that the mineral rights under their lot have been severed and retained by either a prior landowner or D.R. Horton. The reservation of mineral rights in the State of Washington is currently disclosed to prospective homebuyers multiple times throughout the home purchase process, including:

-In the Marketability of Title portion of the Purchase and Sale Agreement;

-As part of the homebuyer’s title insurance commitment; and

-In the deed to the homebuyer.

As is our practice for any homebuyer in Washington who expresses concern regarding the reservation of mineral rights by D.R. Horton, we have and will continue to transfer to our homeowners all mineral rights we own located in or under the homeowner’s property.

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