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Open Mine Doctrine (US)
Practical Law Glossary Item w-029-0070 (Approx. 3 pages)
Glossary
Open Mine Doctrine (US)
An exception to the Texas rule that the life tenant is only entitled to interest earned on the royalties and bonus under an oil & gas lease. The open mine doctrine:
- States that if an oil & gas lease was in effect when the life estate was created by the grantor, the life tenant can receive the royalties because:
- it is not waste for the life tenant to continue production for its own use; and
- the proceeds are regarded as a profit from the land.
- Provides that the person creating the life estate must have intended that the life tenant be able to fully partake in the benefits of the existing lease (including the bonus and royalties) because if that was not the creator's intention:
- specific directions regarding impounding of the well or limitations on the expenditures of well proceeds would have been set; or
- the life estate covering a leased mineral interest would not have been granted.
The life tenant and remainderman are free to negotiate and agree on different arrangements for receiving the royalty and bonus.