State to press builder to return fracking rights to N.C. homebuyers

Authorities want D.R. Horton to alert 657 who haven’t taken action

jmurawski@newsobserver.comAugust 10, 2012 

MINERALRIGHTS1NE041112CEL

People who buy houses from homebuilder D.R. Horton are giving up their mineral rights, which are being transferred to the homebuilder's subsidiary, DRH Energy.

CHUCK LIDDY — cliddy@newsobserver.com

  • More information Home builder D.R. Horton is returning mineral rights to property owners who request the deed transfer. The Texas company’s Central Carolina Division is in Morrisville, 919-460-2932.

State authorities are stepping up their campaign against home builder D.R. Horton in a bid to pressure the Texas company to return underground fracking rights to hundreds of homeowners in North Carolina.

Their concerns have gained urgency in recent weeks in the wake of the state legislature’s legalization of fracking, a controversial method of extracting natural gas from underground shale rock formations.

Under pressure from state Attorney General Roy Cooper and the N.C. Real Estate Commission, D.R. Horton had previously agreed to stop keeping fracking rights for itself from homes the Texas company sold in this state.

The company in April also agreed to return those rights to homebuyers – as long as the buyer took the initiative to make the request.

That left hundreds of homeowners in limbo who have not contacted D.R. Horton to get their fracking rights back.

D.R. Horton revealed to the attorney general’s office two weeks ago that it had sold 850 homes in the state, systematically stripping the fracking rights at the time of the sale. The number of affected homes is twice as high as previously estimated by the attorney general.

In recent months, 193 property owners requested the return of those rights, which the company granted, D.R. Horton told the attorney general in a July letter from Raleigh lawyer Christopher Crowson.

“I don’t want anyone else to have control over it,” said Brian Young, one of the homeowners who has recovered his rights. “I don’t want anyone fracking under my house.

“And in the end, I was cheated out of it,” said Young, who lives in Chatham County in the Legend Oaks subdivision.

The “mineral rights,” as they are called in property deeds, were kept by D.R. Horton at the time of sale and then transferred to a Texas subsidiary, DRH Energy. Many buyers signed away their rights not knowing that mineral rights gave D.R. Horton the legal right in perpetuity to drill for natural gas under their homes and collect the gas through hydraulic fracturing, or fracking.

At the time that D.R. Horton was accumulating a potential economic goldmine of underground drilling rights from unwitting customers, fracking was not legal in this state. But that changed in July when the state legislature narrowly overrode a gubernatorial veto of legislation that would clear the way for fracking as early as 2014.

Now Cooper and the Real Estate Commission are pushing for further steps from D.R. Horton, the nation’s largest home builder. As part of their parallel investigations into the company’s practices, the agencies plan to ask the company to return underground legal rights to the 657 homebuyers who have not asked to get those rights back.

“We ... plan to follow up with D.R. Horton to make sure that all homeowners are notified about how they can reclaim their mineral rights,” said Cooper spokeswoman Noelle Talley. “One of our general concerns is that consumers in the same position should have the same opportunity for relief.

“Some consumers should not receive better relief than others due to random factors, such as the fact that one happened to read a news article about an opportunity, or heard about an opportunity from their neighbor, while another consumer with a similar situation did not,” Talley said.

The Real Estate Commission’s legal counsel, Janet Thoren, said her agency is also planning to “put in motion a plan to notify the remaining homeowners.”

Both agencies don’t want the onus put on the homeowners; rather, they want D.R. Horton to take the initiative to fix the problem.

It’s not clear how D.R. Horton will respond.

Crowson, the home builder’s lawyer at the Bagwell Holt Smith law firm, did not return a phone call. John Nance, D.R. Horton’s Central Carolina Division president in Morrisville, also did not return a phone call. The company’s spokeswoman, Jessica Hansen, did not respond to a call and email.

Murawski: 919-829-8932

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