Wednesday, May 23, 2018
Business

Home builder D.R. Horton will no longer pocket mineral rights

Home builder D.R. Horton will stop severing the mineral rights from Florida homes and offer to return those rights to homeowners, a month after the Tampa Bay Times investigated the practice.

In a letter Friday to the Florida Attorney General's Office, the nation's largest home builder said it would suspend its hoarding of underground drilling rights until state lawmakers consider the issue next year.

The builder will also offer to return the rights for free to homeowners who bought from the firm directly, still own the property and respond to a letter the firm said it will send out by next month.

A Times analysis of property records found the builder had given to its own energy subsidiary the rights to drill, mine or explore deep beneath more than 2,500 Tampa Bay homesites, many of which were in the suburbs of southern and eastern Hillsborough County.

That led some homeowners to worry about the possibility of contamination, noise or sinkholes from industrial drilling. Several frustrated buyers said they were never told of the arrangement or learned of it only at the closing table, where they felt pressured to consent.

Mallory and Zach Sinclair, who bought a Horton-built townhouse in Brandon this year, said they learned of the switch in the last minutes of their purchase and were told they had to approve or the deal was off. "I just had to do what I had to do and assume nothing bad was going to happen," Zach Sinclair said.

Ken Bagwell, D.R. Horton's chief counsel for the East region, said the mineral-rights agreements were made abundantly clear to buyers, including in writing near the top of their purchasing agreements.

Buyers always had the option of refusing the mineral-rights reservations, he said, adding that buyers could be given back the rights if they objected. The builder "never lost a sale due to mineral rights," he said.

"There was never any intent on the part of D.R. Horton to try to deceive anyone or to trick anyone out of mineral interests," Bagwell said. "It couldn't have been more plainly discussed."

Bagwell said Florida lawmakers will likely consider proposing a new disclosure form for residential sales that would verify home buyers understood the deal. That way, "No one can come back and say 'I never knew,' which tends to happen. People's memories tend to get very convenient."

Bagwell and a representative from Attorney General Pam Bondi's office met 12 days after the Times story published to discuss the stripping of mineral rights. Bondi press secretary Whitney Ray said on Monday, "We appreciate D.R. Horton's response and are pleased the property owners will have the opportunity to have their mineral rights restored."

Splitting the underground rights and surface rights, Bagwell said, has long been "standard operating procedure" for the builder in oil- and gas-rich markets like Texas, its home state. The severed rights are seen as lottery tickets in case the homes they sold are found to be sitting on lucrative energy reserves.

But expanding the corporate policy to the southeastern United States, where the deals are more rare, has led to a public outcry.

North Carolina homeowners last year criticized the builder's quiet hoarding of mineral rights, especially because state officials there were considering legalizing hydraulic fracturing, the controversial drilling technique known as "fracking." As in Florida, the builder offered to end the practice and return the rights.

Returning the rights beneath Florida homes, though, will be a much "more daunting prospect" because of the number of homes involved, Bagwell said. He could not estimate how many of the builder's Florida homes sit on affected underground tracts, but estimated it was "at least 10 times the number of homes in North Carolina."

Bagwell said the firm had no plans to change its rules on reserving mineral rights in other states, and that depending on what Florida lawmakers decide, the builder could resume the practice in Florida in 2015. But he added that the firm wanted to reassure buyers that it was keeping its business focused on home building, not drilling or mining.

"We're not looking to quarrel with anyone," Bagwell said. "Our business is to make our homeowners happy."

Contact Drew Harwell at (727) 893-8252 or [email protected]

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