Local title attorneys are warning clients that if they buy foreclosed property they need to read the fine print. The FDIC has adopted a new policy wherein the agency retains the mineral rights to any property that results from a foreclosure or a bank failure. There are lots of coal lands and potential oil-drilling sites between Knoxville and the Kentucky line.
Unless the property you buy includes the mineral rights, it could lower the value of the property and complicated land transactions and real estate loans. In the past, the FDIC has retained the rights on a case-by-case basis in mineral-rich areas. But the new policy retains the rights everywhere, given the energy boom and the discovery of natural gas through fracking.
The FDIC will make an exemption if the property is worth less than $50,000. And if you live within the city limits they will attempt to use slant drilling to avoid tearing up your yard.
The FDIC reserve funds have taken a hit during the recession and retaining and selling mineral rights would bring the agency that insures banks more revenue for its trust funds.