Royalty interest
A royalty interest is a right to receive a share of production or revenue from an asset without bearing the costs of operating it. Common examples are net smelter return royalties in mining, gross overriding royalties in oil and gas, and percentage royalties under intellectual property licences. Private royalty interests are created by contract and may or may not be an interest in land.
How BC law treats it
Whether a private oil and gas or mineral royalty is an interest in land depends on the parties' intention as expressed in the agreement (Bank of Montreal v Dynex Petroleum Ltd, 2002 SCC 7). Resource statutes govern Crown tenure and Crown royalties, not private royalty interests.
What it means for your business
If you grant or buy a royalty, the drafting decides whether it binds future owners of the asset and how it ranks in an insolvency.
Risks and common mistakes
A royalty drafted only as a personal contractual right may not bind a purchaser of the property or survive the owner's insolvency.
For the full explanation, see our entry on Royalties.
General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.
