HBA-SEB S.B. 436 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 436
By: Nixon, Drew
Energy Resources
5/6/1999
Engrossed

BACKGROUND AND PURPOSE 

Currently, a person may unknowingly sign away mineral or royalty interest
on a property to a purchaser of that interest because the purchaser
provided an ambiguously-worded instrument of conveyance.  S.B. 436 requires
an offer to purchase the mineral or royalty interest in a property to
conspicuously state that the conveyor of the interest is indeed selling
that interest.  This bill also authorizes a conveyor of interest to bring
suit against a purchaser if the purchaser does not provide that notice.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 5, Property Code, by adding Subchapter F, as
follows: 

SUBCHAPTER F.  REQUIREMENTS FOR CONVEYANCES 
OF MINERAL OR ROYALTY INTERESTS

Sec. 5.151.  DISCLOSURE IN OFFER TO PURCHASE MINERAL INTEREST.  (a)
Requires a person to include in an offer  to purchase mineral or royalty
interest a specific conspicuous statement if it is understood that the
taking of an oil, gas, or mineral lease shall not be deemed a purchase of a
mineral or royalty interest and if the person encloses an instrument of
conveyance of only the mineral or royalty interest and a draft or other
instrument providing for payment for that interest.  Sets forth the form of
the statement, which provides that a person executing and delivering such
an instrument is selling all or a portion of mineral or royalty interest.   

(b)  Authorizes a conveyor of interest to sue the purchaser of the interest
if the purchaser did not give proper notice under Subsection (a) and the
conveyor has given 30 days' written notice to the purchaser that a suit
will be filed unless the matter is resolved.   

(c)  Authorizes the prevailing plaintiff to recover $100 from the purchaser
or an amount up to the difference between the amount paid by the purchaser
for the interest and the fair market value of the interest at the time of
sale, whichever is greater. 

(d)  Authorizes the prevailing party to recover court costs and reasonable
attorney's fees. 

(e)  Provides that a person must bring suit not later than the second
anniversary of the date of the execution of the conveyance. 

(f)  Requires the remedy provided under this section to be in addition to
any other remedies existing under law, excluding rescission or other
remedies that would make the conveyance of the mineral or royalty interest
void or of no force and effect. 

SECTION 2.Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 3.Emergency clause.