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A BILL TO BE ENTITLED
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AN ACT
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relating to the foreclosure sale of property subject to an oil or |
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gas lease. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle B, Title 5, Property Code, is amended by |
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adding Chapter 66 to read as follows: |
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CHAPTER 66. SALE OF PROPERTY SUBJECT TO OIL OR GAS LEASE |
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Sec. 66.001. SALE OF PROPERTY SUBJECT TO OIL OR GAS LEASE. |
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(a) In this section: |
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(1) "Mortgagee," "mortgagor," and "security |
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instrument" have the meanings assigned by Section 51.0001. |
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(2) "Oil or gas lease" means an instrument conveying a |
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fee simple determinable interest in a mineral estate covering oil, |
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gas, or other hydrocarbons or a recorded memorandum of such an |
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instrument. |
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(3) "Real property" means an estate covering the |
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mineral interest in hydrocarbons or the mineral interest in |
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hydrocarbons together with the surface overlying such mineral |
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interest. The term does not include a surface interest or other |
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interest that excludes a mineral interest in hydrocarbons. |
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(b) Notwithstanding any other law, an oil or gas lease |
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covering real property subject to a security instrument that has |
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been foreclosed remains in effect after the foreclosure sale if the |
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oil or gas lease has not terminated or expired on its own terms and |
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was executed and recorded in the real property records of the county |
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before the foreclosure sale. An interest of the mortgagor or the |
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mortgagor's assigns in the oil or gas lease, including a right to |
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receive royalties or other payments that become due and payable |
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after the date of the foreclosure, passes to the purchaser of the |
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foreclosed property to the extent that the security instrument |
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under which the real property was foreclosed had priority over the |
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interest in the oil or gas lease of the mortgagor or the mortgagor's |
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assigns. |
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(c) Notwithstanding Subsection (b), if real property that |
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includes the mineral interest in hydrocarbons together with the |
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surface overlying such mineral interest is subject to both an oil or |
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gas lease and a security instrument and the security interest is |
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foreclosed, the foreclosure sale terminates and extinguishes any |
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right granted under the oil or gas lease for the lessee to use the |
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surface of the real property to the extent that the security |
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instrument under which the real property was foreclosed had |
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priority over the rights of the lessee under the oil or gas lease. |
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(d) An agreement, including a subordination agreement, |
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between a lessee of an oil or gas lease and a mortgagee of real |
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property or the lessee of an oil or gas lease and the purchaser of |
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foreclosed real property controls over any conflicting provision of |
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this section. An agreement between a mortgagor and mortgagee may |
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not modify the application of this section unless the affected |
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lessee agrees to the modification. |
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(e) This section does not apply to a security instrument |
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that does not attach to a mineral interest in hydrocarbons in the |
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mortgaged real property. |
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SECTION 2. Chapter 66, Property Code, as added by this Act, |
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applies only with respect to a foreclosure sale for which the notice |
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of sale is given under Section 51.002, Property Code, on or after |
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the effective date of this Act or a judicial foreclosure for which |
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the judicial foreclosure action commenced on or after the effective |
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date of this Act. |
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SECTION 3. This Act takes effect January 1, 2016. |