By: Orr, Smithee, Vo (Senate Sponsor - Harris) H.B. No. 1355
(In the Senate - Received from the House May 12, 2011;
May 12, 2011, read first time and referred to Committee on Business
and Commerce; May 18, 2011, reported favorably by the following
vote: Yeas 8, Nays 0; May 18, 2011, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to title insurance coverage for minerals and surface
damage resulting from mineral extraction and development.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 2703, Insurance Code, is
amended by adding Section 2703.0515 to read as follows:
Sec. 2703.0515. CERTAIN REQUIREMENTS PROHIBITED. (a) A
title insurance company is not required to offer or provide in
connection with a title insurance policy an endorsement insuring a
loss from damage resulting from the use of the surface of the land
for the extraction or development of coal, lignite, oil, gas, or
another mineral if the policy includes a general exception or
exclusion from coverage a loss from damage resulting from the use of
the surface of the land for the extraction or development of coal,
lignite, oil, gas, or another mineral.
(b) In this section, "general exception or exclusion" means
a provision in a title insurance policy or other title insuring form
that provides that title insurance coverage under the policy or
form:
(1) is subject to, and the title insurer does not
insure title to, and excepts from the description of the covered
property, coal, lignite, oil, gas, and other minerals in and under
and that may be produced from the covered property, together with
related rights, privileges, and immunities; or
(2) does not cover a lease, grant, exception, or
reservation of coal, lignite, oil, gas, or other minerals, or
related rights, privileges, and immunities, appearing in the public
records.
(c) An additional premium or other amount may not be charged
for an endorsement to a loan policy of title insurance if the
endorsement:
(1) insures against loss from damage to improvements
or permanent buildings located on land that results from the future
exercise of any right existing on the date of the loan policy to use
the surface of the land for the extraction or development of coal,
lignite, oil, gas, or another mineral;
(2) expressly does not insure against loss resulting
from subsidence; and
(3) was promulgated by the commissioner in calendar
year 2009.
SECTION 2. Subchapter B, Chapter 2703, Insurance Code, is
amended by adding Sections 2703.055 and 2703.056 to read as
follows:
Sec. 2703.055. REQUIREMENT OF CERTAIN PROVISIONS
PROHIBITED. The commissioner may not require by rule or through
adoption of a title insurance policy or other insuring form that a
title insurance policy delivered or issued for delivery in this
state:
(1) insure against a loss that a person with an
interest in real property sustains from damage to the property by
reason of severance of minerals from the surface estate; or
(2) provide insurance as to ownership of minerals.
Sec. 2703.056. EXCEPTIONS; MINERAL INTERESTS. (a) Subject
to the underwriting standards of the title insurance company, a
title insurance company may in a commitment for title insurance or a
title insurance policy include a general exception or a special
exception to except from coverage a mineral estate or an instrument
which purports to reserve or transfer all or part of a mineral
estate.
(b) The inclusion in a title insurance policy of a general
exception or a special exception described by Subsection (a) does
not create title insurance coverage as to the condition or
ownership of the mineral estate.
SECTION 3. Sections 2703.055 and 2703.056, Insurance Code,
as added by this Act, apply only to a title insurance policy that is
delivered or issued for delivery on or after January 1, 2012. A
policy delivered or issued for delivery before January 1, 2012, is
governed by the law as it existed immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
SECTION 4. This Act applies only to a title insurance policy
that is delivered or issued for delivery on or after January 1,
2012. A policy delivered or issued for delivery before January 1,
2012, is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 5. This Act takes effect September 1, 2011.
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