84R21670 JAM-F
By: Keffer, Anchia, King of Parker H.B. No. 2207
Substitute the following for H.B. No. 2207:
By: Keffer C.S.H.B. No. 2207
A BILL TO BE ENTITLED
AN ACT
relating to the foreclosure sale of property subject to an oil or
gas lease.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 5, Property Code, is amended by
adding Chapter 66 to read as follows:
CHAPTER 66. SALE OF PROPERTY SUBJECT TO OIL OR GAS LEASE
Sec. 66.001. SALE OF PROPERTY SUBJECT TO OIL OR GAS LEASE.
(a) In this section:
(1) "Mortgagee," "mortgagor," and "security
instrument" have the meanings assigned by Section 51.0001.
(2) "Oil or gas lease" means an instrument conveying a
fee simple determinable interest in a mineral estate covering oil,
gas, or other hydrocarbons or a recorded memorandum of such an
instrument.
(3) "Real property" means an estate covering the
mineral interest in hydrocarbons or the mineral interest in
hydrocarbons together with the surface overlying such mineral
interest. The term does not include a surface interest or other
interest that excludes a mineral interest in hydrocarbons.
(b) Notwithstanding any other law, an oil or gas lease
covering real property subject to a security instrument that has
been foreclosed remains in effect after the foreclosure sale if the
oil or gas lease has not terminated or expired on its own terms and
was executed and recorded in the real property records of the county
before the foreclosure sale. An interest of the mortgagor or the
mortgagor's assigns in the oil or gas lease, including a right to
receive royalties or other payments that become due and payable
after the date of the foreclosure, passes to the purchaser of the
foreclosed property to the extent that the security instrument
under which the real property was foreclosed had priority over the
interest in the oil or gas lease of the mortgagor or the mortgagor's
assigns.
(c) Notwithstanding Subsection (b), if real property that
includes the mineral interest in hydrocarbons together with the
surface overlying such mineral interest is subject to both an oil or
gas lease and a security instrument and the security interest is
foreclosed, the foreclosure sale terminates and extinguishes any
right granted under the oil or gas lease for the lessee to use the
surface of the real property to the extent that the security
instrument under which the real property was foreclosed had
priority over the rights of the lessee under the oil or gas lease.
(d) An agreement, including a subordination agreement,
between a lessee of an oil or gas lease and a mortgagee of real
property or the lessee of an oil or gas lease and the purchaser of
foreclosed real property controls over any conflicting provision of
this section. An agreement between a mortgagor and mortgagee may
not modify the application of this section unless the affected
lessee agrees to the modification.
(e) This section does not apply to a security instrument
that does not attach to a mineral interest in hydrocarbons in the
mortgaged real property.
SECTION 2. Chapter 66, Property Code, as added by this Act,
applies only with respect to a foreclosure sale for which the notice
of sale is given under Section 51.002, Property Code, on or after
the effective date of this Act or a judicial foreclosure for which
the judicial foreclosure action commenced on or after the effective
date of this Act.
SECTION 3. This Act takes effect January 1, 2016.