| 1 | 1 | | 84R6284 JAM-D |
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| 2 | 2 | | By: Eltife S.B. No. 1384 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the foreclosure sale of property subject to oil or gas |
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| 8 | 8 | | lease. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Subtitle B, Title 5, Property Code, is amended by |
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| 11 | 11 | | adding Chapter 66 to read as follows: |
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| 12 | 12 | | CHAPTER 66. SALE OF PROPERTY SUBJECT TO OIL OR GAS LEASE |
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| 13 | 13 | | Sec. 66.001. SALE OF PROPERTY SUBJECT TO OIL OR GAS LEASE. |
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| 14 | 14 | | (a) Notwithstanding any other law, an oil or gas lease covering |
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| 15 | 15 | | real property subject to a security interest that has been |
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| 16 | 16 | | foreclosed remains in effect after the foreclosure sale if the oil |
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| 17 | 17 | | or gas lease has not terminated or expired on its own terms and: |
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| 18 | 18 | | (1) was executed and recorded in the real property |
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| 19 | 19 | | records of the county before the date the security interest was |
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| 20 | 20 | | recorded; or |
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| 21 | 21 | | (2) was executed and recorded in the real property |
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| 22 | 22 | | records of the county after the date the security interest was |
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| 23 | 23 | | recorded but before the foreclosure sale. |
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| 24 | 24 | | (b) Any royalty payment due to the owner of the real |
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| 25 | 25 | | property under an oil or gas lease shall be paid to the purchaser of |
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| 26 | 26 | | the foreclosed real property. |
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| 27 | 27 | | (c) The lessee of the oil or gas lease shall indemnify the |
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| 28 | 28 | | purchaser and any mortgagee of the foreclosed real property from |
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| 29 | 29 | | actual damages resulting from the lessee's operations conducted |
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| 30 | 30 | | under the oil or gas lease. |
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| 31 | 31 | | (d) If an oil or gas lease is executed and recorded in the |
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| 32 | 32 | | real property records of the county after the date a security |
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| 33 | 33 | | interest in the affected real property is recorded and the affected |
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| 34 | 34 | | real property is subsequently sold in a foreclosure sale, the |
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| 35 | 35 | | foreclosure sale terminates and extinguishes the lessee's right to |
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| 36 | 36 | | use the surface of the real property under the oil or gas lease. |
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| 37 | 37 | | (e) A subordination agreement between a lessee of an oil or |
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| 38 | 38 | | gas lease and a mortgagee of real property controls over any |
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| 39 | 39 | | conflicting provision of this section. |
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| 40 | 40 | | SECTION 2. Chapter 66, Property Code, as added by this Act, |
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| 41 | 41 | | applies only with respect to a foreclosure sale for which the notice |
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| 42 | 42 | | of sale is given under Section 51.002, Property Code, on or after |
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| 43 | 43 | | the effective date of this Act or a judicial foreclosure for which |
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| 44 | 44 | | the judicial foreclosure action commenced on or after the effective |
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| 45 | 45 | | date of this Act. |
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| 46 | 46 | | SECTION 3. This Act takes effect January 1, 2016. |
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