86R10573 NC-F
By: Bailes H.B. No. 3838
A BILL TO BE ENTITLED
AN ACT
relating to a disclosure in certain offers to purchase or lease a
mineral or royalty interest.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Section 5.151, Property Code, is
amended to read as follows:
Sec. 5.151. DISCLOSURE IN CERTAIN OFFERS [OFFER] TO
PURCHASE OR LEASE MINERAL OR ROYALTY INTEREST.
SECTION 2. Section 5.151, Property Code, is amended by
amending Subsections (a), (b), (c), (e), and (f) and adding
Subsections (a-1) and (c-1) to read as follows:
(a) A person who delivers [mails] to the owner of a mineral
or royalty interest an offer to purchase all or any portion of only
the mineral or royalty interest, it being understood that for the
purpose of this section the taking of an oil, gas, or mineral lease
other than a lease described by Subsection (a-1) shall not be deemed
a purchase of a mineral or royalty interest, and encloses an
instrument of conveyance of only the mineral or royalty interest
[and a draft or other instrument, as defined in Section 3.104,
Business & Commerce Code, providing for payment for that interest]
shall include in the offer a conspicuous statement printed in a type
style that is approximately the same size as 14-point type style or
larger and is in substantially the following form:
BY EXECUTING AND DELIVERING THIS INSTRUMENT YOU
ARE SELLING ALL OR A PORTION OF YOUR MINERAL OR ROYALTY
INTEREST IN (DESCRIPTION OF PROPERTY BEING CONVEYED).
(a-1) An offer to lease an interest in oil and gas in a
property is considered an offer to purchase a mineral or royalty
interest and must include the statement described by Subsection (a)
if:
(1) the property is subject to an existing oil and gas
lease; and
(2) the lease being offered has the effect of
conveying all or a portion of the mineral or royalty owner's
interest in production from the underlying oil and gas lease.
(b) A person who conveys a mineral or royalty interest as
provided by Subsection (a) or (a-1) may bring suit against the
purchaser or lessor of the interest if:
(1) the purchaser or lessor did not give the notice
required by Subsection (a); and
(2) the person has given 30 days' written notice to the
purchaser or lessor that a suit will be filed unless the matter is
otherwise resolved.
(c) A plaintiff who prevails in a suit under Subsection (b)
may rescind the sale or lease agreement and recover from the
[initial] purchaser or lessor of the mineral or royalty interest
[the greater of]:
(1) exemplary damages if the purchaser's or lessor's
conduct constitutes fraud under Sections 27.01(a) and (c), Business &
Commerce Code, in addition to any damages awarded under that
section [$100]; and [or]
(2) an amount up to the difference between the amount
paid by the purchaser or lessor for the mineral or royalty interest
and the fair market value of the mineral or royalty interest at the
time of the sale or lease.
(c-1) Notwithstanding Section 41.004, Civil Practice and
Remedies Code, a court shall award exemplary damages as provided by
Subsection (c)(1) to a plaintiff who prevails in a suit under
Subsection (b) irrespective of whether the plaintiff is awarded
actual damages.
(e) A person must bring a suit under Subsection (b) not
later than the fourth [second] anniversary of the date the person
executed the conveyance.
(f) The remedy provided under this section shall 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 3. The change in law made by this Act applies only
to an offer to purchase or lease a mineral or royalty interest
delivered on or after the effective date of this Act. An offer to
purchase or lease a mineral or royalty interest delivered before
the effective date of this Act 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 takes effect September 1, 2019.