Bill Text: TX HB3838 | 2019-2020 | 86th Legislature | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to a disclosure in certain offers to purchase a mineral or royalty interest.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Passed) 2019-06-10 - Effective on 9/1/19 [HB3838 Detail]

Download: Texas-2019-HB3838-Introduced.html
  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.
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