Rapid progress towards the American slate revolution, which began a rush of landlords who bought thousands and thousands of oil and gas leases. In areas such as the Barnett Shale, many leases covered real estate located in densely urbanized areas, largely subject to previously registered mortgages. Until 2015, lenders were constantly being asked for subordination agreements and many borrowers faced overburdened and lazy mortgage service providers who knew little about the oil and gas industry. In reviewing oil and gas interest titles, I have sometimes found that trusts and other security documents may sometimes contain provisions similar to those proposed under Mr. Moore`s first point above. It may turn out in the future that these leasing provisions will be included more often (or always!) in credit documents. If the financial industry is strong enough about its forced subordination to oil and gas leases in Texas, it could decide to “counterbalance” HB in 2207. Depending on future developments in oil and gas prices, this can become a point of friction between stakeholders, giving rise to litigation. In Texas House Bill 2207, which can bring some relief to financial institutions and lenders. This new law, codified in Chapter 66 of the Texas Property Code, establishes a legal subordination by providing in part that “any oil or gas lease agreement that includes real property subject to a forcibly seized hedging instrument will remain in effect after the sale for forced sale if the oil or gas lease agreement has not ended or expired on its own terms and before the forced sale. A subordination agreement is a legal document that establishes that one debt is ranked behind another in priority for the recovery of a debtor`s repayment. Debt priority can become extremely important when a debtor is in arrears with payments or goes bankrupt. Prior to the passage of this law, Texas was a customary ownership obligation for lessees to seek and obtain follow-up agreements from banks and other pledge holders to minimize the risk of ownership of logging units bundled with encumbered leasing shares. Lawyers Carl Glaze et al.

of the Jackson Walker law firm stated in their article, Texas Legislature Imposes Statutory Subordination of Real Estate Mortgages to Oil and Gas Leases: “Historically, many lenders were happy that their borrowers had the opportunity to earn licenses as an additional source of financing to repay their loans and, therefore, such subordinations would easily be granted. However, with the urban boom in Drilling in Barnett Slate, many leases cover only Residential Land (“Roof Top Leases”), a significant percentage of which is mortgaged at the time of leases. The situation was exacerbated by the sale of these mortgages by the mortgage borrower as securities managed by service companies, many of which were unaware of the oil and gas industry. . . .