express language to the contrary, that the above provision (and those similar to it) allow for the denial of consent for any reason whatsoever and is not to be read with the implication that denial of consent must be based on reasonableness.
Company to ABC Bank via its mortgage/deed of trust. While there is no “standard” mortgage/deed of trust form, all of the deeds of trust examined by the author in his title practice contained the following provisions in one form or another relating to the conveyance of an interest in the mortgaged property to the mortgagee:
2. The court further held:
1. Identification of the mortgagor (grantor) - borrower
“In fact, had the consent-to-assign provision explicitly stated that Carrizo could withhold its consent “for any reason or no reason,” such language would be surplusage because the phrase “may not be assigned ... without the express written consent of Carrizo” has identical meaning.” Barrow-Shaver Resources Company v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 494 (Tex. 2019)
2. Identification of the trustee
3. Identification of the mortgagee (grantee) – lender
4. Words of grant, including but not limited to the words “grant”, “sell”, “assign” etc.
5. Power of sale to the trustee to sell the mortgaged property under the terms and conditions set forth in the instrument
That is, a simply drafted consent provision, which does not address a reasonableness standard for the lessor’s denial of consent to the proposed assignment of the lease, will be interpreted as containing no such reasonableness standard. Under such a drafted provision, the lessor may deny its consent to the proposed assignment for any or no reason whatsoever. (BEWARE: Although not analyzed from a legal standpoint in this article, the reader should be aware that mineral owners’ attorneys are focusing today on the consent provision and providing that, if the consent provision is not complied with, then the underlying lease will automatically terminate without further action of the lessor.)
6. Legally sufficient description of the mortgaged properties (oil and gas leases)
7. Present assignment (conveyance) of all hydrocarbons that are produced from the mortgaged property and the proceeds therefrom. In the author’s opinion, a typical Texas mortgage/deed of trust conveys the equitable title in and to the mortgaged lands (in our example, fee simple determinable interest in and to the oil and gas in, on and under Blackacre) to the mortgagee. This opinion is bolstered by the fact that many, if not all modern deeds of trust, contain an assignment (conveyance) of all oil and gas and all proceeds from the sale of such oil and gas from the mortgagor to the mortgagee. Such an assignment clearly enhances the mortgagee’s claim to an equitable title in the leasehold estate by allowing the mortgagee to claim the ownership/possession of the oil and gas produced from Said Lease as well as the proceeds from the sale thereof. Such conveyance is expressly subject to the right of sale of the mortgaged properties by the trustee in the event the mortgagor defaults in its payments or fails to comply with any other provision of the mortgage which is listed as an event of default.
IV.
Issues
Issue No. 1 –– Was the written consent of A, under Texas law, required so that XYZ Oil Company could validly enter into its mortgage/deed of trust (assignment) with ABC Bank? Recent Texas jurisprudence has clearly and consistently followed the lien theory of mortgages identified and explained above under Select Definitions – Mortgage. Although the legal and equitable titles to the fee simple determinable interest in oil and gas in Blackacre are separately vested (legal title in the mortgagor (A) and equitable title in the mortgagee (XYZ Oil Company)), it is clear that an equitable title in the oil and gas covering and pertaining to Blackacre was conveyed by XYZ Oil
The very focused issue is whether the conveyance of the
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
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