Homeowners in New Mexico who fail to pay the taxes on their real estate for a period of three years may lose their property at a tax sale. Section 7-38-48 (2003) provides that “taxes on real property are a lien against the real property from January 1 of the tax year for which the taxes are imposed. . . . The lien continues until the taxes and any penalty and interest are paid….If a lien exists . . ., the [D]epartment may collect delinquent taxes on real property by selling the real property on which the taxes have become delinquent.”
The New Mexico Taxation and Revenue Department must, according to NMSA 1978, § 7-38-67, sell the property at public auction, with a minimum purchase price determined by the Department. “In determining the minimum price, the [D]epartment shall consider the value of the property owner’s interest in the real property, the amount of all delinquent taxes, penalties and interest for which it is being sold and the costs. The minimum price shall not be less than the total of all delinquent taxes, penalties, interest[,] and costs.” Section 7-38-67(E).
A recent opinion from the New Mexico Court of Appeals in the case of Valenzuela v. Snyder, No. 32,680 (NM Court of Appeals 2014) illustrates how property owners should recognize the severity of the remedy for letting delinquent taxes accrue on their property. In this case the Valenzuelas failed to pay their property taxes for three years. The Taxation and Revenue Department conducted a public auction as required by the governing statute. The minimum price set by the Department was $215 which turned out to be the price which the purchaser paid for the property which is located in Portales, New Mexico. The Valenzuela claims that the property has a fair market value of $25,000. They sought to have the tax sale set aside on the grounds that the purchase price was so grossly disproportionate to the property’s fair market value.
The Court rejected the argument reversing the lower court’s grant of summary judgment in favor of Valenzuela. In reaching that decision, the Court emphasized that other disproportionate sales in New Mexico have been upheld, the purchaser may have to fend off quiet title actions to the property once it is quit claimed to that purchaser and the State of New Mexico has a valid interest in encouraging the collection of delinquent property taxes. For property owners in New Mexico, they should beware of getting behind in their property tax payments. The law in New Mexico, as it currently stands, invokes a severe penalty for this kind of delinquency.
Before making any real estate purchase or transaction, contact the attorneys at Giddens & Gatton Law, PC located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico. Call the Law Office of George “Dave” Giddens at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com for more information.