44th legislature - STATE OF NEW MEXICO - second session, 2000

RELATING TO TAXATION; PROVIDING FOR THE COLLECTION OF DELINQUENT PROPERTY TAXES BY A CLASS A OR CLASS B COUNTY; PERMITTING USE OF AN AUTHORIZED PRIVATE ATTORNEY IN A CLASS A OR CLASS B COUNTY; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-38-48 NMSA 1978 (being Laws 1973, Chapter 258, Section 88, as amended) is amended to read:

"7-38-48. PROPERTY TAXES ARE A LIEN AGAINST [REAL] PROPERTY FROM JANUARY 1--PRIORITIES--CONTINUANCE OF TAXING PROCESS.--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 runs in favor of the state and secures the payment of taxes on the [real] property and any penalty and interest that [becomes] become due. The lien continues until the taxes and any penalty and interest are paid. The lien created by this section is a first lien and paramount to any other interest in the property, perfected or unperfected. The annual taxing process provided for in the Property Tax Code shall continue as to any particular property regardless of prior tax delinquencies or of pending protests, actions for refunds or other tax controversies involving the property, including a sale for delinquent taxes."

Section 2. Section 7-38-50 NMSA 1978 (being Laws 1973, Chapter 258, Section 90, as amended) is amended to read:

"7-38-50. DELINQUENT TAXES--CIVIL PENALTIES.--

A. If property taxes become delinquent, a penalty of one percent of the delinquent taxes for each month or any portion of a month they remain unpaid shall be imposed, but the total penalty shall not exceed five percent of the delinquent taxes except that, when the penalty determined under the foregoing provisions of this subsection is less than five dollars ($5.00), the penalty to be imposed shall be five dollars ($5.00). A county may suspend for a particular tax year application of the minimum penalty requirements of this subsection by resolution of its county commissioners adopted not later than September 1 of that tax year. A copy of any such resolution shall be forwarded to the county treasurer.

B. If property taxes become delinquent because of an intent to defraud by the property owner, fifty percent of the property taxes due or fifty dollars ($50.00), whichever is greater, shall be added as a penalty.

C. An additional penalty to defray costs of collection shall be imposed if the county electing to collect delinquent taxes on real property referred the collection of the delinquent taxes, penalties and interest to a private attorney and if the taxes due are at least sixty days delinquent. The additional penalty shall be thirty percent of the amount of taxes, interest and other penalties due. Any penalty assessed pursuant to this subsection shall become the property of the private attorney employed by the county upon collection from the delinquent taxpayer of the taxes, penalties and interest.

D. Any civil penalty assessed pursuant to Subsection C of this section shall become the property of the private attorney employed by the county upon collection from the delinquent taxpayer of the taxes, penalties and interest."

Section 3. Section 7-38-51 NMSA 1978 (being Laws 1973, Chapter 258, Section 91, as amended) is amended to read:

"7-38-51. NOTIFICATION TO PROPERTY OWNER OF DELINQUENT PROPERTY TAXES.--

A. In respect to any tax that is delinquent for more than thirty days as of June 30 of each year, the county treasurer shall mail a notice of delinquency to:

(1) the owner of the property as shown on the property tax schedule at the address of the owner as shown on the most recent property tax schedule; and

(2) any person other than the owner to whom the tax bill on the property was sent.

B. The notice required by this section shall be in a form and contain the information prescribed by [division] department regulations and shall include at least the following:

(1) a description of the property upon which the property taxes are due;

(2) a statement of the amount of property taxes due, the date on which they became delinquent, the rate of accrual of interest and any penalties that may be charged;

(3) a statement that, if the property taxes due on real property are not paid within three years from the date of delinquency, the real property will be sold and a deed issued by the [division; and] department;

(4) a statement that if property taxes due on personal property are not paid, the personal property may be seized and sold for taxes under authority of a demand warrant; and

(5) a statement that, if the delinquent taxes have been referred for collection to a private attorney pursuant to Section 7-38-61.1 NMSA 1978, an additional civil penalty of thirty percent of the taxes will be incurred if the taxes are not paid."

Section 4. Section 7-38-53 NMSA 1978 (being Laws 1973, Chapter 258, Section 93) is amended to read:

"7-38-53. COLLECTION OF DELINQUENT PROPERTY TAXES ON PERSONAL PROPERTY--ASSERTION OF CLAIM AGAINST PERSONAL PROPERTY.--A county treasurer may collect delinquent property taxes on personal property by asserting a claim against the owner's personal property for which taxes are delinquent. A claim shall be asserted by service of a demand warrant by the county treasurer, an employee of his office designated by him, a private attorney retained by the county pursuant to Section 7-38-61.1 NMSA 1978 or the county sheriff upon any person in possession of the personal property subject to the claim."

Section 5. Section 7-38-61 NMSA 1978 (being Laws 1973, Chapter 258, Section 100, as amended) is amended to read:

"7-38-61. REAL PROPERTY TAXES DELINQUENT FOR MORE THAN TWO YEARS--TREASURER TO PREPARE DELINQUENCY LIST--NOTATION ON PROPERTY TAX SCHEDULE.--

A. By July 1 of each year, the county treasurer shall prepare a property tax delinquency list of all real property for which taxes have been delinquent for more than two years. The tax delinquency list shall contain the information and be in a form prescribed and submitted by the date required by department regulations. The county treasurer shall record the tax delinquency list in the office of the county clerk. There shall be no recording fee for recordation of the tax delinquency list. The updated final property tax sale list shall be recorded with the office of the county clerk the day following the sale of the property. There shall be no recording fee for recordation of the final property tax sale list.

B. Except for accounts the county is collecting pursuant to an election under Section 7-38-61.1 NMSA 1978, the county treasurer shall make a notation on the property tax schedule indicating that the account has been transferred to the department for collection at the time the tax delinquency list is mailed to the department."

Section 6. A new section of the Property Tax Code, Section 7-38-61.1 NMSA 1978, is enacted to read:

"7-38-61.1. [NEW MATERIAL] COUNTY ELECTION TO COLLECT DELINQUENT TAXES ON REAL PROPERTY--AUTHORITY TO USE PRIVATE ATTORNEY TO COLLECT DELINQUENT TAXES.--

A. For the 2001 and subsequent property tax years, a class A or B county may elect to assume authority for collection of delinquent property taxes due on real property in the county, including authority to sell the property pursuant to the provisions of Sections 7-38-65 and 7-38-66 NMSA 1978; provided that the department retains authority to collect delinquent taxes, penalty, interest and costs on property submitted on a tax delinquency list until the taxes, penalty, interest and costs are collected or the property is sold pursuant to Sections 7-38-65 and 7-38-66 NMSA 1978. To make the election, the board of county commissioners shall adopt a resolution to assume the authority and shall deliver or mail a copy of the resolution to the department prior to the July 1 immediately preceding the property tax year to which the resolution first applies.

B. A county that has assumed authority under Subsection A of this section is authorized to retain a private attorney to collect delinquent taxes and interest and penalties due thereon that are owed to the county or taxing jurisdictions for which the county collects the taxes.

C. Having assumed authority to collect delinquent taxes due on real property, the county may elect to return that authority to the department. To make this election, the board of county commissioners shall adopt a resolution returning the authority and shall deliver or mail a copy of the resolution to the department at least eighteen months prior to the beginning of the property tax year to which the return of authority is to apply.

D. The department may prepare and require the use of model resolutions for use of the counties in assuming and returning authority as provided in this section."

Section 7. A new section of the Property Tax Code, Section 7-38-61.2 NMSA 1978, is enacted to read:

"7-38-61.2. [NEW MATERIAL] SUIT TO COLLECT DELINQUENT TAXES AND INTEREST AND PENALTIES.--

A. At any time after a tax on property becomes delinquent, a class A county or its retained private attorney may file suit to foreclose a lien securing payment of the tax or seeking a personal judgment against the taxpayer. The suit must be in a court of competent jurisdiction for the county in which the tax was or is imposed.

B. In a suit brought under Subsection A of this section, a county may foreclose any other property tax lien on the property in favor of the county."

Section 8. A new section of the Property Tax Code, Section 7-38-61.3 NMSA 1978, is enacted to read:

"7-38-61.3 [NEW MATERIAL] RECOVERY OF COSTS AND EXPENSES IN COLLECTION SUIT.--

A. In addition to other costs authorized by law, a class A county or its retained private attorney is entitled to recover the following costs and expenses in its efforts to collect a delinquent tax:

(1) all usual court costs, including the cost of serving process;

(2) costs of filing for record any notice of lis pendens against property;

(3) expenses of tax sale;

(4) reasonable expenses that are incurred by the county or its attorney in determining the name, identity and location of necessary parties and in procuring necessary legal descriptions of the property on which a delinquent tax is due; and

(5) in cases where Subsection C of Section 7-38-50 NMSA 1978 is not applicable, reasonable attorney fees of the total amount of thirty percent of the total amount of taxes, penalties and interest due.

B. Each item specified by Subsection A of this section is a charge against the property and shall be collectible in the same manner as the taxes, penalties, interest and costs due by the tax debtor and is subject to collection by foreclosure in a suit or as otherwise provided by law and shall be collected out of the proceeds of sale of the property."

Section 9. A new section of the Property Tax Code, Section 7-38-61.4 NMSA 1978, is enacted to read:

"7-38-61.4. [NEW MATERIAL] LIABILITY FOR COSTS--COUNTY AND ITS PRIVATE ATTORNEY.--

A. Except as provided by Subsection B of this section, a class A county or its retained private attorney is not liable in a suit to collect taxes for court costs, including any fees for service of process, costs or fees of opposing counsel, arbitration or mediation and shall not be required to post security for costs.

B. A class A county or its retained private attorney shall pay the cost of publishing citations, notices of sale or other notices. The county is entitled to reimbursement from other taxing units that are parties to the suit for their proportionate share of the publication costs on satisfaction of any portion of the tax indebtedness before further distribution of the proceeds. A county shall not be required to pay a word or line rate for publication of citation or other required notice that exceeds the rate that the newspaper publishing the notice charges private entities for similar classes of advertising."

Section 10. Section 7-38-62 NMSA 1978 (being Laws 1973, Chapter 258, Section 102, as amended) is amended to read:

"7-38-62. AUTHORITY OF DEPARTMENT TO COLLECT DELINQUENT PROPERTY TAXES AFTER RECEIPT OF TAX DELINQUENCY LIST--USE OF PENALTIES, INTEREST AND COSTS.--

A. After the receipt of the tax delinquency list, the department has the responsibility and exclusive authority to take all action necessary to collect delinquent taxes shown on the list unless the county has assumed authority pursuant to Section 7-38-61.1 NMSA 1978 to collect delinquent taxes due on real property. In that case, the county and, if the county has retained a private attorney pursuant to Subsection B of Section 7-38-61.1 NMSA 1978, its attorney have the same authority as that granted by the department in Subsection B of this section.

B. This authority includes bringing collection actions in the district courts based upon the personal liability of the property owner for taxes as well as the actions authorized in the Property Tax Code for proceeding against the property subject to the tax for collection of delinquent taxes.

C. For delinquent taxes being collected by the department, payment of delinquent taxes listed and any penalty, interest or costs due in connection with those taxes shall be made to the department if occurring after the receipt by the department of the tax delinquency list; however, the department may authorize county treasurers to act as its agents in accepting payments of taxes, penalties, interest or costs due.

D. Penalties, interest and costs due, except the penalty imposed pursuant to Subsection C of Section 7-38-50 NMSA 1978, received by the department under this section shall be retained by the department for use, subject to appropriation by the legislature, in the administration of the Property Tax Code."

Section 11. Section 7-38-68 NMSA 1978 (being Laws 1973, Chapter 258, Section 108, as amended) is amended to read:

"7-38-68. INSTALLMENT AGREEMENTS.--

A. The [division] department, a county having authority pursuant to Section 7-38-61.1 NMSA 1978 to collect delinquent taxes or, subject to ratification by the county, a private attorney retained by a class A or class B county pursuant to Section 7-38-61.1 NMSA 1978 may enter into an installment agreement for the payment of all delinquent property taxes, penalties, interest and costs due with respect to either real property or a manufactured home with the owner of the real property or manufactured home whose taxes have become delinquent and whose account for all or part of the delinquent taxes has been transferred for collection to the [division] department, the county or the county's private attorney. Execution of an installment agreement under this section by a property owner is an irrevocable admission of liability for all taxes that are the subject of the agreement. The installment agreement shall be in writing and shall not extend for a period of more than thirty-six months. Interest shall accrue on the unpaid balance during the period of the installment agreement. The rate of interest shall be one percent a month, and no other interest on that portion of the principal representing unpaid taxes shall accrue while an installment agreement is in effect. [The division shall not enter into] An installment agreement with a property owner shall not be entered into on or after the date of the initial sale of real property or manufactured home for delinquent taxes whether or not the real property or manufactured home is sold and a deed issued as a result of that sale. The [division] department shall promulgate regulations establishing requirements for a minimum down payment and substantially equal monthly payments for installment agreements.

B. An installment agreement prevents any further action to collect the delinquent taxes stated in the agreement as long as the terms of the agreement are met.

C. The [division] department, a county having authority pursuant to Section 7-38-61.1 NMSA 1978 to collect delinquent taxes or the county's private attorney retained pursuant to Subsection B of Section 7-38-61.1 NMSA 1978 may proceed under the Property Tax Code to collect the property taxes, penalties, interest and costs due and unpaid if:

(1) installment payments are not made on or before the dates specified in the agreement;

(2) the property owner fails to pay other property taxes when required; or

(3) any other condition contained in the agreement is not met.

D. For the purpose of computing the time when real property or a manufactured home may be sold for delinquent taxes, the date of original delinquency shall be used when the delinquent taxes have been the subject of an installment agreement that was subsequently breached by the property owner.

E. If an owner of real property or a manufactured home enters into an installment agreement and subsequently breaches the agreement under this section, neither the [division] department, the county or the county's retained private attorney shall [not] enter into another installment agreement with that property owner for the payment of the delinquent taxes that were the subject of the installment agreement.

F. Alphabetically indexed and serially numbered records of installment agreements must be kept in the office of the director and made available for public inspection."

Section 12. Section 7-38-69 NMSA 1978 (being Laws 1973, Chapter 258, Section 109, as amended) is amended to read:

"7-38-69. DISTRIBUTION OF AMOUNTS COLLECTED UNDER INSTALLMENT AGREEMENTS.--Amounts collected under installment agreements entered into by the department, a county having authority pursuant to Section 7-38-61.1 NMSA 1978 to collect delinquent taxes or the county's private attorney retained pursuant to Subsection B of Section 7-38-61.1 NMSA 1978 that represent delinquent taxes shall be remitted to the county treasurer of the county to which the net taxable value of the property is allocated for distribution to the governmental units. Amounts collected that represent penalties, interest and costs shall be retained by the department in accordance with Section 7-38-71 NMSA 1978. Money collected shall be remitted at the times and in the manner required by applicable law and the regulations of the department of finance and administration. When the department has received payment in full of delinquent taxes, penalties, interest and costs paid under an installment agreement, the department shall notify the county treasurer of that fact, and the county treasurer shall make an entry on the property tax schedule indicating that the delinquent property taxes, penalties and interest have been paid."

Section 13. Section 7-38-71 NMSA 1978 (being Laws 1973, Chapter 258, Section 111, as amended) is amended to read:

"7-38-71. DISTRIBUTION OF AMOUNTS RECEIVED FROM SALE OF PROPERTY.--

A. Money received by the department from the sale of real or personal property for delinquent property taxes shall be deposited in a suspense fund and distributed as follows:

(1) first, that portion equal to the costs shall be retained by the department for use, subject to appropriation by the legislature, in administration of the Property Tax Code;

(2) second, that portion equal to the penalties and interest due shall be retained by the department for use, subject to appropriation by the legislature, by the department in administration of the Property Tax Code;

(3) third, that portion equal to the penalties provided for in Subsection C of Section 7-38-50 NMSA 1978 shall be paid over to the private attorney retained by a class A or class B county pursuant to Subsection B of Section 7-38-61.1 NMSA 1978;

[(3) third] (4) fourth, that portion equal to the delinquent taxes due shall be remitted by the department to the appropriate county treasurer for distribution by the treasurer to the governmental units in accordance with the law and the regulations of the department of finance and administration; and

[(4)] (5) the balance shall be paid to the former owner of the property sold or to any other person designated by order directed to the department by a court of competent jurisdiction; provided that the department may first apply all or any portion of the balance to be paid against the amount of any property tax, including any penalty and interest related thereto, owed by the person to whom the balance would otherwise be paid.

B. As a condition precedent to payment of the balance of the sale amount received to the former owner of the property, the department may require any person claiming to be entitled to that payment to present sufficient evidence of proof of former ownership of the property to the department. The department shall adopt regulations providing for the procedures to be followed by persons claiming sale proceeds as former owners in those instances where conflicting claims exist or the department requires proof of ownership.

C. If no person claims the balance of sale proceeds, whether the property was sold under the provisions of the Property Tax Code or prior law, as the former owner of the property within two years of the date of the sale and after a reasonable search to determine the former owner is made by the department and no former owner is found, the balance of the sale proceeds shall be considered abandoned property and deposited in accordance with the provisions of the Uniform Unclaimed Property Act.

D. If the balance of proceeds from the sale after paying a higher priority claim under Subsection A of this section is insufficient to pay all of the next priority claim, then the complete balance shall be applied to that next priority claim as partial payment."

Section 14. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2000.