45th legislature - STATE OF NEW MEXICO - second session, 2002

RELATING TO TAXATION; PROVIDING AN OPTION FOR COUNTIES TO ENFORCE COLLECTION OF DELINQUENT PROPERTY TAXES ON REAL PROPERTY.

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

Section 1. Section 7-35-2.1 NMSA 1978 (being Laws 1995, Chapter 12, Section 5) is amended to read:

"7-35-2.1. ADDITIONAL [DEFINITION] DEFINITIONS.--As used in the Property Tax Code:

A. "costs" means the expenses incurred by the [department] collecting authority in connection with collecting delinquent taxes. As applied to a particular property, "costs" may be, in the discretion of the [department] collecting authority, either the sum of the expenses incurred specifically in connection with that property or the uniform charge applied to the class of delinquent properties of which the property is a member; and

B. "collecting authority" means:

(1) the department, when exercising authority granted pursuant to Section 7-38-62 NMSA 1978; or

(2) a county, when exercising authority granted pursuant to Section 7-38-61.1 NMSA 1978."

Section 2. Section 7-38-42 NMSA 1978 (being Laws 1979, Chapter 343, Section 1) is amended to read:

"7-38-42. COLLECTION AND RECEIPT OF AND ACCOUNTING FOR PROPERTY TAXES--APPLICATION OF RECEIPTS TO DELINQUENT TAXES.--

A. The county treasurer has the responsibility and authority for collection of taxes and any penalties or interest due under the Property Tax Code except [for the collection of delinquent taxes, penalties and interest authorized to be collected by the department under Section 7-38-62 NMSA 1978] that, pursuant to Section 7-38-62 NMSA 1978, the department has the responsibility and exclusive authority to collect delinquent taxes, penalties and interest for the delinquent taxes shown on a tax delinquency list prepared and transferred to the department by a county that has not elected, pursuant to Section 7-38-61.1 NMSA 1978, to assume authority for the collection of delinquent taxes.

B. Property taxes, penalties and interest collected shall be receipted and accounted for in accordance with law and regulations of the department of finance and administration.

C. Except as provided in Section 7-38-61.4, 7-38-69 or 7-38-71 NMSA 1978, any payments received by the treasurer or the department as payments for property taxes, penalties or interest shall be first applied to the oldest outstanding unpaid property taxes, penalties or interest accrued in prior property tax years on the property identified and described in the property tax bill for which payment is tendered or, if the payment cannot be identified with a particular year's property tax bill, then the payment shall be applied first to the oldest liability for property taxes, penalties and interest shown in the treasurer's records under the name of the paying taxpayer. In applying the foregoing requirements for applications of payments and in the adoption of any regulations to implement those provisions, the following additional rules shall apply:

(1) applications of payments to prior year's delinquent taxes, penalties and interest shall not be made for more than ten years prior to the year of payment unless the treasurer's records show that the property for which taxes are delinquent has been deeded to the state of New Mexico and that property has not been sold by the state pursuant to applicable law;

(2) after application of payment received, if all or part of the payment has been applied to a prior year's delinquent taxes, penalties or interest, the receipting authority shall issue a receipt to the paying taxpayer showing the application of the payment and indicating any balance due for taxes, penalties or interest to bring the property tax payment status current; and

(3) the failure of a receipting authority to apply a payment as required under this subsection or the failure to issue a required receipt to the taxpayer of the status of his account shall not relieve the taxpayer of liability for taxes, penalties or interest he would otherwise be required to pay nor does action or inaction by the receipting authority act to estop the collecting authority from taking any action to collect or enforce the payment of taxes, penalties and interest legally due."

Section 3. 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] collecting authority 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 4. 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 has elected, pursuant to Section 7-38-61.1 NMSA 1978, to assume authority for the collection of delinquent taxes and has referred the collection to a qualified private attorney. The additional penalty shall equal the amount agreed to between the county and the attorney but shall not exceed fifteen percent of the amount of taxes due at the time of collection."

Section 5. 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, no later than August 1, the county treasurer shall, by certified mail, 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) if the county has elected, pursuant to Section 7-38-61.1 NMSA 1978, to assume authority for the collection of delinquent taxes, a statement informing the property owner of his right to enter into an installment agreement with the county for payment of delinquent taxes, penalties, interest and costs, in accordance with Section 7-38-68 NMSA 1978;

(4) information on the name and phone number of the individual in the county the taxpayer can contact to arrange for an installment agreement in accordance with Section 7-38-68 NMSA 1978;

[(3)] (5) 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] collecting authority;

[(4)] (6) 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

(7) if the county has elected, pursuant to Section 7-38-61.1 NMSA 1978, to assume authority for the collection of delinquent taxes, a statement that, if the taxes are not paid before September 1, the delinquent taxes may be referred to a qualified private attorney and that an additional civil penalty of up to fifteen percent of the taxes due will be incurred."

Section 6. 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 qualified 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 7. Section 7-38-60 NMSA 1978 (being Laws 1973, Chapter 258, Section 101, as amended) is amended to read:

"7-38-60. NOTIFICATION TO PROPERTY OWNER OF DELINQUENT TAXES.--By June 10 of each year, the county treasurer shall, by certified mail, mail a notice to each property owner of property for which taxes have been delinquent for more than two years. The notice shall be in a form and contain the information prescribed by department regulations and shall include the following:

A. a description of the property upon which the taxes are due;

B. 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 or costs that may be charged;

C. if the county has elected, pursuant to Section 7-38-61.1 NMSA 1978, to assume authority for the collection of delinquent taxes, a statement informing the property owner of his right to enter into an installment agreement with the county for payment of delinquent taxes, penalties, interest and costs, in accordance with Section 7-38-68 NMSA 1978;

D. information on the name and phone number of the individual in the county the taxpayer can contact to arrange for an installment agreement in accordance with Section 7-38-68 NMSA 1978;

[C.] E. if the county has not elected, pursuant to Section 7-38-61.1 NMSA 1978, to assume authority for the collection of delinquent taxes, a statement that the delinquent tax account on real property will be transferred to the department for collection;

[D.] F. a statement that if 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; and

[E.] G. a statement that if taxes due on personal property are not paid, the personal property may be seized and sold for taxes under authority of a demand warrant."

Section 8. 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. 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.]

B. If the county has not elected, pursuant to Section 7-38-61.1 NMSA 1978, to assume authority for the collection of delinquent taxes, the county treasurer shall mail the tax delinquency list to the department and make a notation on the property tax schedule indicating that the account has been transferred to the department for collection."

Section 9. 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 OPTION TO COLLECT DELINQUENT TAXES--AUTHORITY TO CONTRACT FOR THE COLLECTION OF DELINQUENT TAXES.--

A. A class A county with a population, according to the most recent federal decennial census, of greater than four hundred thousand 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 the Property Tax Code. To make the election, the board of county commissioners, with the express concurrence in writing of the county treasurer, shall adopt a resolution to assume the authority and shall deliver or mail a copy of the resolution to the department no later than thirty days after its adoption and at least thirty days prior to January 1 of the tax year to which the resolution first applies.

B. A county that has assumed authority to collect delinquent taxes pursuant to Subsection A of this section may take all actions allowed by law to collect delinquent taxes, penalties and interest, including:

(1) filing suit pursuant to Section 7-38-61.2 NMSA 1978;

(2) selling the real property on which taxes have become delinquent pursuant to Sections 7-38-65 through 7-38-67 and 7-38-70 through 7-38-72 NMSA 1978; and

(3) entering into installment agreements pursuant to Sections 7-38-68 and 7-38-69 NMSA 1978.

C. A county that has assumed authority pursuant to Subsection A of this section may request competitive proposals pursuant to the Procurement Code from qualified private attorneys and may execute a professional services contract with a successful offeror for the collection of delinquent taxes, penalties and interest due thereon that are owed to the county or governmental units for which the county collects the taxes. Pursuant to the contract and upon the referral of delinquent taxes from the county to the qualified private attorney, the attorney may take such actions to collect the taxes, penalties, interest and costs on behalf of the county as are allowed by law.

D. An assumption of collection authority adopted pursuant to Subsection A of this section may be revoked by a subsequent resolution of the board of county commissioners, provided that the effective date of the revocation shall be the beginning of the tax year commencing on or after eighteen months after the department receives written notification of the revocation.

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

F. As used in this section, "qualified private attorney" means an attorney licensed to practice in New Mexico who carries professional liability insurance in an amount determined adequate by the board of county commissioners, which amount shall be specified in the request for proposals."

Section 10. 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.--At any time after a tax on property becomes delinquent, a county that, pursuant to Section 7-38-61.1 NMSA 1978, has elected to assume the authority to collect delinquent taxes or its qualified private attorney may file suit seeking a personal judgment against the taxpayer. The suit shall be filed in a court of competent jurisdiction for the county in which the tax was or is imposed."

Section 11. 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 IN COLLECTION SUIT.--

A. If successful in a suit to collect a delinquent tax pursuant to Section 7-38-61.2 NMSA 1978, in addition to other costs authorized by law, a county or its qualified private attorney is entitled to recover from the delinquent taxpayer the following costs:

(1) court costs;

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

(3) expenses of a tax sale; and

(4) reasonable expenses that are incurred by the county or its qualified private 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.

B. Each item specified by Subsection A of this section is a charge against the property and a personal obligation of the property owner and shall be collectible in the same manner as the taxes, penalties, interest and costs due by the owner."

Section 12. 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] DISTRIBUTION OF PROCEEDS RECEIVED.--Except for proceeds from the sale of real property distributed pursuant to Section 7-38-71 NMSA 1978 and amounts collected under installment agreements distributed pursuant to Section 7-38-69 NMSA 1978, delinquent taxes, penalties, interest and costs received by a county after a matter has been referred by the county to a qualified private attorney pursuant to Subsection C of Section 7-38-61.1 NMSA 1978 shall be distributed as follows:

A. first, that portion equal to the costs incurred by the county, including any amount owed to a qualified private attorney under a contract entered into pursuant to Section 7-38-61.1 NMSA 1978, and the penalties and interest due shall be deposited in the general fund of the county; and

B. second, the remaining balance shall be distributed by the county treasurer to the governmental units in accordance with the law and regulations of the department of finance and administration."

Section 13. 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.--[After the receipt of the tax delinquency list]

A. The department has the responsibility and exclusive authority to take all action necessary to collect [delinquent taxes shown on the list] delinquent taxes shown on a tax delinquency list prepared and transferred to the department by a county that has not elected to assume the authority to collect taxes pursuant to Section 7-38-61.1 NMSA 1978.

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. 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] authority to collect those delinquent taxes has been granted to the department pursuant to Subsection A of this section; however, the department may authorize county treasurers to act as its agents in accepting payments of taxes, penalties, interest or costs due. Penalties, interest and costs due 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 14. Section 7-38-65 NMSA 1978 (being Laws 1973, Chapter 258, Section 105, as amended by Laws 2001, Chapter 253, Section 1 and by Laws 2001, Chapter 254, Section 1) is amended to read:

"7-38-65. COLLECTION OF DELINQUENT TAXES ON REAL PROPERTY--SALE OF REAL PROPERTY.--

A. The [department] collecting authority may collect delinquent taxes on real property by selling the real property on which the taxes have become delinquent. The sale of real property for delinquent taxes shall be in accordance with the provisions of the Property Tax Code. Real property may be sold for delinquent taxes at any time after the expiration of three years from the first date shown on the tax delinquency list on which the taxes became delinquent. Real property shall be offered for sale for delinquent taxes either within four years after the first date shown on the tax delinquency list on which the taxes became delinquent or, if the [department] collecting authority is barred by operation of law or by order of a court of competent jurisdiction from offering the property for sale for delinquent taxes within four years after the first date shown on the tax delinquency list on which the taxes became delinquent, within one year from the time the [department] collecting authority determines that it is no longer barred from selling the property, unless:

(1) all delinquent taxes, penalties, interest and costs due are paid by 5:00 p.m. of the day prior to the date of the sale; or

(2) an installment agreement for payment of all delinquent taxes, penalties, interests and costs due is entered into with the [department] collecting authority by 5:00 p.m. of the day prior to the date of the sale pursuant to Section 7-38-68 NMSA 1978.

B. Failure to offer property for sale within the time prescribed by Subsection A of this section shall not impair the validity or effect of any sale which does take place.

C. The time requirements of this section are subject to the provisions of Section 7-38-83 NMSA 1978."

Section 15. Section 7-38-66 NMSA 1978 (being Laws 1973, Chapter 258, Section 106, as amended by Laws 2001, Chapter 253, Section 2 and by Laws 2001, Chapter 254, Section 2) is amended to read:

"7-38-66. SALE OF REAL PROPERTY FOR DELINQUENT TAXES--NOTICE OF SALE.--

A. At least twenty days but not more than thirty days before the date of the sale for delinquent taxes, the [department] collecting authority shall notify by certified mail, return receipt requested, to the address as shown on the most recent property tax schedule, each property owner whose real property will be sold that the owner's real property will be sold to satisfy delinquent taxes, unless:

(1) all delinquent taxes, penalties, interest and costs due are paid by 5:00 p.m. of the day prior to the date of the sale; or

(2) an installment agreement for payment of all delinquent taxes, penalties, interest and costs due is entered into with the [department] collecting authority by 5:00 p.m. of the day prior to the date of sale in accordance with Section 7-38-68 NMSA 1978.

B. The notice shall also:

(1) state the amount of taxes, penalties, interest and costs due;

(2) state the time and place of the sale;

(3) describe the real property that will be sold;

(4) inform the property owner of his right to enter into an installment agreement with the [department] collecting authority for payment of delinquent taxes, penalties, interest and costs, in accordance with Section 7-38-68 NMSA 1978;

(5) provide information on the name and phone number of the individual in the [department] collecting authority the taxpayer can contact to arrange for an installment agreement in accordance with Section 7-38-68 NMSA 1978; and

(6) contain any other information that the department may require by regulation.

C. At the same time a notice required by Subsection A of this section is sent to the owner of the property, a notice containing the information set out in Subsection B of this section shall also be sent to each person holding a lien or security interest of record in the property if an address for such person is reasonably ascertainable through a search of the property records of the county in which the property is located.

D. Failure of the [department] collecting authority to mail a required notice by certified mail, return receipt requested, shall invalidate the sale; provided, however, that return to the [department] collecting authority of the notice of the return receipt shall be deemed adequate notice and shall not invalidate the sale.

E. Proof by the taxpayer that all delinquent taxes, penalties, interest and costs had been paid by 5:00 p.m. of the day prior to the date of sale shall prevent or invalidate the sale.

F. Proof by the taxpayer that the taxpayer has, by 5:00 p.m. of the day prior to the date of sale, entered into an installment agreement to pay all delinquent taxes, penalties, interest and costs as provided in Section 7-38-68 NMSA 1978 and that timely payments under such agreement are being made shall prevent or invalidate the sale.

G. The time requirements of this section are subject to the provisions of Section 7-38-83 NMSA 1978."

Section 16. Section 7-38-67 NMSA 1978 (being Laws 1973, Chapter 258, Section 107, as amended by Laws 2001, Chapter 253, Section 3 and by Laws 2001, Chapter 254, Section 3) is amended to read:

"7-38-67. REAL PROPERTY SALE REQUIREMENTS.--

A. Real property may not be sold for delinquent taxes before the expiration of three years from the first date shown on the tax delinquency list on which the taxes on the real property became delinquent.

B. Notice of the sale shall be published in a local newspaper within the county where the real property is located or, if there is no local county or municipal newspaper, then a newspaper published in a county contiguous to or near the county in which the real property is located, at least once a week for the three weeks immediately preceding the week of the sale. For more generalized notice, the [department] collecting authority may choose to publish notice of the sale also in a newspaper not published within the county and of more general circulation. The notice shall state the time and place of the sale and shall include a description of the real property sufficient to permit its identification and location by potential purchasers.

C. Real property shall be sold at public auction either by the [department] collecting authority or an auctioneer hired by the [department] collecting authority. The auction shall be held in the county where the real property is located at a time and place designated by the [department] collecting authority.

D. If the real property can be divided so as to enable the [department] collecting authority to sell only part of it and pay all delinquent taxes, penalties, interest and costs, the [department] collecting authority may, with the consent of the owner, sell only a part of the real property.

E. Before the sale, the [department] collecting authority shall determine a minimum sale price for the real property. In determining the minimum price, the [department] collecting authority 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. Real property may not be sold for less than the minimum price unless no offer met the minimum price when it was offered at an earlier public auction. A sale properly made under the authority of and in accordance with the requirements of this section constitutes full payment of all delinquent taxes, penalties and interest that are a lien against the property at the time of sale, and the sale extinguishes the lien.

F. Payment shall be made in full by the close of the public auction before an offer may be deemed accepted by the [department] collecting authority.

G. Real property not offered for sale may be offered for sale at a later sale, but the requirements of this section and Section 7-38-66 NMSA 1978 shall be met in connection with each sale."

Section 17. 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] collecting authority 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]. 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] collecting authority shall not enter into an installment agreement with a property owner 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] collecting authority 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, the [division] collecting authority 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] collecting authority and made available for public inspection."

Section 18. 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] collecting authority 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] distributed in accordance with Section 7-38-71 NMSA 1978. Money collected shall be remitted at the times and in the manner required by regulations of the department of finance and administration. When the [department] collecting authority has received payment in full of delinquent taxes, penalties, interest and costs paid under an installment agreement, the [department] collecting authority 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 19. Section 7-38-70 NMSA 1978 (being Laws 1973, Chapter 258, Section 110, as amended) is amended to read:

"7-38-70. ISSUANCE OF DEEDS AS RESULT OF SALE OF REAL PROPERTY FOR DELINQUENT TAXES--EFFECT OF DEEDS--LIMITATION OF ACTION TO CHALLENGE CONVEYANCE.--

A. Upon receiving payment for real property sold for delinquent taxes, the [division] collecting authority shall execute and deliver a deed to the purchaser.

B. If the real property was sold substantially in accordance with the Property Tax Code, the deed conveys all of the former property owner's interest in the real property as of the date the [state's] collecting authority's lien for real property taxes arose in accordance with the Property Tax Code, subject only to perfected interests in the real property existing before the date the property tax lien arose.

C. After two years from the date of sale, neither the former real property owner shown on the property tax schedule as the delinquent taxpayer nor anyone claiming through him may bring an action challenging the conveyance.

D. Subject to the limitation of Subsection C of this section, in all controversies and suits involving title to real property held under a deed from the [state] collecting authority issued under this section, any person claiming title adverse to that acquired by the deed from the [state must] collecting authority shall prove, in order to defeat the title, that:

(1) the real property was not subject to taxation for the tax years for which the delinquent taxes for which it was sold were imposed;

(2) the [division] collecting authority failed to mail the notice required under Section 7-38-66 NMSA 1978 or to receive any required return receipt;

(3) he, or the person through whom he claims, had title to the real property at the time of the sale and had paid all delinquent taxes, penalties, interest and costs prior to the sale as provided in Subsection E of Section 7-38-66 NMSA 1978; or

(4) he, or the person through whom he claims, had entered into an installment agreement to pay all delinquent taxes, penalties, interest and costs prior to the sale as provided in Section 7-38-68 NMSA 1978 and that all payments due were made timely."

Section 20. 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. If the collecting authority is the department, 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 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) 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. If the collecting authority is a county, money received by the county from the sale of real or personal property for delinquent property taxes shall be distributed as follows:

(1) first, that portion equal to the costs incurred by the county, including any amount owed to a qualified private attorney under a contract entered into pursuant to Section 7-38-61.1 NMSA 1978, and the penalties and interest due shall be deposited in the general fund of the county;

(2) second, the balance, up to an amount equal to the delinquent taxes due, shall be distributed by the county treasurer to the governmental units in accordance with the law and regulations of the department of finance and administration; and

(3) the balance shall be paid to the former owner of the property sold or to any other person designated by order directed to the county by a court of competent jurisdiction, provided that the county 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.] C. As a condition precedent to payment of the balance of the sale amount received to the former owner of the property, the [department] collecting authority 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] collecting authority. 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] collecting authority requires proof of ownership.

[C.] D. 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] collecting authority 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.] E. If the balance of proceeds from the sale after paying a higher priority claim under Subsection A or B 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 21. Section 7-38-72 NMSA 1978 (being Laws 1973, Chapter 258, Section 112, as amended) is amended to read:

"7-38-72. NOTATION ON PROPERTY TAX SCHEDULE BY COUNTY TREASURER WHEN PROPERTY SOLD FOR DELINQUENT TAXES.--When the county treasurer receives written notification from the [division] collecting authority of the sale of property for delinquent taxes, [he] the treasurer shall make an entry on the property tax schedule indicating that the delinquent property taxes, penalties and interest are no longer a lien against the property."

Section 22. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2002.