2004 House Bill text for HB0570

HOUSE BILL 570

46th legislature - STATE OF NEW MEXICO - second session, 2004

INTRODUCED BY

Ben Lujan

FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE

AN ACT

RELATING TO PROPERTY TAXATION; AMENDING AND ENACTING PROVISIONS OF THE PROPERTY TAX CODE.

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

Section 1. Section 7-35-2 NMSA 1978 (being Laws 1973, Chapter 258, Section 2, as amended by Laws 1994, Chapter 9, Section 1 and by Laws 1994, Chapter 9, Section 2) is amended to read:

"7-35-2. DEFINITIONS.--As used in the Property Tax Code:

A. "department" or "division" means the taxation and revenue department, the secretary [of taxation and revenue] or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

B. "director" means the secretary;

C. "livestock" means cattle, buffalo, horses, mules, sheep, goats, swine, ratites, alpacas and other domestic animals useful to man;

D. "manufactured home" means a manufactured home as that term is defined in Section 66-1-4.11 NMSA 1978;

E. "net taxable value" means the value of property upon which the tax is imposed and is determined by deducting from taxable value the amount of any exemption authorized by the Property Tax Code;

F. "nonresidential property" means property that is not residential property;

G. "owner" means the person in whom is vested any title to property;

H. "person" means an individual or any other legal entity;

I. "property" means tangible property, real or personal;

J. "residential property" means property consisting of one or more dwellings together with appurtenant structures, the land underlying both the dwellings and the appurtenant structures and a quantity of land reasonably necessary for parking and other uses that facilitate the use of the dwellings and appurtenant structures. As used in this subsection, "dwellings" includes both manufactured homes and other structures when used primarily for permanent human habitation, but the term does not include structures when used primarily for temporary or transient human habitation such as hotels, motels and similar structures;

K. "secretary" means the secretary of taxation and revenue and, except for purposes of Section 7-35-6 NMSA 1978 [and Paragraphs (1) and (2) of Subsection B of Section 7-38-90 NMSA 1978], also includes the deputy secretary or a division director or deputy division director delegated by the secretary;

L. "tax" means the property tax imposed under the Property Tax Code;

M. "taxable value" means the value of property determined by applying the tax ratio to the value of the property determined for property taxation purposes;

N. "tax rate" means the rate of the tax expressed in terms of dollars per thousand dollars of net taxable value of property;

O. "tax ratio" means the percentage established under the Property Tax Code that is applied to the value of property determined for property taxation purposes in order to derive taxable value; and

P. "tax year" means the calendar year."

Section 2. Section 7-35-4 NMSA 1978 (being Laws 1973, Chapter 258, Section 7) is amended to read:

"7-35-4. DEPARTMENT TO PROVIDE MANUALS AND OTHER MATERIALS.--The department shall [prepare, issue and periodically revise] provide valuation manuals, cost and valuation schedules, bulletins and annotated digests of property tax laws and regulations in handbook form for the use of its employees, the county assessors and their employees and other persons involved in the administration and collection of the property tax. The department shall make the foregoing materials available to members of the public and may charge a fee for the materials to offset the cost of physical preparation. Any amounts collected are appropriated to the department for its operation."

Section 3. Section 7-36-21.3 NMSA 1978 (being Laws 2000, Chapter 21, Section 1, as amended) is amended to read:

"7-36-21.3. LIMITATION ON INCREASE IN VALUE FOR SINGLE-FAMILY DWELLINGS OCCUPIED BY LOW-INCOME OWNERS SIXTY-FIVE YEARS OF AGE OR OLDER OR DISABLED.--

A. For the 2001 and subsequent tax years, the valuation for property taxation purposes of a single-family dwelling owned and occupied by a person who is sixty-five years of age or older and whose modified gross income, as defined in the Income Tax Act, for the prior taxable year did not exceed the greater of eighteen thousand dollars ($18,000) or the amount calculated pursuant to Subsection [C] D of this section shall not be greater than the valuation of the property for property taxation purposes in the:

(1) 2001 tax year;

(2) year in which the owner has his sixty-fifth birthday, if that is after 2001; or

(3) tax year following the tax year in which an owner who turns sixty-five or is sixty-five years of age or older first owns and occupies the property, if that is after 2001.

B. For the 2003 and subsequent tax years, the valuation for property taxation purposes of a single-family dwelling owned and occupied by a person who is disabled and whose modified gross income, as defined in the Income Tax Act, for the prior taxable year did not exceed the greater of eighteen thousand dollars ($18,000) or the amount calculated pursuant to Subsection [C] D of this section shall not be greater than the valuation of the property for property taxation purposes in the:

(1) 2003 tax year;

(2) year in which the owner is determined to be disabled, if that is after 2003; or

(3) tax year following the tax year in which an owner who is disabled or who is determined in that year to be disabled first owns and occupies the property, if that is after 2003.

C. The limitation of value specified in Subsections A and B of this section shall be applied in a tax year in which the owner claiming entitlement files with the county assessor an application for the limitation on a form furnished to him by the assessor. The application shall be filed with the assessor within thirty days after the mailing of the assessor's notice of valuation, pursuant to Section 7-38-20 NMSA 1978. The application form shall be designed by the department and shall provide for proof of age or disability, occupancy and income eligibility for the tax year for which application is made.

D. For the 2002 tax year and each subsequent tax year, the maximum amount of modified gross income in Subsections A and B of this section shall be adjusted to account for inflation. The department shall make the adjustment by multiplying the maximum amount for tax year 2000 by a fraction, the numerator of which is the consumer price index ending during the prior tax year and the denominator of which is the consumer price index ending in tax year 2000. The result of the multiplication shall be rounded down to the nearest one hundred dollars ($100), except that if the result would be an amount less than the corresponding amount for the preceding tax year, then no adjustment shall be made. For purposes of this subsection, "consumer price index" means the consumer price index for all urban consumers published by the United States department of labor for the month ending September 30. The department shall publish annually the amount determined by the calculation and distribute it to each county assessor no later than December 1 of each tax year.

E. The limitation of value specified in Subsections A and B of this section does not apply to:

(1) a change in valuation resulting from any physical improvements made to the property during the year immediately prior to the tax year or a change in the permitted use or zoning of the property during the year immediately prior to the tax year; or

(2) a residential property in the first tax year that is valued for property taxation purposes.

F. As used in this section, "disabled" means a person who has been determined to be blind or permanently disabled with medical improvement not expected pursuant to 42 USCA 421 for purposes of the federal Social Security Act or is determined to have a permanent total disability pursuant to the Workers' Compensation Act."

Section 4. Section 7-38-12.1 NMSA 1978 (being Laws 2003, Chapter 118, Section 2) is amended to read:

"7-38-12.1. RESIDENTIAL PROPERTY TRANSFERS--AFFIDAVIT TO BE FILED WITH ASSESSOR.--

A. After January 1, 2004, a [person] transferor or its authorized agent or a transferee or its authorized agent presenting for recording with a county clerk a deed, real estate contract or memorandum of real estate contract [for recording with a county clerk] transferring an interest in real property classified as residential property for property taxation purposes shall also file with the county assessor within thirty days of the date of filing with the county clerk an affidavit signed and completed in accordance with the provisions of Subsection B of this section.

B. The affidavit required for submission shall be in a form [developed] approved by the [property tax division] department and signed by the transferors or their authorized agents or the transferees or their authorized agents of any interest in residential real property transferred by deed or real estate contract. The affidavit shall contain [at least] the following information to be used only for analytical and statistical purposes in the application of appraisal methods:

(1) the complete names of all transferors and transferees;

(2) the current mailing addresses of all transferors and transferees;

(3) the legal description of the real property interest transferred as it appears in the document of transfer;

(4) the full consideration, including money or any other thing of value, paid or exchanged for the transfer and the terms of the sale; and

(5) the value and a description of personal property that is included in the sale price.

C. Upon receipt of the affidavit required by Subsection A of this section, the county assessor shall place the date of receipt on the original affidavit and on a copy of the affidavit. The county assessor shall retain the original affidavit as a [permanent] confidential record and as proof of compliance and shall return the copy marked with the date of receipt to the person presenting the affidavit. The assessor shall index the affidavits in a manner that permits cross-referencing to other records in the assessor's office pertaining to the specific property described in the affidavit. The affidavit and its contents are not part of the valuation record of the assessor.

D. The affidavit required by Subsection A of this section shall not be required for:

(1) a deed transferring nonresidential property;

[(1)] (2) a deed that results from the payment in full or forfeiture by a transferee under a recorded real estate contract or recorded memorandum of real estate contract;

[(2)] (3) a lease of or easement on real property, regardless of the length of term;

[(3)] (4) a deed, patent or contract for sale or transfer of real property in which an agency or representative of the United States, New Mexico or any political subdivision of the state is the named grantor or grantee and authorized transferor or transferee;

[(4)] (5) a quitclaim deed to quiet title or clear boundary disputes;

[(5)] (6) a conveyance of real property executed pursuant to court order;

[(6)] (7) a deed to an unpatented mining claim;

[(7)] (8) an instrument solely to provide or release security for a debt or obligation;

[(8)] (9) an instrument that confirms or corrects a deed previously recorded;

[(9)] (10) an instrument between husband and wife or parent and child with only nominal actual consideration therefor;

[(10)] (11) an instrument arising out of a sale for delinquent taxes or assessments;

[(11)] (12) an instrument accomplishing a court-ordered partition;

[(12)] (13) an instrument arising out of a merger or incorporation;

[(13)] (14) an instrument by a subsidiary corporation to its parent corporation for no consideration, nominal consideration or in sole consideration of the cancellation or surrender of the subsidiary's stock;

[(14)] (15) an instrument from a person to a trustee or from a trustee to a trust beneficiary with only nominal actual consideration therefor;

[(15)] (16) an instrument to or from an intermediary for the purpose of creating a joint tenancy estate or some other form of ownership; or

[(16)] (17) an instrument delivered to establish a gift or a distribution from an estate of a decedent or trust.

E. The affidavit required by Subsection A of this section shall not be construed to be a valuation record pursuant to Section 7-38-19 NMSA 1978.

F. Prior to November 1, 2003, the department shall print and distribute to each county assessor affidavit forms for distribution to the public upon request."

Section 5. Section 7-38-49 NMSA 1978 (being Laws 1973, Chapter 258, Section 89) is amended to read:

"7-38-49. UNPAID PROPERTY TAXES--IMPOSITION OF INTEREST.--If property taxes are not paid for any reason within thirty days after the date they are due, interest on the unpaid taxes shall accrue from the thirtieth day after they are due until the date they are paid. Interest shall accrue at the rate of one percent a month or any fraction of a month. Interest shall accrue whether or not protests have been resolved. However, in the case of a timely protest, interest payable shall be computed on a principal amount equal to the unpaid taxes finally determined to be due upon resolution of the protest. Interest shall not be imposed on interest or on any penalty. Interest accrued pursuant to the provisions of this section shall not be waived by the state or by a political subdivision of the state."

Section 6. 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).

B. A county may suspend for a particular tax year application of the minimum penalty requirements of [this] Subsection A of this section 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.

C. Except as provided in Subsection B of this section, penalties imposed pursuant to Subsection A of this section shall not be waived by the state or by a political subdivision of the state.

[B.] D. 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."

Section 7. A new section of the Property Tax Code is enacted to read:

"[NEW MATERIAL] RECEIPT FOR PAYMENT OF DELINQUENT TAXES--DISTRIBUTION.--At the time a county treasurer receives payment of delinquent taxes, penalties, interest and costs, the county treasurer shall issue a receipt to the property owner. The county treasurer shall note the payment of the property taxes, penalties, interest and costs on the property tax schedule and shall distribute the property taxes to the appropriate governmental units according to rules of the department of finance and administration."

Section 8. A new section of the Property Tax Code is enacted to read:

"[NEW MATERIAL] COUNTY TREASURER TO PREPARE PAYMENT REPORT.--A county treasurer shall prepare a monthly report of all payments of property taxes, penalties, interest and costs received on properties listed on the tax delinquency list and shall submit the report to the department together with the distribution of the penalties, interest and costs pursuant to Section 7 of this 2004 act. The report shall be in a form prescribed by the department and shall contain the following information:

A. the name of the county;

B. the account number reflected on the tax delinquency list to which payment was applied;

C. the base amount of property taxes paid;

D. the amount of penalty paid;

E. the amount of interest paid; and

F. the amount of costs paid."

Section 9. Section 7-38-65 NMSA 1978 (being Laws 1973, Chapter 258, Section 105, as amended) is amended to read:

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

A. If a lien exists by the operation of Section 7-38-48 NMSA 1978, the department 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 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 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] and time the sale is scheduled to begin; or

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

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] that does take place.

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

Section 10. 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 of real property for delinquent taxes, the department shall notify by certified mail, return receipt requested, [to the address as shown] the current assessed owner of the real property whose name appears 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] and time the sale is scheduled to begin; or

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

B. The notice shall also:

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

(2) state the date, 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 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 the [taxpayer] owner 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:

(1) the delinquent owner as reflected on the tax delinquency list;

(2) the owner of record as recorded on the deed with the county clerk's office in the county in which the property is located; and

(3) each person holding a lien or security interest [of record] in the property as recorded on the lien, mortgage or real estate contract with the county clerk's office in the county in which the property is located 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] clerk's office.

D. Failure of the department to mail a required notice by certified mail, return receipt requested, shall invalidate the sale; provided, however, that return to the department of the [notice of the] return receipt or certified notice 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] and time the sale is scheduled to begin 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] and time the sale is scheduled to begin, 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 11. 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 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 date, time and place [of] where the sale is to be conducted and shall include [a description]:

(1) the delinquent owner's name as reflected on the tax delinquency list;

(2) the legal description of the real property as reflected on the tax delinquency list;

(3) the minimum sale price; and

(4) the approximate location 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 or an auctioneer hired by the department. The auction shall be held in the county where the real property is located at a time and place designated by the department.

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

E.] D. Before the sale, the department shall determine a minimum sale price for the real property. [In determining the minimum price, the department shall consider the value of the property owner's interest in the real property] The minimum sale price shall include 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.] E. Payment shall be made in full by the close of the public auction [before an offer may be deemed accepted by the department].

F. If a successful bidder fails to make payment in full by the close of the public auction, the department may preclude the bidder from bidding at future auctions, and the bidder will be responsible for all costs, expenses and attorney fees expended in the attempt to collect the bid.

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 12. 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 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] on the tax delinquency list with the owner of record 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] as recorded on the deed with the county clerk's office in the county in which the real property is located. 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] principal during the period of the installment agreement. The rate of interest shall be one percent a month, and no other interest or penalty on that portion of the principal representing unpaid taxes shall accrue while an installment agreement is in effect. The [division] department 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] after commencement of the scheduled sale of the real property for delinquent taxes. The real property shall not be removed from the sale list unless the requirements to enter into an installment agreement are met prior to the commencement of the scheduled sale of the real property. The department shall promulgate regulations establishing requirements for [a minimum down payment and substantially equal monthly payments for] entering into 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 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] department 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] Installment agreements shall be indexed by installment agreement number and name and retained in the office of the director and made available for public inspection."

Section 13. 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] department shall [execute and deliver a deed] issue a receipt to the purchaser. The purchaser has no property rights or right of entry to the property purchased until the department delivers to the purchaser a deed consummating the sale.

B. [If the real property was sold substantially in accordance with the Property Tax Code] No later than six weeks after the date of the sale, after determining that the sale substantially complied with the Property Tax Code, the department shall execute and mail a deed to the purchaser. The deed conveys all of the former property owner's interest in the real property as of the date the state'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]. The state deed issued for real property sold for delinquent taxes has the same effect as a quitclaim deed and does not warrant title.

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] of record as recorded on the deed with the county clerk's office in the county in which the real property is located 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 issued under this section, any person claiming title adverse to that acquired by the deed from the state [must] 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] department failed to mail the notice required under Section 7-38-66 NMSA 1978 or to receive any required return receipt or certified notice;

(3) he, or the person through whom he claims, had title to the real property that was reflected on a deed recorded with the county clerk's office in the county in which the real property is located 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.

E. In the event a deed is canceled pursuant to the requirements set forth in Subsection D of this section, only the amount paid for the real property at the sale is subject to refund. No interest or expenses shall be paid to the buyer regardless of the basis for the cancellation."

Section 14. 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 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] record of the property sold as recorded on the deed with the county clerk's office in the county in which the property is located 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] shall 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 15. APPLICABILITY.--The provisions of this act apply to the 2004 and subsequent property tax years.

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