TFiscal impact
reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for
standing finance committees of the NM Legislature. The LFC does not assume
responsibility for the accuracy of these reports if they are used for other
purposes.
Current FIRs (in
HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us). Adobe PDF versions include all attachments,
whereas HTML versions may not.
Previously issued FIRs and attachments may be obtained from the LFC in
|
SPONSOR |
Leavell |
DATE TYPED |
|
HB |
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SHORT
TITLE |
Connect Real Property to Right of Redemption |
SB |
531 |
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ANALYST |
Reynolds-Forte |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY04 |
FY05 |
FY04 |
FY05 |
|
|
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|
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|
Minimal – See Narrative |
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|
|
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(Parenthesis
( ) Indicate Expenditure Decreases)
LFC Files
Responses
Received From
Mortgage
Finance Authority
Administrative
Office of the Courts
Attorney
General
Regulation
and Licensing Department
Taxation
and Revenue Department
SUMMARY
Synopsis of Bill
Senate Bill 531 changes the right of redemption
for real property. The bill prohibits the
owner of real property, which is sold at a foreclosure sale, from transferring their
right of redemption to a third party other than their heirs or personal
representative of their estate; and prohibits the purchaser of real property,
which was sold at a foreclosure sale, from assigning to a third party (other
than their heirs or personal representative) the purchaser’s right to receive
the amount paid by another individual to redeem the property.
Section 2 of
Senate Bill 531 proposes to significantly shorten the period of time in
which the state has to exercise its right of redemption (from 9 months to 90
days) when the state is a junior lien holder in a foreclosure action. This applies where the state has a lien (such
as for unpaid income tax or gross receipt tax) and the property was sold in
order to satisfy a judgment lien.
ADMINISTRATIVE IMPLICATIONS
In a foreclosure
action in which the state is a junior lien holder, the state has approximately
three months instead of nine months to exercise its statutory right of
redemption. The Taxation and Revenue
Department believes that if the state’s redemption period is decreased from 9
months to 90 days, it would be very difficult to redeem the real property at
issue. Ninety days is too short a time
period. The Federal redemption period is
120 days.
OTHER SUBSTANTIVE ISSUES
New Mexico case law
has held that the right of redemption is created by statue and does not arise
until the property is sold under judgment foreclosing a mortgage (Sun Country
Savings Bank of NM v. McDowell, 108 NM 528, 775 P.2d 730 (1989). Because this is a statutory right, the legislature
may place restrictions on transfer or “alienation” of this right. However, the proposed amendment would limit
the universe of individuals to whom the right of redemption could be
transferred. For example, suppose that
within one month after the foreclosure sale, an unrelated third party offers to
buy the owner’s right of redemption, so that the third party may redeem the
property (from the new purchaser) by paying the amounts specified in law (price
paid by the purchaser, interest, costs of sale, penalties, taxes, ects.). Senate bill 531 would prohibit the owner of
the real property from entering into this transaction with a third party.
POSSIBLE QUESTIONS
PRF/dm