HB 254

Page 1

AN ACT

RELATING TO PROPERTY; AMENDING THE DEED OF TRUST ACT;

AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA 1978.

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

Section 1. Section 48-10-3 NMSA 1978 (being Laws 1987,

Chapter 61, Section 3, as amended) is amended to read:

"48-10-3. DEFINITIONS.--As used in the Deed of Trust

Act, unless the context otherwise requires:

A. "beneficiary" means the person named or

otherwise designated in a deed of trust as the person for

whose benefit a deed of trust is given or the person's

successor in interest;

B. "contract" means an agreement between or among

two or more persons, including, without limitation, a note,

promissory note, guarantee or the terms of any deed of trust;

C. "credit bid" means a bid made by the

beneficiary in full or partial satisfaction of the contract

that is secured by the deed of trust. A credit bid may only

include an amount owing on a contract with interest secured by

liens, mortgages, deeds of trust or encumbrances that are

superior in priority to the deed of trust and which liens,

mortgages or encumbrances, whether recourse or nonrecourse,

are outstanding as provided in the contract or as provided in

the deed of trust, together with the amount of other

HB 254

Page 2

obligations provided in or secured by the deed of trust and

the costs of exercising the power of sale and the trustee's

sale, including the fees of the trustee and reasonable

attorney fees actually incurred by the trustee and the

beneficiary;

D. "parent corporation" means a corporation that

owns eighty percent or more of each class of the issued and

outstanding stock of another corporation or, in the case of a

savings and loan association, eighty percent or more of the

issued and outstanding guaranty capital of the savings and

loan association;

E. "person" means an individual or organization;

F. "deed of trust" means a document by way of

mortgage in substance executed in conformity with the Deed of

Trust Act and in conformity with Section 47-1-39 NMSA 1978

granting or mortgaging trust real estate to a trustee

qualified under the Deed of Trust Act to secure the

performance of a contract;

G. "junior encumbrancer" means a person holding a

lien, mortgage or other encumbrance of record evidencing an

interest in the trust real estate that is subordinate in

priority to the deed of trust and includes a lienholder, a

mortgagee, a seller and a purchaser as provided in a real

estate contract and, where the context is applicable, escrow

agents as provided in a real estate contract;

HB 254

Page 3

H. "trust real estate" means any legal, equitable,

leasehold or other interest in real estate, including the term

"real estate" as defined in Section 47-1-1 NMSA 1978 and any

improvements and fixtures, which is capable of being

transferred whether or not the interest is subject to any

prior mortgages, deeds of trust, contracts for conveyance of

real estate, real estate contracts or other liens or

encumbrances; provided, however, trust real estate shall not

include:

(1) any real estate used by the trustor for

farming operations, including farming, tillage of the soil,

dairy farming, ranching, production or raising of crops,

poultry or livestock, and production of poultry or livestock

products in an unmanufactured state; or

(2) oil and other liquid hydrocarbons, or

gas, including casinghead gas, condensates and other gaseous

petroleum substances, or coal or other minerals in, on or

under real estate, including patented and unpatented mining

claims, unless such minerals have not been severed from and

are included with the surface estate.

The character of trust real estate shall be determined

as of the date of the deed of trust covering the trust real

estate;

I. "trustee" means a person qualified as provided

in the Deed of Trust Act. The obligations of a trustee to the

HB 254

Page 4

trustor, beneficiary and other persons are as provided in the

Deed of Trust Act, together with any other obligations

specified in the deed of trust. Both the beneficiary and the

trustee have all the powers of a mortgagee as provided by law;

and

J. "trustor" means the person or the person's

successor in interest granting or mortgaging trust real estate

by a deed of trust as security for the performance of a

contract and is the same as a mortgagor granting or mortgaging

real estate by way of mortgage as provided by law."

Section 2. Section 48-10-7 NMSA 1978 (being Laws 1987,

Chapter 61, Section 7) is amended to read:

"48-10-7. APPOINTMENT OF SUCCESSOR TRUSTEE BY

BENEFICIARY.--

A. If a person appointed as trustee fails to

qualify, is unwilling, unqualified or unable to serve or

resigns as trustee, the beneficiary may appoint a successor

trustee and the appointment shall constitute a substitution of

trustee.

B. The beneficiary may remove a trustee at any

time for any reason or cause and appoint a successor trustee,

and the appointment shall constitute a substitution of

trustee.

C. Substitutions shall be made by recording notice

of the substitution in the office of the county clerk of each

HB 254

Page 5

county in which all or any part of the trust real estate is

situated at the time of the substitution. The beneficiary

shall give written notice through registered or certified

mail, postage prepaid, to the trustor, the trustee and the

successor trustee. A notice of substitution of trustee shall

be sufficient if acknowledged by all beneficiaries as provided

in the deed of trust and prepared in substantially the

following form:

"NOTICE OF SUBSTITUTION OF TRUSTEE

The undersigned beneficiary hereby appoints _______

_____________________ successor trustee under the

deed of trust executed by ______________ as

trustor, in which _______________ is named

beneficiary and ______________________ as trustee,

and recorded ___________________, 20_______, in

______________ County, New Mexico, in book

______________________, page _____________, and

legally describing the trust real estate as:

(legal description of trust real estate)

Dated this ____________ day of

__________________________, 20_____.

_____________________________________

Signature of Beneficiary

(Here add Acknowledgment).".

D. A notice of substitution of trustee is

HB 254

Page 6

effective immediately on execution as provided in Subsection C

of this section.

E. A person appointed as a trustee under a deed of

trust may resign as trustee at any time. The resignation

shall be without liability, provided the person has not agreed

in writing to be appointed trustee or has not acted in the

capacity of trustee. The trustee may only resign as provided

in the deed of trust and the Deed of Trust Act. If a trustee

fails to qualify or is unwilling or unable to serve or

resigns, the validity of the deed of trust shall not be

affected, except that no action required to be performed by

the trustee as provided in the Deed of Trust Act or as

provided in the deed of trust may be taken until a successor

trustee is appointed by the beneficiary as provided in this

section. If the beneficiary fails or refuses to appoint a

successor trustee, the terms of Section 47-1-42 NMSA 1978

shall be applicable. Resignation by a trustee is made by

recordation of a notice of resignation in the office of the

county clerk of each county in which all or any part of the

trust real estate is situated at the time of the resignation.

Written notice shall be given through registered or certified

mail, postage prepaid, to the trustor and the beneficiary. A

notice of resignation of trustee is sufficient if acknowledged

by the trustee and prepared in substantially the following

form:

HB 254

Page 7

"NOTICE OF RESIGNATION OF TRUSTEE

The undersigned trustee hereby resigns as trustee

under the deed of trust executed by

_____________________________, as trustor, in which

________________________________ is named

beneficiary, and recorded _______________________,

20_____, in ________________________________

County, New Mexico, in book _____________________,

page _____________, and legally describing the

trust real estate as:

(legal description of trust real estate)

Dated this ____________ day of

__________________________, 20_____.

_____________________________________

Signature of Trustee

(Here add Acknowledgment)."."

Section 3. Section 48-10-10 NMSA 1978 (being Laws 1987,

Chapter 61, Section 10, as amended) is amended to read:

"48-10-10. SALE OF TRUST REAL ESTATE--POWER OF

TRUSTEE--FORECLOSURE OF DEED OF TRUST.--

A. By virtue of the trustee's position, a power of

sale is conferred upon the trustee of a deed of trust under

which the trust real estate may be sold as provided in the

Deed of Trust Act after a breach or default in performance of

the contract for which the trust real estate is granted or

HB 254

Page 8

mortgaged as security or a breach or default in performance of

the deed of trust. Except as specifically provided in the

Deed of Trust Act, the trustee shall not delegate the duties

of the trustee as provided in the Deed of Trust Act. At the

option of the beneficiary, a deed of trust may be foreclosed

in the manner provided by law for the foreclosure of mortgages

on real estate. Either the beneficiary or the trustee shall

constitute the proper and complete party plaintiff in any

action to foreclose a deed of trust.

B. The trustee or beneficiary may commence an

action to foreclose a deed of trust at any time before the

trust real estate has been sold as provided in the power of

sale. A sale of trust real estate as provided in a power of

sale in a deed of trust shall not be held after an action to

foreclose the deed of trust has been commenced unless the

foreclosure action has been dismissed.

C. The power of sale of trust real estate

conferred upon the trustee shall not be exercised before the

expiration of ninety days from the recording of the notice of

the sale.

D. The trustee need only be joined as a party in

separate civil actions pertaining to a breach of an obligation

of a trustee as provided in the Deed of Trust Act or as

provided in the deed of trust. Any order of the court entered

against the beneficiary is binding upon the trustee with

HB 254

Page 9

respect to any actions that the trustee is authorized to take

by the deed of trust or by the Deed of Trust Act. If the

trustee is joined as a party in any other separate civil

action, other than an action in which the trustee is an

indispensable or necessary party, the trustee is entitled to

be immediately dismissed and to recover the costs and

reasonable attorney fees actually incurred by the trustee from

the person joining the trustee and from the beneficiary,

jointly and severally."

Section 4. Section 48-10-11 NMSA 1978 (being Laws 1987,

Chapter 61, Section 11) is amended to read:

"48-10-11. NOTICE OF TRUSTEE'S SALE.--

A. The trustee shall give written notice of the

time and place of sale, legally describing the trust real

estate to be sold, by each of the following methods:

(1) publication of the notice as provided by

law for foreclosure of mortgages on real estate;

(2) recording of the notice in the office of

the clerk of each county in which the trust real estate is

situated; and

(3) giving notice as provided in Section

48-10-12 NMSA 1978 to the extent applicable.

B. The sale shall be held at the time and place

designated in the notice of sale on a day other than a

Saturday, Sunday, legal holiday or nonbanking day and at the

HB 254

Page 10

time provided by law for the foreclosure sale of real estate

under real estate mortgages on the front steps of the

courthouse of the county in which the trust real estate is

located. If the trust real estate is located in more than one

county, the sale may be held in any county in which part of

the trust real estate is located.

C. The notice of sale shall contain the street

address, if any, or identifiable location as well as the legal

description of the trust real estate. Failure to accurately

describe within the notice either the street address or the

identifiable location of the trust real estate to be sold

shall not be grounds for invalidating the sale if the correct

legal description of the trust real estate to be sold was

contained in the notice of sale. The notice of sale shall be

sufficient if made in substantially the following form:

"NOTICE OF TRUSTEE'S SALE

The following legally described trust real estate

will be sold, pursuant to the power of sale as

provided in the deed of trust recorded in book

_______________ at page _______,

___________________ County, New Mexico, records, at

public auction to the highest bidder on the front

steps of the county courthouse in

_____________________ County, New Mexico, in or

near _____________________________, New Mexico, on

HB 254

Page 11

_________________, 20____, at ______________

o'clock ___m. of that day:

(street address, if any, or identifiable location

of trust real estate and legal description of

trust real estate)

Dated this ____________ day of

____________________, 20_____.

_________________________ ________________________

(Name of Trustor) (Name of Trustee)

________________________________

Signature

(Here add Acknowledgment)."."

Section 5. Section 48-10-13 NMSA 1978 (being Laws 1987,

Chapter 61, Section 13) is amended to read:

"48-10-13. SALE BY PUBLIC AUCTION--POSTPONEMENT OF

SALE.--

A. On the date and at the time and place

designated in the notice of sale, the trustee shall sell the

trust real estate at public auction for cash to the highest

bidder. To determine the highest bidder, the trustor or

beneficiary present at the sale may suggest the then existing

and legally described and established lots, blocks, tracts or

parcels of the trust real estate in which the trust real

estate may be sold. The trustee shall ascertain all such

suggestions, shall conditionally sell the trust real estate

HB 254

Page 12

under each suggestion and, in addition, shall sell the trust

real estate as a whole. The trustee shall determine which

conditional sale results in the highest total price bid for

all of the trust real estate. The lawyer for the trustee may

conduct the sale and may act at the sale as the auctioneer for

the trustee. Any person, including the trustee or

beneficiary, may bid at the sale. Only the beneficiary may

make a credit bid, instead of cash, at the sale. A junior

encumbrancer may bid the amount or value of the obligation

secured by the lien, mortgage, encumbrance or real estate

contract, as the case may be, owed to the junior encumbrancer,

less the amount or value of any prior deeds of trust,

mortgages, liens, encumbrances or real estate contracts, if

any, instead of cash, at the sale. In appropriate

circumstances, the trustee may sell the trust real estate

subject to prior deeds of trust, mortgages, liens,

encumbrances or real estate contracts that are not being

foreclosed. Every bid shall be deemed an irrevocable offer

until the sale is completed and the sale shall not be deemed

completed until the purchaser pays the price bid in

immediately collectible or available federal funds. If the

purchaser fails to pay the amount bid by the purchaser for the

trust real estate struck off to the purchaser at the sale as

provided in the Deed of Trust Act, the trustee may accept the

next highest bid or proceed with the sale of the trust real

HB 254

Page 13

estate to the highest bidder. The person who fails to make

the payment shall be liable to any person who suffers loss or

expenses, including reasonable attorney fees actually incurred

by the trustee and beneficiary occasioned by the failure, and

the trustee may subsequently in any postponed or continued

sale of the trust real estate reject any bid of the person

failing to pay the amount bid.

B. The person conducting the sale may, for the

purpose of verifying the proper amount to be paid or the

availability of immediately collectible federal funds,

postpone or continue the sale for a reasonable period by

giving notice of the new time by public declaration at the

time and place last appointed for the sale. No other notice

of the postponed or continued sale is required.

C. A sale is not complete if the sale as held is

contrary to or in violation of any federal statute in effect

because of an unknown or undisclosed bankruptcy. A sale so

held is deemed to be continued to a date, time and place

announced by the trustee at the sale and shall comply with

Subsection B of this section or, if not announced, is deemed

continued to the same place and at the same time twenty-eight

days later, unless the twenty-eighth day falls on a Saturday,

Sunday or legal holiday, in which event is deemed continued to

the first business day thereafter. In the event a sale is

continued because of an unknown or undisclosed bankruptcy, the

HB 254

Page 14

trustee shall notify by registered or certified mail, with

postage prepaid, all bidders who provide their names,

addresses and telephone numbers in writing to the party

conducting the sale of the continuation of the sale."

Section 6. Section 48-10-16 NMSA 1978 (being Laws 1987,

Chapter 61, Section 16) is repealed and a new Section 48-10-16

NMSA 1978 is enacted to read:

"48-10-16. REDEMPTION.--

A. After the sale of trust real estate pursuant to

Section 48-10-13 NMSA 1978, the trust real estate may be

redeemed by the beneficiary, or by any junior encumbrancer, by

paying the purchaser at any time within nine months from the

date of the sale the amount paid with interest from the date

of purchase at the rate of ten percent a year, together with

all taxes, interest and penalties thereon, and all payments

made to satisfy in whole or in part any prior lien or mortgage

not foreclosed paid by the purchaser, with interest on such

taxes, interest, penalties and payments made on liens or

mortgages at the rate of ten percent a year from the date of

payment.

B. The parties may in the deed of trust shorten

the redemption period to not less than one month."

Section 7. Section 48-10-17 NMSA 1978 (being Laws 1987,

Chapter 61, Section 17, as amended) is amended to read:

"48-10-17. ACTION TO RECOVER BALANCE AFTER SALE OR

HB 254

Page 15

FORECLOSURE ON TRUST REAL ESTATE AS PROVIDED IN DEED OF

TRUST--ACTION TO RECOVER BALANCE PROHIBITED ON LOANS SECURED

BY LOW-INCOME HOUSEHOLDS.--

A. Except as provided in Subsections D and E of

this section, a separate civil action may be commenced to

recover a deficiency judgment for the balance due on the

contract for which the deed of trust was given as security.

The deficiency judgment shall be for an amount equal to the

sum of the total amount owing the beneficiary as of the date

of the sale, as determined by the court, and, if applicable,

the amount owing on all prior mortgages, deeds of trust, liens

and encumbrances and real estate contracts with interest less

the sale price at the sale by the trustee of the trust real

estate. Any deficiency judgment recovered shall include

interest on the amount of the deficiency from the date of the

sale at the rate provided in the deed of trust or contract,

together with any costs of the action.

B. If no action is commenced for a deficiency

judgment as provided in Subsection A of this section, the

proceeds of the sale, regardless of amount, shall be deemed to

be in full satisfaction of the debt and no right to recover a

deficiency in any separate civil action shall exist.

C. Except as provided in Subsections D and E of

this section, the Deed of Trust Act does not preclude a

beneficiary or a trustee from foreclosing a deed of trust in

HB 254

Page 16

the same manner provided by law for the foreclosure of

mortgages on real estate.

D. A deed of trust not encumbering real estate

occupied by a low-income household may, by express language,

validly prohibit the recovery of any balance due after the

trust real estate is sold or after the deed of trust is

foreclosed in the manner provided by law for the foreclosure

of mortgages on real estate.

E. No deficiency judgment shall be sought or

obtained under any deed of trust encumbering real estate

occupied by a low-income household. A deed of trust

encumbering real estate occupied by a low-income household

shall expressly prohibit the recovery of any balance due after

the trust real estate is sold or after the deed of trust is

foreclosed in the manner provided by law for the foreclosure

of mortgages on real estate.

F. No deficiency in recovery of any balance due

after the sale of trust real estate encumbering real estate

occupied by a low-income household shall be reported to any

credit reporting agencies or disclosed to any person, other

than the trustor, unless the disclosure is required by law or

regulation.

G. For the purposes of Subsections D, E and F of

this section, "low-income household" means a household that

the New Mexico mortgage finance authority certifies as low

income at the time of the closing of the contract."

Section 8. REPEAL.--Sections 48-10-2 and 48-10-4 NMSA

1978 (being Laws 1987, Chapter 61, Sections 2 and 4, as

amended) are repealed. HB 254

Page 17