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People who own real property must pay property taxes. The government uses these taxes to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value. When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes. So, if you don't pay your real property taxes in New Mexico, the county can eventually sell your home to a new owner at a tax sale, and you won't be able to get it back afterward by redeeming it. However, you'll have plenty of time to get current on the delinquent amounts before a sale occurs. And if a problem occurred in the sale process, you might be able to invalidate the sale and recover your property.
If your New Mexico property taxes are delinquent for more than two years, your home will be added to a "tax delinquency list." (N.M. Stat. § 7-38-61.)
Three years after the first delinquent date shown on the list, the Taxation and Revenue Department will schedule a sale to sell your home to pay off the tax debt. (N.M. Stat. § 7-38-67.)
Look Out for Legal Changes
In this article, you'll find details on property tax laws in New Mexico, with citations to statutes so you can learn more. You can find New Mexico's property tax sale laws in Chapter 7, Article 38, §§ 7-38-1 through 7-38-93 of the New Mexico Statutes.
Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you're facing a tax sale.
New Mexico's Taxation and Revenue Department must mail you a notice about the upcoming tax sale and publish notice in a newspaper.
Notice by mail. The Department must send you a notice by certified mail, return receipt requested, at least 20 days, but not more than 30 days, before the tax sale date. The notice will inform you how much you must pay in taxes, penalties, interest, and costs to get current on the debt. (N.M. Stat. § 7-38-66.)
Notice by publication. In New Mexico, notice of the sale must be published in a local newspaper for three weeks or, if the area doesn't have a newspaper, in a newspaper published in a nearby county. (N.M. Stat. § 7-38-67.)
The tax sale consists of a public auction where the Department sells the home to the highest bidder. After the sale, the purchaser gets a deed (title) to your home and becomes the new owner. (N.M. Stat. § 7-38-70.)
The minimum price at the sale can't be less than the total amount of all delinquent taxes, penalties, interest, and costs. (N.M. Stat. §§ 7-38-67, 7-38-70.)
Sometimes, the Department will agree to sell only part of the property to cover the delinquent taxes, penalties, interest, and costs, like if:
You can stop the sale by paying the delinquent taxes, penalties, interest, and costs by 5:00 p.m. of the day before the sale. (N.M. Stat. § 7-38-66.) This payoff is called "redeeming" the property.
Or you may enter into an installment agreement by 5:00 p.m. of the day before the sale. (N.M. Stat. §§ 7-38-66, 7-38-68.) The installment agreement can't extend for longer than 36 months, and interest will accrue at 1% per month. (N.M. Stat. § 7-38-68.)
But the tax sale may proceed if you:
Also, if you previously entered into an installment agreement to pay the delinquent taxes and failed to meet your obligations under that agreement, you can't do another one. So, for example, if you previously defaulted on an installment agreement, you won't be eligible to enter into another contract to get caught up on the delinquent amounts. (N.M. Stat. § 7-38-68.)
In some states, a homeowner who loses their home to a tax sale can get the house back by catching up on the delinquent amounts or by paying the purchaser the amount paid at the sale, plus some other amounts. This process is also called "redeeming the home."
In New Mexico, however, you can't redeem your home after a tax sale.
While New Mexico law doesn't have a law giving you the right to redeem after the sale, you might be able to get your home back following a tax sale by challenging the sale in court. (N.M. Stat. § 7-38-70.)
You'll have to show:
You must file such a suit within the two years after the sale. (N.M. Stat. § 7-38-70.)
Property tax liens have priority. So, a tax sale process can eliminate mortgages (and deeds of trust) . If your mortgage loan isn't escrowed and you don't pay the property taxes, the loan servicer will usually pay them to stop a tax sale from happening.
Most mortgages say the lender can add the amount it paid for the taxes to your loan. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure.
If you're having trouble paying your property taxes, you might be able to reduce your tax bill or get extra time to pay.
Talk to a foreclosure, tax, or real estate lawyer if you're facing a tax sale in New Mexico and have questions about the process.
To learn more about property taxes and other aspects of homeownership, get Nolo's Essential Guide to Buying Your First Home by Ilona Bray, J.D., Attorney Ann O'Connell, and Marcia Stewart.