NM Real Estate cheat sheet

Fee simple absolute is the largest estate: perpetual, inheritable, and freely transferable, subject only to the government powers of taxation, eminent domain, police power, and escheat.

Freehold estates (fee simple, life estate) are real property interests of indefinite or lifetime duration; leasehold estates are personal property interests held by a tenant.

Fixture test: an item becomes real property when it is annexed to the land, adapted to the property's use, and intended to remain permanently; trade fixtures installed by a tenant stay the tenant's property and are removable before the lease ends.

An easement is an interest in land that runs with title (appurtenant benefits a neighboring parcel, in gross benefits a person); a license is merely revocable permission and creates no interest in land.

Encumbrances divide into monetary liens (mortgage, property tax, judgment) and nonmonetary items (easements, deed restrictions, encroachments); lien priority generally follows recording date unless a statute gives priority.

Co-ownership forms: tenancy in common (unequal undivided shares, no survivorship), joint tenancy (equal shares plus right of survivorship), tenancy by the entirety (spouses only, in states recognizing it).

Legal description methods: metes and bounds (courses and distances from a point of beginning), lot and block (recorded plat), and government survey (section = 640 acres = 1 square mile; township = 36 sections).

Federal Fair Housing Act prohibits discrimination by race, color, religion, sex, national origin, familial status, and disability; the New Mexico Human Rights Act adds protected classes such as sexual orientation, gender identity, ancestry, and spousal affiliation.

Listing types: exclusive right to sell earns a commission no matter who finds the buyer; exclusive agency reserves the seller's own sale without commission; open listing pays only the broker who procures the buyer.

New Mexico real estate licensing is governed by the Real Estate License Law (NMSA 1978, Chapter 61, Article 24) and Commission rules in NMAC Title 16, Chapter 48; the New Mexico Real Estate Commission sits within the Regulation and Licensing Department.

New Mexico licenses qualifying brokers and associate brokers; a brokerage must have a designated qualifying broker who supervises associate brokers and support staff and answers to the Commission for compliance.

Compensation for brokerage services may be paid only to a licensed broker or the broker's brokerage; paying a commission to an unlicensed person or directly to an associate broker by a client violates the license law.

Client funds such as earnest money and rents must be deposited promptly into a separate trust account; commingling with the broker's operating or personal funds and failure to keep required records are violations.

Advertising and solicitation must show the licensed brokerage name; an associate broker advertises under the qualifying broker's brokerage rather than as an independent company.

New Mexico licenses renew on a three-year cycle, and continuing education plus renewal fees must be completed for the license to remain active; practicing on an expired or inactive license is a violation.

The Commission may investigate complaints, hold hearings, and impose discipline including reprimand, fines, required education, suspension, or revocation of the license.

Failure to disclose an agency or limited-representation role, misrepresentation of material facts, and undisclosed compensation are grounds for discipline.

New Mexico imposes gross receipts tax on brokerage commissions as a tax on services; the state has no general retail sales tax on goods.

Fiduciary duties owed to a principal are commonly remembered as COLDAC: Care, Obedience, Loyalty, Disclosure, Accounting, and Confidentiality.

New Mexico requires a written brokerage relationship disclosure identifying whom the licensee represents and the types of brokerage relationships available, provided before or when services begin.

In a limited-representation or transaction-broker role the licensee assists both sides without being the agent of either, but still owes honesty, disclosure of known material adverse facts, accounting for funds, and confidentiality.

Acting for both buyer and seller (dual agency) creates conflicting duties and therefore requires full written disclosure and the informed written consent of both parties.

Confidentiality survives termination of the brokerage relationship, but it never excuses withholding known material adverse facts about the property or transaction.

A seller's agent owes the buyer honesty and disclosure of known material defects; a buyer's agent must not reveal the buyer's motivation, top price, or negotiating limits.

A licensee must disclose any personal interest in the transaction and any referral fee or compensation from a third party, and obtain consent, before acting.

The qualifying broker supervises associate brokers and may be responsible for their acts within the brokerage, which is why office supervision and recordkeeping rules exist.

Statute of frauds: real estate contracts and deeds must be in writing, signed by the party to be charged, and identify the parties, the property, and the price or consideration.

Required contract elements are offer, acceptance (mirror image), consideration, capacity, legality, and mutual assent; a counteroffer rejects the original offer and becomes a new offer.

Typical New Mexico purchase-contract contingencies include financing, appraisal, inspection, title review, and sale of the buyer's property, each with its own deadline and remedy.

Earnest money is held in the broker's trust account and credited to the buyer at closing; a liquidated damages clause must be a reasonable estimate of loss to be enforceable.

Deed requirements: competent grantor, identifiable grantee, words of conveyance, legal description, signature, and delivery plus acceptance; recording with the county clerk gives constructive notice.

General warranty deed warrants title against all claims; special warranty deed covers only claims arising during the grantor's ownership; quitclaim deed conveys only whatever interest the grantor has, with no warranty.

New Mexico transaction documents include the listing agreement, buyer-broker agreement, purchase agreement, seller disclosures, lead-based paint disclosure for pre-1978 housing, closing statement, promissory note, and mortgage or deed of trust.

Title insurance commitment schedules list exceptions and requirements; the buyer should review exceptions, survey or plat issues, and payoff requirements before closing.

New Mexico is a community property state, so both spouses generally must join to convey or encumber community real property.

Loan-to-value ratio = loan amount divided by the lesser of the purchase price or appraised value; down payment = purchase price minus loan amount.

One discount point = 1 percent of the loan amount; points paid at closing buy down the interest rate, raising lender yield and lowering the monthly payment.

Amortizing payment: P and I = L x i / (1 - (1 + i)^-n), where L is loan amount, i is the annual rate divided by 12, and n is the number of monthly payments.

PITI = principal, interest, property taxes, and hazard insurance; taxes and insurance are often collected monthly in an escrow or impound account.

Common qualifying ratios: conventional housing expense near 28 percent of gross monthly income with total debt near 36 percent; FHA near 31/43; VA relies heavily on residual income analysis.

Capitalization rate = net operating income divided by price, so value = net operating income divided by cap rate; gross rent multiplier = price divided by gross monthly rent.

Cost approach value = replacement or reproduction cost minus depreciation plus land value; sales comparison is the primary approach for residences, income approach for investment property.

Area units: 1 acre = 43,560 square feet; 1 section = 640 acres = 1 square mile; 1 mile = 5,280 feet; 1 square yard = 9 square feet.

Prorations use actual days in a 365-day year unless the contract specifies otherwise; New Mexico property taxes are billed in two installments due November 10 and April 10.