NM Real Estate key terms

The most complete ownership interest in real property. It lasts indefinitely, can be inherited, and is limited only by law and private restrictions such as easements or deed covenants.

A right to use a neighboring parcel of land that benefits the owner's property and passes automatically with it when either parcel is sold. It runs with the land.

Any right or interest held by someone else that burdens real property and may reduce its value or limit the owner's use, such as liens, easements, and deed restrictions.

An item of personal property that has become part of the real estate because of how it is attached, how it is adapted, or what the parties agreed. Fixtures normally stay with the property when it sells.

The legal, physically possible, financially feasible use of a property that produces the highest value. Appraisers use it as the foundation for estimating market value.

The government's authority to regulate private property to protect public health, safety, and welfare, through zoning, building codes, and similar rules. It does not require payment to the owner.

The government's power to take private property for a public purpose, provided the owner receives just compensation. A taking may involve the whole property or only part of it.

The state agency that licenses New Mexico real estate brokers, adopts rules, investigates complaints, and imposes discipline. Its rules appear in Title 16, Chapter 47 of the Administrative Code.

The broker who holds a brokerage's license and is responsible for supervising its associate brokers and employees, handling trust funds, and keeping the office compliant with Commission rules.

A licensed broker who works under a qualifying broker instead of operating an independent brokerage. New Mexico's entry-level license is the broker license, so newer licensees typically work as associate brokers.

A fund the Commission maintains from license fees to reimburse consumers who have a court judgment against a licensee for certain violations and cannot collect it from the licensee.

A separate bank account where a broker holds money belonging to clients and others, such as earnest money or security deposits, apart from the brokerage's own operating funds.

The administrative rules adopted by the New Mexico Real Estate Commission, covering licensing, education, advertising, trust accounts, and standards of conduct for licensees.

A person who may do clerical and administrative work for a brokerage but may not negotiate, show property, or perform activities that require a real estate license.

A relationship in which a broker is authorized to act for a client and owes that client fiduciary duties. In brokerage it is normally created by a written agreement.

The duties an agent owes a client, commonly described as care, obedience, loyalty, disclosure, accounting, and confidentiality. Breach can bring discipline, liability for damages, or loss of commission.

The duty to place the client's interests above the agent's own and to avoid undisclosed conflicts of interest, such as secretly buying the client's property or taking an undisclosed payment.

The duty to keep the client's private information, such as the reason for selling or the most the client will pay, from being disclosed. In New Mexico it continues after the agency ends.

Information that a reasonable person would consider important in deciding whether and on what terms to buy, sell, or lease. Licensees must disclose known material facts.

A written contract hiring a broker to represent a buyer, stating the duties owed, the length of the relationship, and how the broker will be paid.

A situation in which one broker represents both the buyer and the seller in the same transaction. New Mexico allows it only with informed written consent of both parties.

A false or misleading statement of a material fact, made intentionally or negligently, that another party relies on. It is different from puffing, which is general sales talk.

The rule that certain agreements, including contracts for the sale of land and long-term leases, must be in writing and signed by the party to be held liable.

A deposit made by a buyer to show serious intent, usually credited toward the purchase price at closing. The contract says who holds it and when it may be released.

A contract condition that must be met before a party must perform, such as obtaining financing, a satisfactory inspection, or an appraisal. If it fails, the buyer may usually cancel.

A three-party security instrument in which the borrower conveys title to a trustee to secure a loan owed to the lender. It is widely used in New Mexico instead of a mortgage.

A nonjudicial foreclosure conducted under a deed of trust after the borrower defaults and required notices are given. The property is sold at auction without a court judgment.

A deed that transfers whatever interest the grantor may have with no promises about the title. It is often used between family members or co-owners to clear up title issues.

A deed in which the grantor makes promises about the title. A general warranty covers all claims; a special warranty covers only claims arising during the grantor's period of ownership.

An installment sale agreement where the buyer pays over time while the seller keeps title until the balance is paid. New Mexico treats these contracts much like mortgages, so default can lead to foreclosure.

A policy that protects an owner or lender against losses from title defects existing before the policy date, based on a search of the public records. It is usually paid for at closing.

A neutral third party holding money and documents until the conditions of a transaction are satisfied. New Mexico closings are commonly handled by an escrow or title company.

The loan amount divided by the property's price or appraised value, expressed as a percentage. A higher ratio means greater lender risk and often triggers mortgage insurance.

The four parts of a typical monthly housing payment: principal, interest, property taxes, and hazard insurance. Lenders use the total to decide whether a borrower can qualify.

The gradual reduction of a loan balance through regular payments. Each payment covers interest first, and whatever remains reduces the principal owed.

Coverage that protects a lender if a borrower defaults on a loan with a high loan-to-value ratio. Lenders commonly require it when the down payment is small.

An appraisal method that estimates value by comparing recent sales of similar properties and adjusting for differences such as size, condition, and location. It is standard for single-family homes.

A ratio used to convert a property's net operating income into an estimate of value, found by dividing income by sale price. It is a key tool in the income approach.

The taxable value of property, which in New Mexico is one-third of the market value determined by the county assessor. Taxes are calculated by applying the mill levy to this figure.

The division of ongoing expenses such as property taxes, rent, or association dues between buyer and seller at closing, so each pays for the time they own or occupy the property.