2023 New Mexico Statutes › Chapter 7 - Taxation › Article 38 - Administration and Enforcement of Property Taxes › Section 7-38-70 - Issuance of deeds as result of sale of real property for delinquent taxes; effect of deeds; limitation of action to challenge conveyance.

A. Upon receiving payment for real property sold for delinquent taxes, the division shall execute and deliver a deed to the purchaser.
B. If the real property was sold substantially in accordance with the Property Tax Code, the deed conveys all of the former property owner's interest in the real property as of the date the state's lien for real property taxes arose in accordance with the Property Tax Code, subject only to perfected interests in the real property existing before the date the property tax lien arose.
C. After two years from the date of sale, neither the former real property owner shown on the property tax schedule as the delinquent taxpayer nor anyone claiming through him may bring an action challenging the conveyance.
D. Subject to the limitation of Subsection C of this section, in all controversies and suits involving title to real property held under a deed from the state issued under this section, any person claiming title adverse to that acquired by the deed from the state must prove, in order to defeat the title, that:
(1) the real property was not subject to taxation for the tax years for which the delinquent taxes for which it was sold were imposed;
(2) the division failed to mail the notice required under Section 7-38-66 NMSA 1978 or to receive any required return receipt;
(3) he, or the person through whom he claims, had title to the real property at the time of the sale and had paid all delinquent taxes, penalties, interest and costs prior to the sale as provided in Subsection E of Section 7-38-66 NMSA 1978; or
(4) he, or the person through whom he claims, had entered into an installment agreement to pay all delinquent taxes, penalties, interest and costs prior to the sale as provided in Section 7-38-68 NMSA 1978 and that all payments due were made timely.
History:
1953 Comp., § 72-31-70, enacted by Laws 1973, ch. 258, § 110; 1982, ch. 28, § 25.
ANNOTATIONS
I. GENERAL CONSIDERATIONS.
Suing to quiet title within two years of tax sale.
— Section 42-6-1 NMSA 1978, which provides that "Title may be quieted against the owner or holder of any mortgage, claim of lien or other encumbrance, where the owner or holder of such mortgage, lien or encumbrance has permitted [the encumbrance] to become barred by the statute of limitations," does not bar a plaintiff from initiating a suit to quiet title to clear a cloud against the title within the two-year period following a tax sale, provided in Subsection D of this section.
Bentz v. Peterson
, 1988-NMCA-071, 107 N.M. 597, 762 P.2d 259.
Time of delivery of deed.
— This section does not mandate immediate delivery of the deed at the time of sale; thus, a deed delivered one month after the tax sale was issued pursuant to statutory authority, and the sale and deed could not be invalidated on the basis of a claimed jurisdictional defect.
Cano v. Lovato
, 1986-NMCA-043, 105 N.M. 522, 734 P.2d 762, cert. quashed, 105 N.M. 438, 733 P.2d 1321.
Applicability of recording act.
— Section 14-9-3 NMSA 1978, relating to effect of unrecorded instruments applies to tax deeds.
Cano v. Lovato
, 1986-NMCA-043, 105 N.M. 522, 734 P.2d 762, cert. quashed, 105 N.M. 438, 733 P.2d 1321.
Grantees in quitclaim deed from purchaser of property sold for taxes
would take subject to all defects therein of which they knew, or which an examination of the record would disclose.
State ex rel. State Tax Comm'n v. Garcia
, 1967-NMSC-098, 77 N.M. 703, 427 P.2d 230.
Purpose of statutes on tax deeds
is to give a measure of certainty and security to tax titles.
First Nat'l Bank v. State
, 1967-NMSC-097, 77 N.M. 695, 427 P.2d 225.
Original owner's right to purchase.
— Former statutory language gave the original owner of the land the preferential right to purchase the property upon the payment of the full amount of taxes, penalties, interest and costs for which the property was sold by the tax sale proceedings. The purpose of the legislature was to grant a preference to the original property owner to become reinvested of his property upon payment of taxes, penalties, interest and costs.
Trujillo v. Montano
, 1958-NMSC-079, 64 N.M. 259, 327 P.2d 326 (decided under prior law).
Power of treasurer (department) to execute tax deed
is not exhausted until a deed is made in compliance with law.
Brown v. Gurley
, 1954-NMSC-025, 58 N.M. 153, 267 P.2d 134.
The assessment of property for taxation
is one of the essential steps leading up to a sale for taxes. If an assessment is void, it follows inevitably that the sale based upon such assessment is likewise void.
Baltzley v. Lujan
, 1949-NMSC-065, 53 N.M. 502, 212 P.2d 417.
II. CHALLENGES TO TAX SALE.
A. GENERALLY.
Grounds for challenge to tax sale
are generally strictly limited to the grounds set forth in Subsection D of this section, but there could be such a degree of noncompliance with other required procedures that a tax sale could be voided on grounds other than those of that subsection.
Cochrell v. Mitchell
, 2003-NMCA-094, 134 N.M. 180, 75 P.3d 396.
Substantial compliance.
— Subsection B means that a trial court is empowered to review the sale procedures, but not for the purpose of requiring letter-perfect compliance with each requirement of the statutes.
Cochrell v. Mitchell
, 2003-NMCA-094, 134 N.M. 180, 75 P.3d 396.
A reading of the entirety of this section, together with the cases, indicates that the substantial compliance language of Subsection B of this section must overlay all the other statutes that comprise the Property Tax Code.
Cochrell v. Mitchell
, 2003-NMCA-094, 134 N.M. 180, 75 P.3d 396.
This section is "curative" statute
that stringently limits the grounds upon which a successful attack upon a tax deed issued by the state may be made. It also limits the time for bringing such action.
Bailey v. Barranca
, 1971-NMSC-074, 83 N.M. 90, 488 P.2d 725.
Tax deed prima facie valid.
— Since tax deeds attacked were signed by the proper officials, they were prima facie valid unless some departure from statutory mandates, which made the conveyance a nullity and void, was established. The burden in this respect was on the state in order to overcome the prima facie effect granted the deeds by former 72-8-43, 1953 Comp.
First Nat'l Bank v. State
, 1967-NMSC-097, 77 N.M. 695, 427 P.2d 225.
Tax titles subject to attack for failure of procedure.
— While the title received from the state is a new and paramount title in fee simple absolute, tax titles are commonly subject to attack for failure to comply with statutory procedures in the assessment and collection of taxes, in the sale of properties because of failure to pay taxes and in the redemption from tax sale.
State ex rel. State Tax Comm'n v. Garcia
, 1967-NMSC-098, 77 N.M. 703, 427 P.2d 230.
B. STANDING.
Appellants without color of title have no standing to contest deed.
— Since appellants could show no color of title, they did not have title to the land at the time of the sale and were not the owners of the land sold for taxes and, therefore, could not claim fraud nor contest appellee's tax deed under provisions of former version of this section.
Griego v. Roybal
, 1970-NMSC-021, 81 N.M. 202, 465 P.2d 85.
Mere possession of land
is not such substantial right as would constitute "title" required by this section.
Griego v. Roybal
, 1970-NMSC-021, 81 N.M. 202, 465 P.2d 85.
State in no better position than other stranger.
— The state is in no better position to avoid its deeds or to claim deprivation of rights guaranteed by statute to the prior owner than would be some other stranger to the right.
First Nat'l Bank v. State
, 1967-NMSC-097, 77 N.M. 695, 427 P.2d 225.
State has no standing to assert rights of owners.
— The rights preserved in the statutes are rights of "owners" as that term is interpreted, and the state cannot bring itself within the protection of those statutes. Unless the conveyances were void and a nullity, the state has no standing to assert rights given by statute to "owners" or "persons entitled to redeem."
First Nat'l Bank v. State
, 1967-NMSC-097, 77 N.M. 695, 427 P.2d 225.
C. PARTICULAR GROUNDS.
Fraud as grounds for challenge of tax deed.
— Prior to 1973, constructive fraud by the officer selling property was a statutory ground for attacking a tax deed but in 1973, the legislature amended the Property Tax Code, omitting fraud by tax officials from the list of statutory grounds for attacking a tax deed.
Cordova v. N.M. Taxation & Revenue Dep't
., 2005-NMCA-009, 136 N.M. 713, 104 P.3d 1104.
Fraud by county treasurer avoids tax title.
— Fraud on the part of the county treasurer, either actual or constructive, will suffice to avoid a tax title and save property from forfeiture.
Trujillo v. Dimas
, 1956-NMSC-043, 61 N.M. 235, 297 P.2d 1060.
Constitutional and statutory notice requirements applicable to Subsection C.
— The legislature did not intend to apply Subsection C when the state fails to comply with the notice requirements of Section 7-38-66 NMSA 1978 and federal and state constitutional due process requirements.
Hoffman v. State
, Taxation & Revenue Dep't, 1994-NMCA-032, 117 N.M. 263, 871 P.2d 27.
Notice of tax sale constitutionally inadequate.
— The notice of a tax sale was constitutionally inadequate under both the United States and New Mexico Constitutions, since the notice was mailed only to the taxpayer's old address, the notice was returned with a stamp indicating that the forwarding address had expired, and the new location of the taxpayer was reasonably ascertainable since she had submitted a change of address to the county assessor.
Hoffman v. State, Taxation & Revenue Dep't
, 1994-NMCA-032, 117 N.M. 263, 871 P.2d 27.
Clear evidence necessary to set aside tax deed for fraud.
— One seeking to set aside a tax title on the ground of fraud, actual or constructive, in giving out erroneous information, has the burden of establishing such fact by clear and convincing evidence, a mere preponderance will not suffice.
Trujillo v. Dimas
, 1956-NMSC-043, 61 N.M. 235, 297 P.2d 1060;
Gallegos v. Quinlan
, 1980-NMSC-065, 94 N.M. 405, 611 P.2d 1099.
Tax deed obtained by fraud may be attacked
without regard to statute of limitations.
Gallegos v. Quinlan
, 1980-NMSC-065, 94 N.M. 405, 611 P.2d 1099.
Payment of taxes under erroneous assessment good defense to sale.
— When the owner of land who in good faith paid taxes under an erroneous assessment, thinking and intending the payment to cover the tax on his land, such payment constituted a good defense against the sale and tax deed based upon a second assessment of the same land with a proper description.
Trujillo v. Montano
, 1958-NMSC-079, 64 N.M. 259, 327 P.2d 326.
III. TITLE.
A. GENERALLY.
Former vendor's interest transferred.
— Under Subsection B, all of the former vendor's interests in the real property were conveyed to the defendants by the tax deed because the vendor is a "former property owner." Thus, the vendor's legal title to the property was conveyed to the defendants because legal title is clearly an interest in real property. Further, the vendor lost its reversionary interest in the property because it lost legal title to the land.
Southwest Land Inv., Inc. v. Hubbart
, 1993-NMSC-072, 116 N.M. 742, 867 P.2d 412.
Former vendor's perfected interest does not survive.
— The Property Tax Code states that "all of the former property owner's interest in the real property" is conveyed. The legislature did not limit the word "all". The second phrase states that the tax deed is accepted "subject only to perfected interests in the real property." The legislature chose to use the same language in both the first and second clauses. Reading these clauses together and giving them their plain meaning, the vendor's perfected security interest in the property did not survive the conveyance by the tax deed. The vendor was an owner under the code and its perfected security interest was an interest "in the real property." Even though the interest may have been perfected, because the interest was "in the real property" and because the vendor was an owner, the interest was conveyed along with all of the vendor's other interests in the property.
Southwest Land Inv., Inc. v. Hubbart
, 1993-NMSC-072, 116 N.M. 742, 867 P.2d 412.
Effect of multiple tax sale certificates.
— Although a tax sale certificate to which the deed in question could be traced was issued at a time when the state already had title pursuant to an earlier certificate and tax deed, the state's conveyance to the property owner was nonetheless valid. Deeds from the state do not purport to convey interests acquired by the state under any particular tax deed, regardless of certain tax sale certificates or deeds that are referenced in the conveyance. A deed from the state is a conveyance of its interest in land, not its interest in a particular tax deed or tax sale certificate.
Johnson v. Rodgers
, 1991-NMSC-059, 112 N.M. 137, 812 P.2d 791.
Tax deed subject to subsequent lien under "betterment" statute.
— To subject a tax deed to operation of a subsequent lien under the "betterment" statute, Section 42-4-18 NMSA 1978, is not in conflict with Subsection B of this section, governing the issuance and effect of tax deeds - to preclude such a lien would foreclose an avenue of security for those performing services upon the property and allow unjust enrichment.
Cano v. Lovato
, 1986-NMCA-043, 105 N.M. 522, 734 P.2d 762, cert. quashed, 105 N.M. 438, 733 P.2d 1321.
Mortgagees cannot extinguish mortgage by tax deed.
— When a tax deed grantee is the previous owner of the property, his mortgage is not extinguished.
In re Bouma
, 32 Bankr., 619 (Bank. D.N.M. 1983).
Tax deed grants fee simple absolute.
— Once land is sold by the state for delinquent taxes, the tax deed issued becomes a new and paramount title in fee simple absolute, striking down all previous titles and interests in the property. This is to ensure certainty and stability in tax titles, and to promote important social and economic objectives such as raising state revenues and promoting land improvement.
Worman v. Echo Ridge Homes Coop
., 1982-NMSC-081, 98 N.M. 237, 647 P.2d 870.
Perpetual grazing right extinguished by tax sale.
— Alleged perpetual grazing right which arose either by express reservation in the deed or by prescription was extinguished by tax sale by the state.
Huning v. Potts
, 1977-NMSC-037, 90 N.M. 407, 564 P.2d 612.
Tax title is in nature of new and independent grant
from the sovereign authority and is a new and paramount title in fee simple absolute, striking down all previous titles and interests in the property.
Bailey v. Barranca
, 1971-NMSC-074, 83 N.M. 90, 488 P.2d 725.
Fraudulent tax deed passes good title to bona fide purchaser.
— A tax deed fraudulently obtained from the state is not void, but simply voidable, and there can be no cancellation when there has been a sale to a bona fide purchaser.
State ex rel. State Tax Comm'n v. Garcia
, 1967-NMSC-098, 77 N.M. 703, 427 P.2d 230.
Tenant may buy tax title.
— A tenant who owes no duty to pay taxes for his landlord and who has not withheld rents due, or in some other manner lulled his landlord into tax delinquency, may, while in possession of the property, both buy a tax title and assert it.
Gore v. Cone
, 1955-NMSC-075, 60 N.M. 29, 287 P.2d 229.
B. PROPERTY DESCRIPTION.
The test of validity of a tax deed
is whether the description is sufficient, aided by data furnished by it, to identify the property. The substitution of "NE" for "NW" resulted in the identification of an entirely different parcel of property than that which was intended to have been assessed. Ambiguity may not be resolved by reference to the description of the property in the assessment rolls of prior and subsequent years.
Brylinski v. Cooper
, 1981-NMSC-028, 95 N.M. 580, 624 P.2d 522.
Property conveyed.
— Lands underlying a dam and reservior and which are budgeted with severed easements for the maintenance and operation of the dam, were not covered by an assessment describing the estate as improvements. The lands were not sold for delinquent taxes and the tax deed, upon which plaintiff based its title, does not cover them.
Rio Costilla Coop. Livestock Ass'n v. W.S. Ranch Co
., 1970-NMSC-020, 81 N.M. 353, 467 P.2d 19.
The rules regarding sufficiency of descriptions
in deeds are applicable to tax deeds.
Hughes v. Meem
, 1962-NMSC-039, 70 N.M. 122, 371 P.2d 235.
Sale not affected by error in survey number.
— When the tax deed issued to the plaintiff described the land as being located in homestead entry survey 370, instead of 378, the error was so manifestly clerical that the validity of the sale could not be affected by it.
Trujillo v. Montano
, 1958-NMSC-079, 64 N.M. 259, 327 P.2d 326.
IV. REDEMPTION.
Tax deed issued before period of redemption has expired
is void.
First Nat'l Bank v. State
, 1967-NMSC-097, 77 N.M. 695, 427 P.2d 225.
Contention plaintiff prevented right of redemption unfounded.
— Plaintiff's contention that he was prevented from exercising his right of redemption on property sold to state for delinquent taxes by fraud of county tax assessor is unfounded where fraud is based on assessor's refusal to alter the description on tax rolls in the absence of a court order.
Trujillo v. Dimas
, 1956-NMSC-043, 61 N.M. 235, 297 P.2d 1060.
Adverse possession protected by redemption.
— The right to acquire title by adverse possession is capable of protection by means of redemption from a tax sale.
Morris v. Ross
, 1954-NMSC-063, 58 N.M. 379, 271 P.2d 823.
Effect of redemption
will not be a transfer of the inchoate title of the purchaser at tax sale but will be to extinguish the tax sale; and, as to all other persons who might have had a right to redeem, the redemption is in their interest and, consequently, they are not adversely affected.
Morris v. Ross
, 1954-NMSC-063, 58 N.M. 379, 271 P.2d 823.
Failure of notice to redeem.
— The failure of the treasurer to send notice that the property had been sold for taxes and of the tax commission to advise of the sale and of the preferential right of redemption or repurchase were at most irregularities which were covered by the curative provisions of this article.
Brown v. Gurley
, 1954-NMSC-025, 58 N.M. 153, 267 P.2d 134 (decided under prior law).
Am. Jur. 2d, A.L.R. and C.J.S. references. —
Easement, servitude, or covenant as affected by sale for taxes, 7 A.L.R.5th 187.