Opinion ID: 1354688
Heading Depth: 2
Heading Rank: 1

Heading: Applicability of the Residential Home Loan Act

Text: The RHLA forbids a lender from requiring a penalty or premium for the prepayment of the balance of indebtedness. § 56-8-30. This restriction only applies to real estate contracts made for the purchase of a residence. Residence, in turn, is defined as a dwelling and the underlying real property designed for occupancy by one to four families   . § 56-8-24 A. Plaintiffs argue that, at the time of purchase, the lot contained a log cabin, which was clearly a single-family, residential structure; that they made improvements to the cabin after purchase, to make it more attractive for single family use; and that they intended to use it for recreational purposes, though the best and highest use would be commercial. Defendants, relying on the trial court's findings below, contend that the property is located in the center of a commercial area; that prior to putting the property up for sale, defendants had taken steps to develop the property commercially; that the Naumburgs' residence is in Santa Fe and that the property in question is nothing more than a recreational second-home which the Naumburgs use sporadically; and that the RHLA was not meant to benefit sophisticated buyers. In interpreting the statutory definition of residence, we must ascertain the legislative intent from the language used and words will be given their ordinary meaning unless a different intent is clearly indicated. Davis v. Commissioner of Revenue, 83 N.M. 152, 153, 489 P.2d 660, 661 (Ct.App.), cert. denied 83 N.M. 151, 489 P.2d 659 (1971). Section 56-8-24 A is plain and unambiguous in defining a residence as a dwelling designed for occupancy by one to four families. Our task, then, is to review the record to determine whether the log cabin falls within this definition. The record reveals that, at the time of purchase, the log cabin was a structure designed for single-family use, notwithstanding its location in a commercial area. The cabin contained three bedrooms, a family room, a kitchen, and a bathroom. Furthermore, it is undisputed that plaintiffs intended to use, and did in fact use, the property for recreational and not commercial purposes. Thus, the property clearly fits the statutory definition of residence. To answer each of defendants' claims, specifically, we note first that the Act contemplates protecting purchasers of dwellings intended to house four families or less regardless of whether the dwellings are located in residential or commercial areas. The RHLA makes no distinctions based on the locale of the property. Second, although the record reveals that defendants had begun excavation in front of the cabin to put in a parking lot, this does not render the dwelling commercial. Third, Section 56-8-24 A contains no requirement that the dwelling be the primary family residence. Hence, it makes no difference that the log cabin was a vacation home. We will not presume, absent some indication to the contrary, that the Legislature intended to limit the protection of the RHLA to primary family residences. Lastly, in response to defendants' recurring argument that the RHLA was not intended to protect sophisticated purchasers of real estate, such as Mr. Naumburg, we find no indication, either express or implied that the RHLA applies only to unsophisticated and naive purchasers of real estate. Unless and until the Legislature directs otherwise, we assume that the Act applies to all New Mexicans who purchase a residence designed for occupancy by one to four families. The trial court erred in finding that the RHLA did not apply to the real estate contract between the Naumburgs and the Pattisons.