US New Mexico Salesperson License Exam

The core issue revolves around the legal distinction between real property and securities. A Real Estate Investment Trust, or REIT, is a corporate entity that owns, operates, or finances income-producing real estate. While its assets are tangible real estate, an investment in a REIT takes the form of purchasing shares, which are legally classified as securities. The sale and advisement of securities are regulated by the U.S. Securities and Exchange Commission (SEC) at the federal level and by state securities divisions, such as the New Mexico Securities Division, at the state level. These activities require a specific securities license. A New Mexico real estate license, whether for an associate broker or a qualifying broker, grants the authority to represent parties in the transaction of real property—the land and all things permanently attached to it. This license does not extend to the transaction of securities. Therefore, a real estate licensee who facilitates the purchase or sale of REIT shares for a client would be engaging in the unlicensed sale of securities, a serious violation of the law. The proper and ethical course of action for the licensee is to recognize the limits of their license and expertise. They must inform the client that they are not licensed or qualified to handle such a transaction and advise the client to seek assistance from a licensed securities professional, like a stockbroker or a financial advisor. To qualify for pass-through tax treatment, a REIT must meet strict criteria, including distributing at least \(90\%\) of its taxable income to its shareholders as dividends, which further solidifies its status as a specialized investment vehicle distinct from direct property ownership.

This situation is governed by the New Mexico Uniform Owner-Resident Relations Act (UORRA). The scenario describes a material noncompliance with the rental agreement by the tenant that affects health and safety. According to the UORRA, when a tenant commits a breach of the rental agreement, other than nonpayment of rent, the owner must first deliver a written notice to the tenant. This notice must specify the acts and omissions constituting the breach. For a curable breach, the notice must state that the rental agreement will terminate upon a date not less than seven days after receipt of the notice if the breach is not remedied in seven days. The tenant’s repeated disruptive parties, despite a prior warning, constitute a material noncompliance. The landlord’s first formal legal step in the eviction process for this type of violation is to provide this specific seven-day notice to cure or quit. The landlord cannot immediately file a lawsuit without providing the requisite notice, nor can they use the notice period designated for nonpayment of rent, which is three days. The thirty-day notice is typically used for terminating a month-to-month tenancy without cause, which is not applicable here as the eviction is for a specific breach of the lease terms. Only if the tenant fails to remedy the situation within the seven-day period can the landlord then proceed to file a Petition by Owner for Restitution with the court to formally begin the eviction lawsuit.

The lender’s risk assessment is based on using the lesser of the appraised value or the purchase price to calculate the Loan-to-Value (LTV) ratio. Purchase Price = $450,000 Appraised Value = $430,000 The lesser of the two values is the appraised value of $430,000. The lender will use this lower figure as the ‘Value’ component in the LTV calculation. The formula used is \[LTV = \frac{\text{Loan Amount}}{\text{Value}}\]. Therefore, the maximum loan amount is determined by applying the 90% LTV to the $430,000 appraised value, not the $450,000 purchase price. The buyer must then provide the difference between the purchase price and the total of the loan plus their original down payment. The core principle governing the Loan-to-Value ratio is that a lender will always base their calculation on the lesser of two figures: the property’s appraised value or the agreed-upon purchase price. This practice is a fundamental risk management strategy for financial institutions. By using the lower value, the lender ensures that the loan amount is collateralized by a conservative, professionally determined market value, rather than a potentially inflated price driven by market competition or other factors. In a scenario where the appraised value is less than the contract price, the lender will use the appraised value as the ‘V’ in the LTV formula. This directly impacts the maximum loan amount the lender is willing to extend. Consequently, the buyer must cover the gap between the sales price and the appraised value with additional cash at closing, as the loan will not cover this difference. This protects the lender by ensuring their investment does not exceed the property’s verified worth, maintaining a more secure collateral position from the outset of the loan term. This approach is standard across the lending industry, including in New Mexico, and is crucial for maintaining the stability of the mortgage market.

The legal standing is determined by the express terms of the promissory note itself. A promissory note is a contract, and its terms are binding on the original parties as well as any subsequent assignees or holders. When Isabella sold the note to the lending institution, the institution acquired her rights and obligations under the note, but it did not gain the authority to unilaterally alter the contract’s terms. The principle of contract law dictates that for a provision like a prepayment penalty to be enforceable, it must be explicitly included in the written agreement. The absence of a prepayment penalty clause in the original note means that no such penalty was agreed upon. Therefore, the borrower, Ricardo, has the right to prepay the loan without penalty. The new holder, the lending institution, is bound by the four corners of the document it purchased. The institution cannot impose its own standard policies or fees if they were not part of the original agreement. The acceleration clause is a separate provision related to default and has no bearing on the borrower’s right to prepay the loan under normal circumstances. The core issue is that a party cannot be held to a contractual term to which they never agreed.

The situation described involves a property use that was legally established before the current zoning ordinance was enacted. The art gallery was a permitted use at its inception but is no longer allowed under the new, strictly residential (R-1) zoning classification. This specific circumstance defines a legal nonconforming use, often referred to as a “grandfathered” use. The key principle is that the use does not conform to the current law but is allowed to continue because it predates the law. However, this right to continue is not unlimited. Municipal zoning ordinances in New Mexico, as elsewhere, place significant restrictions on nonconforming uses to encourage eventual conformity with the comprehensive plan. Typically, the owner cannot expand, enlarge, or intensify the nonconforming use. For example, they could not build an addition to the gallery. Furthermore, if the nonconforming use is abandoned for a specified period or if the structure housing the use is destroyed or damaged beyond a certain percentage (often 50%), the right to continue the nonconforming use is terminated. The property would then revert to the current zoning regulations, and only residential use would be permitted. This is a critical material fact that a licensee must understand and disclose, as it significantly impacts the property’s value and a buyer’s future plans. It is distinct from a variance, which is a deviation from developmental standards like setbacks due to a unique property hardship, and a special use permit, which allows a specific use in a zone where it is not automatically permitted but is deemed potentially compatible.

The core of this issue rests on the specific definitions provided by New Mexico Real Estate License Law and the rules of the New Mexico Real Estate Commission (NMREC). An associate broker has a fundamental duty to disclose all adverse material facts they know, or reasonably should know, about a property. An adverse material fact is generally defined as information that could negatively impact the property’s value or a party’s decision to proceed with the transaction. However, New Mexico statutes provide explicit exceptions to this rule to prevent the stigmatization of properties. Specifically, Section 47-13-2 of the New Mexico Statutes Annotated states that a seller or broker has no duty to disclose that a property was the site of a natural death, homicide, suicide, or any other crime punishable as a felony. This means that such information is, by law, not considered a material fact. In this scenario, the seller, Mr. Ortiz, was not legally required to list the prior owner’s felony on the disclosure statement. Similarly, even though the associate broker, Lena, independently discovered and verified this information, her professional obligation is tied to the legal definition of a material fact. Since the statute explicitly excludes the site of a felony from this definition, she has no affirmative duty to disclose it to potential buyers. Her duty to disclose adverse material facts does not extend to information that the state legislature has specifically carved out as non-material.

The determination of a binding contract hinges on the precise sequence of offer, counteroffer, acceptance, and communication as governed by New Mexico contract law. The seller, Mateo, rejected the buyer’s initial offer by altering a material term, the closing date. This action created a new offer, known as a counteroffer, which was then presented to the buyer, Ananya. At this point, Ananya became the offeree with the power to accept or reject Mateo’s counteroffer. For a contract to be formed, acceptance must be unequivocal and must be communicated to the offeror or their authorized agent. In this scenario, Ananya’s broker, David, acting as her agent, communicated her acceptance to Mateo’s broker, Lucia, via email. Under the Uniform Electronic Transactions Act (UETA), adopted by New Mexico, this electronic communication constitutes a valid form of delivery. The contract became legally binding at the moment Lucia received David’s email communicating acceptance. The subsequent attempt by Mateo to revoke his counteroffer was ineffective because it occurred after acceptance had already been communicated. A fundamental principle of contract law is that an offeror can revoke an offer at any time before it is accepted. However, once acceptance is communicated, the power of revocation is extinguished. The fact that the physically signed document had not yet been received is immaterial; the communication of acceptance itself finalized the agreement.

The legal principle at the core of this scenario is that a fee simple absolute estate, while representing the highest and most complete form of property ownership recognized by law, is not entirely free from government influence. In New Mexico, as in all other states, all private property rights are subject to certain inherent powers of the government. These are commonly referred to as the four governmental powers: Police Power, Eminent Domain, Taxation, and Escheat. Police power is the authority of the state and its political subdivisions, such as counties and municipalities, to enact laws and regulations to protect the health, safety, morals, and general welfare of the public. Zoning ordinances are a primary example of the exercise of police power. Eminent domain is the right of the government to take private property for public use, provided that just compensation is paid to the owner. Taxation is the power to levy taxes on real property to fund government operations. Escheat is the power of the state to acquire title to property when an owner dies without a will and without any legal heirs. In the given situation, the county’s action of imposing zoning restrictions falls directly under its police power. Therefore, the owner’s fee simple absolute title does not grant him immunity from such regulations, which are designed to serve the broader community’s interest.

Step 1: Identify the controlling legislation. The property is in Albuquerque, New Mexico, so the New Mexico Human Rights Act (NMHRA) applies, in addition to the federal Fair Housing Act. Step 2: Identify the basis for the denial. The denial was based on a policy giving preference to married applicants, directly disadvantaging the unmarried couple. Step 3: Compare the basis for denial against the protected classes under the NMHRA. The NMHRA prohibits housing discrimination based on race, color, religion, national origin, ancestry, sex, sexual orientation, gender identity, physical or mental handicap, familial status, and spousal affiliation. Step 4: Determine if the basis for denial aligns with a protected class. The term “spousal affiliation” is a protected class unique to New Mexico law. It refers to the status of an individual as being married, single, divorced, or widowed. A policy that prefers married individuals inherently discriminates against unmarried individuals based on their spousal affiliation. Step 5: Evaluate exemptions and liability. The property is a 12-unit commercial building, so no owner-occupied exemptions apply. Furthermore, a licensed qualifying broker is involved, which heightens the standard of care and eliminates nearly all potential exemptions. Therefore, the action is a direct violation of the NMHRA. The New Mexico Human Rights Act provides broader protections against housing discrimination than the federal Fair Housing Act. While federal law establishes a national standard, states are free to enact laws that offer more extensive protections. New Mexico has done so by including several unique protected classes, such as ancestry, sexual orientation, gender identity, and, most relevant to this scenario, spousal affiliation. Spousal affiliation encompasses a person’s status as married, single, widowed, or divorced. A landlord or property manager implementing a policy that explicitly favors married applicants over unmarried applicants is engaging in discrimination on the basis of spousal affiliation. This is a direct violation of the NMHRA, regardless of whether the policy is applied consistently to all unmarried persons. The involvement of a real estate licensee, such as a qualifying broker, in enforcing such a discriminatory policy is a serious breach of both ethical duties and state law. The fact that the owner directed the policy does not absolve the licensee of responsibility, as licensees are required to know and comply with all applicable fair housing laws.

\[\text{Total Monthly Debt} = \$475 (\text{car}) + \$350 (\text{student loan}) + \$175 (\text{credit cards}) + \$2,400 (\text{proposed PITI}) = \$3,400\] \[\text{Gross Monthly Income} = \$7,800\] \[\text{Back-End DTI} = \frac{\text{Total Monthly Debt}}{\text{Gross Monthly Income}} = \frac{\$3,400}{\$7,800} \approx 0.4358 \text{ or } 43.6\%\] The debt-to-income ratio is a critical metric used by mortgage lenders to assess a borrower’s capacity to repay a loan. It compares the borrower’s total recurring monthly debt obligations to their gross monthly income. There are two primary types: the front-end ratio, which only considers housing costs, and the back-end ratio, which includes housing costs plus all other long-term debts like car loans, student loans, and credit card payments. Lenders place significant emphasis on the back-end ratio as it provides a more comprehensive view of the borrower’s financial obligations. In this scenario, the calculated back-end DTI is approximately 43.6 percent. This figure is significant because of the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage (QM) rule. A key feature of the general QM definition is a DTI limit of 43 percent. Loans that meet QM standards provide the lender with certain legal protections. While some loans, like those eligible for purchase by Fannie Mae or Freddie Mac, may allow for higher DTIs under specific circumstances, a DTI exceeding 43 percent presents a substantial hurdle for securing a conventional mortgage. An associate broker in New Mexico has a duty to provide competent advice, which includes preparing clients for the realities of modern mortgage underwriting. Understanding that a DTI above this threshold is a primary obstacle is crucial for managing client expectations and guiding them toward financial readiness or alternative financing options.

For an associate broker’s first license renewal in New Mexico, the educational requirements are distinct from all subsequent renewals. The New Mexico Real Estate Commission mandates that new licensees complete a specific 30-hour course titled “New Broker Business Practice.” This course is a one-time requirement and must be completed within the first three-year licensing period. The purpose of this intensive course is to provide a practical foundation in the day-to-day operations of a real estate business, covering topics beyond the initial pre-licensing curriculum. In addition to this 30-hour mandatory course, the broker must also complete 6 additional hours of approved continuing education electives. This brings the total education requirement for the first renewal cycle to 36 hours, which is the same total number of hours as subsequent cycles, but the composition of those hours is fundamentally different. The standard structure for later renewals, which includes the 4-hour annual Core Course, a 4-hour ethics course, and a 4-hour core elective, does not apply to the very first renewal. Overlooking the specific New Broker Business Practice course is a common error for new licensees.

Initial Basis Calculation: \[ \text{Purchase Price} + \text{Acquisition Costs} = \$450,000 + \$5,000 = \$455,000 \] Depreciable Basis Calculation: \[ \text{Initial Basis} – \text{Land Value} = \$455,000 – \$95,000 = \$360,000 \] Annual Depreciation Calculation: \[ \frac{\text{Depreciable Basis}}{\text{Recovery Period}} = \frac{\$360,000}{27.5} = \$13,090.91 \] The final answer is rounded to the nearest dollar, which is $13,091. For federal income tax purposes, an owner of an investment property can take a deduction for depreciation, which is a non-cash expense representing the cost recovery of the improvements over their useful life. The calculation begins with establishing the property’s basis. The initial basis is the cost to acquire the property, including the purchase price plus certain settlement fees and closing costs, such as legal fees, recording fees, and title insurance. Loan-related costs, like points or appraisal fees for the lender, are generally not added to the basis but may be amortized separately. A critical step is to separate the value of the improvements from the value of the land, because land is not depreciable. The portion of the basis allocated to the building and other improvements is the depreciable basis. The Internal Revenue Service (IRS) mandates specific recovery periods over which the depreciable basis can be deducted. For residential rental property, such as a duplex, the recovery period is 27.5 years. For commercial property, the period is 39 years. The straight-line method is used, meaning an equal amount of depreciation is deducted each full year the property is in service. The amount of the mortgage loan and the term of the loan are irrelevant for calculating the depreciation deduction.

The lender’s demand for an “acceleration penalty” is improper and invalidates the cure amount specified in the Notice of Sale. Under the New Mexico Deed of Trust Act, specifically NMSA 1978, § 48-10-16, a debtor has a statutory right to cure the default at any time prior to the foreclosure sale. To cure the default, the debtor must pay the entire amount then due under the terms of the deed of trust, excluding any portion of the principal that would not have been due had no default occurred. This includes all past-due installments of principal and interest, any contractually agreed-upon late charges, and the reasonable costs and expenses actually incurred in enforcing the deed of trust, such as trustee’s and attorney’s fees. The purpose of this right to cure is to allow the debtor to reinstate the loan and de-accelerate the debt. By demanding an additional, undefined “acceleration penalty” that is not a reasonable, documented cost of the foreclosure process, the lender is creating an unlawful impediment to the debtor’s statutory right. This action effectively attempts to collect on the accelerated balance rather than allowing for a true cure and reinstatement, which contravenes the specific protections afforded to homeowners under New Mexico’s non-judicial foreclosure statutes.

An estate for years is a type of leasehold estate characterized by a specific, predetermined start date and end date. The term “for years” is a legal convention and does not mean the lease must be for a year or more; it can be for any fixed duration, such as days, weeks, or months. A critical and defining feature of an estate for years is that it terminates automatically upon the expiration of the specified term. Neither the landlord nor the tenant is required to provide any notice to terminate the lease because the termination date is already established in the lease agreement itself. When the end date arrives, the tenant’s right to possession is extinguished. If the tenant remains in possession of the property after the lease has expired and without the landlord’s consent, the tenant’s status changes. They become a tenant at sufferance. This is the lowest form of estate in land, signifying that the tenant’s original lawful possession has ended, but they have not yet been evicted by the landlord. The landlord has the option to either begin eviction proceedings to remove the tenant at sufferance or to accept rent, which would typically create a new periodic tenancy by implication. However, at the precise moment the fixed-term lease expires, the tenant holding over is merely a tenant at sufferance. This is distinct from a periodic tenancy, which requires notice to terminate, or a tenancy at will, which exists by mutual consent without a fixed term.

In New Mexico, water rights are governed by the doctrine of Prior Appropriation, which is fundamentally different from the riparian rights common in other parts of the United States. Under this doctrine, all surface and groundwater is publicly owned by the state of New Mexico. Individuals or entities do not own the water itself but can acquire a right to use a specific amount of water for a beneficial purpose. This right to use is considered a form of real property and is separate from the land. Consequently, water rights do not automatically transfer with the sale of land; they are not appurtenant by default. For a water right to be conveyed from a seller to a buyer, it must be explicitly included in the purchase agreement and the transfer must be formally approved by the New Mexico Office of the State Engineer (OSE). The OSE reviews applications for water right transfers to ensure the change in ownership, place of use, or purpose of use will not impair existing water rights or be detrimental to the public welfare. The process involves filing specific forms, providing public notice, and awaiting the OSE’s decision. A real estate professional must advise clients that securing these rights is a distinct legal process managed by a state agency, separate from recording the property deed at the county level.

For a real estate contract to be considered valid and enforceable in New Mexico, it must contain several essential elements, including offer and acceptance, consideration, competent parties, and a legal purpose. The principle of legal purpose, also known as lawful objective, dictates that the object of the agreement must not be illegal or against public policy. If the central purpose for which the contract is formed violates a statute, local ordinance, or established public policy, the contract is rendered void. A void contract is a nullity from its inception; it is as if the contract never existed. It cannot be enforced by either party. In the scenario presented, the buyer’s sole and explicitly stated purpose for the purchase is to engage in an activity that is prohibited by a recently enacted municipal ordinance. This illegal purpose is not an incidental part of the agreement but is its fundamental basis, as documented within the contract itself. Therefore, the contract lacks the essential element of a legal purpose. This makes the entire agreement void, not merely voidable. A voidable contract is one that may be legally avoided at the option of one of the parties, such as in cases of fraud or duress, but it is not automatically null. Because the objective here is illegal from the outset, the contract is fundamentally invalid.

The core of this scenario revolves around the duties of an associate broker in New Mexico when representing a buyer who intends to develop a subdivision. The primary professional responsibility is to protect and promote the client’s interests. In this context, the most significant and immediate hurdle for a new subdivision in New Mexico is compliance with the New Mexico Subdivision Act and securing adequate water resources. The developer’s entire project is contingent on receiving approval from the relevant county, and a cornerstone of that approval process is a demonstration of a sufficient and sustainable water supply. Therefore, the associate broker’s most critical action is to advise the client to undertake thorough due diligence focused specifically on these state and local requirements. This involves investigating the feasibility of obtaining water rights from the Office of the State Engineer, assessing the potential yield of wells, and understanding the specific environmental and infrastructure requirements laid out by the county’s subdivision regulations. While other environmental assessments are important, the water and subdivision approval process is the fundamental, threshold issue that determines the viability of the entire development project in New Mexico’s arid environment. Failing to advise the client to investigate this primary constraint would be a significant breach of the broker’s fiduciary duty.

The scenario involves a buyer, Alejandro, who submits a timely “Objection, Resolution, and Waiver Notice” on day 10 of a 10-day inspection period. The seller, Beatrice, is given a 3-day resolution period to respond to the buyer’s demands. Beatrice fails to provide any written response within this 3-day period. According to the standard provisions within the New Mexico Association of REALTORS® (NMAR) Purchase Agreement, the seller’s failure to respond within the specified resolution period constitutes a specific outcome. It does not mean the buyer’s demands are automatically accepted, nor does it force the buyer to accept the property as-is. Instead, this inaction by the seller triggers an automatic termination of the purchase agreement. The contract becomes void. As a result of this termination, which is caused by the seller’s failure to engage in the resolution process, the buyer’s primary and immediate right is the full and complete return of any earnest money they have deposited. This contractual mechanism is designed to provide a clear and definitive path forward when negotiations over property condition break down, preventing the parties from being locked in an unresolvable limbo. It highlights the critical importance of adhering to the strict deadlines outlined in the contract, as failure to act carries significant and automatic consequences.

A contract for the sale of real estate requires that all parties be legally competent. Competency means the person understands the nature and consequences of the agreement. In New Mexico, contracts entered into by individuals who have been legally adjudicated as incompetent by a court are void. However, if a person has not been legally declared incompetent but lacks the mental capacity to understand the transaction at the time of signing, the resulting contract is generally considered voidable, not automatically void. This means the incompetent party, or their legal guardian or representative, has the option to either enforce the contract or disaffirm (void) it. The other party to the contract does not have this option and is bound by the agreement if the incompetent party’s side chooses to uphold it. A durable power of attorney is a legal instrument that allows a principal to appoint an agent (attorney-in-fact) to act on their behalf. The “durable” provision means the agent’s authority continues even if the principal subsequently becomes incapacitated. For the POA to be valid, the principal must have been competent at the time it was created. In the given situation, the first agreement, signed by the property owner personally, is potentially voidable. His competency is questionable due to his memory loss, but without a court order declaring him incompetent, the contract is not automatically void. His daughter, acting as his representative, could seek to have it voided. The second agreement was executed by the daughter using a valid durable power of attorney. Since the POA was created when the principal was competent and is durable, her authority to act is valid. Therefore, she created a valid contract on her father’s behalf. The result is two conflicting contracts: one that is voidable and one that is valid, creating a legal conflict over the property that would likely require judicial intervention to resolve.

The New Mexico Real Estate Commission (NMREC), operating under the authority of the state’s Uniform Licensing Act (ULA), has specific powers to discipline licensees found in violation of the Real Estate License Law. When a licensee like an associate broker is found guilty after a formal hearing, the Commission can impose a range of sanctions designed to protect the public and maintain the integrity of the profession. These sanctions can be applied individually or in combination. The Commission is authorized to suspend or revoke a license, issue a formal reprimand, or place the licensee on probation. Furthermore, it can impose civil penalties, but these are capped by statute at one thousand dollars for each separate violation. In a situation involving three distinct violations, the total civil penalty could therefore reach up to three thousand dollars. The Commission also has the authority to mandate that the licensee complete specific educational courses to address the area of the violation, such as trust account management or ethics. It is crucial to understand the limits of the Commission’s power. The NMREC is an administrative body, not a court of law. Therefore, it cannot impose criminal penalties such as imprisonment, nor can it award civil or punitive damages to an injured party; such remedies must be pursued through the judicial system in a separate civil lawsuit.

N/A In New Mexico, the foreclosure process is typically judicial, meaning it proceeds through the court system. A critical aspect of this process for property owners is the statutory right of redemption. This right allows a former owner to reclaim their property after it has been sold at a foreclosure sale. The standard period for this right of redemption is nine months. This nine-month clock begins ticking not from the date of the auction itself, but from the date the court enters its order approving the sale. To exercise this right, the redeeming party, typically the former homeowner, must pay the purchaser the full amount paid at the foreclosure sale, plus any accrued interest, taxes, and other legitimate costs the purchaser has incurred since the sale. It is important to distinguish this statutory right from the equitable right of redemption, which exists before the sale and allows the borrower to prevent the foreclosure by paying off the entire loan balance. The statutory right of redemption can be shortened from nine months to one month if the mortgage or deed of trust explicitly includes such a provision, but this is an exception to the general rule and subject to certain conditions, such as the property not being used for agricultural purposes. In a standard scenario without such a clause, the nine-month period is the default.

The legal principle governing this scenario rests on the distinction between an inter vivos transfer (a transfer made during one’s lifetime) and a testamentary transfer (a transfer made by a will upon death). In New Mexico, a deed is the instrument used for an inter vivos conveyance of real property. For a deed to be valid and effectively transfer title between the grantor and the grantee, it must be in writing, signed by the grantor, contain words of conveyance, adequately describe the property, and be delivered to and accepted by the grantee. The act of delivery and acceptance during the grantor’s lifetime completes the conveyance, and title passes to the grantee at that moment. Consequently, the property is no longer part of the grantor’s estate upon their death. A will, on the other hand, is ambulatory, meaning it is not effective until the testator’s death. It only governs the disposition of property that the testator owns at the time of death. Since the property was already conveyed by the deed, it is not in the estate to be passed by the will. Furthermore, while acknowledgment (notarization) and recording are crucial for providing constructive notice to the public and protecting the grantee against claims from subsequent bona fide purchasers or creditors, they are not required to validate the transfer of title between the original grantor and grantee.

The situation involves analyzing the sequence of events and the specific rights granted to each party under the contingencies of the New Mexico Association of REALTORS® (NMAR) Purchase Agreement. The buyer, Mateo, submitted an Objection, Resolution, and Waiver Notice based on the home inspection findings. This action triggers a specific set of options for the seller, Ananya. According to the standard NMAR form, upon receiving the buyer’s objections, the seller has a defined period to respond. The seller can agree to all of the buyer’s resolutions, propose an alternative resolution, or elect to terminate the agreement. In this case, Ananya chose to reject the buyer’s request and exercised her right to terminate the contract. This is a valid action under the terms of the inspection contingency. Once the seller properly delivers this notice of termination to the buyer, the contract is legally terminated. The subsequent event, which is the appraisal report coming in below the purchase price, is rendered moot. The appraisal contingency cannot be acted upon because there is no longer a valid, active contract in place. The contract was already dissolved by the seller’s prior, valid action. The terms of the inspection contingency clause typically stipulate that if the agreement is terminated due to an inability to resolve objections, the buyer’s earnest money deposit shall be refunded in full. Therefore, the contract is terminated, and Mateo is entitled to the return of his deposit.

N/A In New Mexico, the management and disposition of tenant security deposits are strictly regulated by the Uniform Owner-Resident Relations Act (UORRA). A property manager, acting as the landlord’s agent, is bound by the provisions of this Act. The primary responsibility concerning a security deposit is to account for it properly and return it, or any portion thereof, to the tenant within a specific timeframe. Upon termination of the tenancy, the property manager has 30 days to either return the full security deposit or provide the former tenant with a written, itemized statement of any deductions made for damages, along with the remaining balance. Deductions from a security deposit are legally limited to covering unpaid rent and the cost of repairing damages to the property caused by the tenant, beyond normal wear and tear. Using the security deposit for capital improvements, upgrades, or general renovations that are not direct repairs of tenant-caused damage is a violation of the UORRA. A property manager’s fiduciary duty of obedience to the property owner does not extend to carrying out illegal instructions. The manager has an independent legal obligation to comply with state law, which supersedes any conflicting directive from the owner. Therefore, the manager must refuse an owner’s request to wrongfully withhold a security deposit for unauthorized purposes like property upgrades. The manager’s duty is to assess actual damages, itemize the repair costs, and return the remainder of the deposit to the tenant within the 30-day statutory period.

To determine a seller’s net proceeds, all credits and debits must be calculated. The primary credit is the sale price. Debits include all of the seller’s costs, such as the mortgage payoff, commission, closing costs, any seller concessions, and prorated expenses. For an item paid in arrears, such as property taxes, the seller owes for the portion of the year they owned the property, but the bill has not yet been paid. This amount is calculated and debited from the seller and credited to the buyer at closing. Consider a property sold for \( \$450,000 \) with a closing date of September 15th. The seller has an existing mortgage payoff of \( \$210,000 \). The total commission is \( 6\% \), so the seller’s portion is \( \$450,000 \times 0.06 = \$27,000 \). Other seller closing costs are \( \$2,500 \) and the seller agreed to pay \( \$5,000 \) of the buyer’s costs. Annual property taxes are \( \$3,600 \), paid in arrears. The proration is calculated on a 365-day year. The seller is responsible for the first 258 days of the year (January 1 to September 14). Seller’s Tax Proration (Debit) = \( ( \$3,600 \div 365 ) \times 258 \text{ days} = \$2,544.66 \) The seller’s net proceeds are calculated as follows: \[ \text{Net Proceeds} = \text{Sale Price} – \text{Total Debits} \] \[ \text{Total Debits} = \text{Mortgage Payoff} + \text{Commission} + \text{Closing Costs} + \text{Concessions} + \text{Tax Proration} \] \[ \text{Total Debits} = \$210,000 + \$27,000 + \$2,500 + \$5,000 + \$2,544.66 = \$247,044.66 \] \[ \text{Net Proceeds} = \$450,000 – \$247,044.66 = \$202,955.34 \] This calculation demonstrates the final cash amount the seller receives after all obligations are met. The proration of property taxes is a critical component. Because the taxes for the current year have not yet been paid, the seller must compensate the buyer for the period of the seller’s ownership. This is handled as a debit to the seller and a credit to the buyer on the settlement statement. The buyer will then be responsible for paying the entire tax bill when it comes due. This accounting ensures that each party only pays for the expenses incurred during their respective period of ownership. Understanding how to properly account for debits, such as loan payoffs and prorated expenses, versus credits is fundamental to accurately projecting a seller’s final financial outcome in a real estate transaction.

Let’s consider a simplified loan of \( \$200,000 \) with a fixed interest rate of \( 6\% \) per annum, which is \( 0.5\% \) per month (\( 0.005 \)). The term is 30 years (360 months), and the fixed monthly principal and interest payment is \( \$1,199.10 \). For the first payment: The interest due is calculated on the full loan amount. Interest for Month 1 = \( \$200,000 \times 0.005 = \$1,000.00 \) The remainder of the payment is applied to the principal. Principal for Month 1 = \( \$1,199.10 – \$1,000.00 = \$199.10 \) The new loan balance is \( \$200,000 – \$199.10 = \$199,800.90 \). For the second payment: The interest is now calculated on the slightly lower principal balance. Interest for Month 2 = \( \$199,800.90 \times 0.005 = \$999.00 \) The principal portion of the payment is now: Principal for Month 2 = \( \$1,199.10 – \$999.00 = \$200.10 \) This calculation demonstrates the fundamental principle of loan amortization. A fully amortized loan is structured so that a series of equal, periodic payments will completely pay off the debt, including all accrued interest, by the end of the loan term. While the total monthly payment of principal and interest remains constant, the allocation of that payment between principal and interest changes with every payment made. In the early stages of the loan, the outstanding principal balance is at its highest. Consequently, the largest portion of the payment is dedicated to paying the interest that has accrued on this large balance. A smaller portion of the payment goes toward reducing the principal. As each payment reduces the principal balance, the amount of interest calculated on the new, lower balance for the next period also decreases. Since the total payment amount is fixed, this means that a progressively larger portion of each subsequent payment is applied to the principal. This dynamic continues over the life of the loan, so that by the final years, the majority of each payment is applied to principal and only a small amount is for interest. This systematic process ensures the loan balance gradually declines to zero at the end of the term.

Logical Analysis Steps: 1. Identification of Program: The scenario describes a loan program offering down payment assistance to a first-time homebuyer with limited savings. This points towards a state-sponsored program, specifically one administered by the New Mexico Mortgage Finance Authority (MFA). 2. Analysis of Funding Source: MFA programs are often funded through the sale of Mortgage Revenue Bonds (MRBs). These are tax-exempt bonds, and federal law attaches specific conditions to loans financed by them to ensure they benefit the intended lower-to-moderate-income demographic. 3. Identification of Unique Stipulation: A key federal requirement for loans funded by MRBs is a potential recapture tax. This is a unique and significant feature not present in standard conventional or FHA loans that do not use this specific type of bond financing. 4. Evaluation of Conditions for Recapture Tax: The tax is not automatic. It is only triggered if three conditions are met simultaneously: the home is sold within the first nine years of ownership, the owner realizes a capital gain from the sale, and the owner’s household income has increased significantly above the program’s limits at the time of sale. 5. Conclusion: The most critical and distinguishing potential financial ramification that a qualifying broker must disclose regarding this type of financing is the possibility of the federal recapture tax, as it directly impacts the homeowner’s net proceeds upon an early sale if their financial situation improves substantially. In New Mexico, the Mortgage Finance Authority (MFA) provides various loan programs designed to assist first-time and other qualified homebuyers, particularly those with challenges saving for a down payment. These programs, such as FIRSTHome, often combine a conventional, FHA, VA, or USDA loan with down payment assistance, which may be structured as a silent second mortgage that is forgivable over time. A crucial aspect that both brokers and buyers must understand is the funding source for many of these assistance programs: tax-exempt Mortgage Revenue Bonds (MRBs). Because the federal government allows these bonds to be tax-exempt to promote affordable housing, it imposes a specific condition to prevent higher-income individuals from benefiting unfairly. This condition is a potential federal recapture tax. A qualifying broker has a duty to inform a client like Alejandra about this possibility. The recapture tax is only triggered if three specific events occur: the owner sells the home within the first nine years, their household income at the time of sale has risen significantly above the program’s qualifying income limits, and they make a net profit on the sale. If all three conditions are met, a portion of the financial benefit they received from the subsidized mortgage interest rate may need to be “recaptured” by the federal government via their income tax return for the year of the sale. This is a material fact that distinguishes MFA-type loans from other financing options and can have a significant financial impact on a seller’s future plans.

This scenario does not require any mathematical calculations. In New Mexico, a comprehensive plan serves as a long-term, foundational policy guide for the physical development of a municipality or county. It is not a law in itself, but it provides the legal and rational basis for land use regulations like zoning ordinances. A core legal principle in land use law is that zoning decisions must be consistent with the adopted comprehensive plan. This consistency requirement ensures that decisions are not arbitrary, capricious, or discriminatory. When a planning commission evaluates a request for a zoning change, its primary duty is to determine if the proposed change aligns with the goals, objectives, and future land use map articulated in the comprehensive plan. These plans are holistic documents that balance various community interests, which can include economic growth, housing, transportation, environmental protection, and, particularly in New Mexico, the preservation of unique cultural and historical resources such as traditional view corridors and acequia systems. If a proposed development, despite offering economic benefits, directly conflicts with one or more fundamental and explicitly stated goals of the comprehensive plan, that inconsistency provides the strongest and most legally defensible justification for the commission to deny the rezoning request. The plan acts as the community’s established vision, and deviations from it must be carefully scrutinized and justified, with non-conformance being a valid reason for denial.

The scenario presents two distinct breaches of the lease agreement by the tenant: non-payment of rent and a separate, curable material non-compliance. Under the New Mexico Uniform Owner-Resident Relations Act (UORRA), a landlord must provide specific written notice to the tenant before filing for eviction. For non-payment of rent, the law requires the landlord to serve the tenant with a 3-day notice to either pay the outstanding rent in full or vacate the property. For a curable material non-compliance with the rental agreement, such as the unauthorized installation of a satellite dish, the landlord must provide a 7-day notice, giving the tenant the opportunity to remedy the breach within that timeframe. The landlord’s stated goal is to initiate the eviction process as efficiently as possible. Comparing the two available legal paths, the 3-day notice for non-payment of rent provides the quickest route to filing a Petition for Restitution in court if the tenant fails to comply. The 7-day notice for the other violation provides a longer period and allows the tenant to cure the breach, which would halt the eviction process on that specific ground. Therefore, to expedite the legal proceedings, the most direct and time-sensitive initial action is to address the failure to pay rent, as it carries the shortest statutory notice period before court action can be taken. The landlord must properly serve this written notice and wait for the 3-day period to expire before they are legally permitted to file an eviction lawsuit with the court.

The correct course of action is determined by the broker’s independent and non-delegable duties under New Mexico Real Estate Commission Rules. The central concept is the disclosure of “adverse material facts.” An adverse material fact is defined as a fact that a competent licensee recognizes as having a negative impact on the property’s value, a significant reduction in its structural integrity, or a health risk to occupants. In this scenario, the broker’s observation of a large ceiling stain and a moldy odor, based on their professional experience, constitutes knowledge of a potential adverse material fact. Under New Mexico law, a broker has an affirmative duty to disclose all known adverse material facts to a buyer in a timely manner. This duty is independent of the seller’s own disclosure obligations or instructions. The seller’s instruction to conceal this information is an unlawful instruction, and following it would be a violation of the broker’s license law obligations. The broker’s duty is to the integrity of the transaction and to all parties, which supersedes the duty of obedience to an unlawful client instruction. While advising the seller to get an inspection or terminating the listing are potential business decisions, they do not fulfill the immediate and primary legal requirement to disclose the known potential defect to the prospective buyer. The broker is not required to confirm the problem with an expert before disclosing what they have personally observed. The disclosure should be of the facts observed, i.e., the stain and the odor, which indicate a potential problem.