New Mexico Seller Disclosure Requirements: What Home Sellers Must Reveal

New Mexico’s Real Estate Disclosure Act does not require a property-condition disclosure form. Its one affirmative duty on a seller is, for a residential sale, a county assessor’s property-tax estimate, delivered before an offer is accepted (NMSA § 47-13-4). A seller who knowingly hides a defect can still be sued for fraud (McElhannon v. Ford, 2003-NMCA-091).

Six sections, and none of them is a condition checklist

Chapter 47, Article 13 NMSA 1978, “may be cited as the ‘Real Estate Disclosure Act'” (§ 47-13-1). It has six sections. Section 47-13-1 is the short title and 47-13-1.1 holds definitions. Sections 47-13-2 and 47-13-3 cover stigmatized property. Section 47-13-4 requires the tax estimate. Section 47-13-5 says the Distributed Generation Disclosure Act does not apply to the sale of land carrying a distributed energy generation system. None of them asks a seller to describe the roof, foundation, plumbing or water supply, and none prescribes a form; the Real Estate Commission’s broker-duty rules (Part 19, below) prescribe none either. The article was last changed in 2017, when Laws 2017, chapter 102 added § 47-13-5.

The assessor’s tax estimate under § 47-13-4

The legislature’s stated reason is that the current year’s tax “can be a misleading guide to property tax levies in the years following the sale.” So, “Prior to accepting an offer to purchase,” the seller or the seller’s broker must:

1. “request from the county assessor the estimated amount of property tax levy with respect to the property and shall specify the listed price as the value of the property to be used in the estimate”; and
2. give a copy of the assessor’s response in writing to the prospective buyer or the buyer’s broker.

The buyer acknowledges receipt in writing. The assessor must answer “by the close of business of the business day following the day the request is received,” and may do so through a website. For this purpose the estimate is one-third of the listed price multiplied by the current tax rates, or the prior year’s rates where the current ones are not yet imposed (§ 47-13-1.1).

Two escape valves. First, the buyer may sign a written waiver before making the offer, acknowledging that the estimate “is not readily available.” Second, sellers and brokers who comply “shall be immune from suit and liability arising from or relating to the estimated amount of property tax levy.”

A death or a crime in the house: sections 47-13-2 and -3

A seller, landlord or agent “shall not be liable for failure to disclose and shall not have a duty to disclose” the fact or suspicion that the property is or has been:

• “the site of a natural death”;
• “the site of a homicide, suicide, assault, sexual assault or any other crime punishable as a felony”; or
• owned or occupied by a person who was exposed to, infected with or suspected to be infected with HIV, or diagnosed with AIDS or any other disease that medical evidence shows is highly unlikely to be transmitted through occupancy of the property, or that is not known to be transmitted that way.

Under § 47-13-3, no cause of action arises from that silence, “in any action at law or in equity.” The nondisclosure “shall not be deemed to be grounds for termination or rescission” of the sale. Both sections date from Laws 1991, chapter 74.

When silence about a defect becomes deceit

McElhannon v. Ford, 2003-NMCA-091, 134 N.M. 124, 73 P.3d 827, involved a house in Clayton that the seller, a contractor, had built without the permits the Construction Industries Licensing Act required. The Court of Appeals said fraud by nondisclosure “clearly is recognized in New Mexico.” It then set the bar: in an arm’s-length sale “a duty to disclose arises only when the defendant has actual knowledge of both the undisclosed information and the fact that the plaintiff is proceeding in ignorance of facts basic to the transaction; it is not enough to show that the defendant should have known.” The buyers’ damages claim for negligent nondisclosure failed; their claim “sounds solely in deceit.”

Two more holdings matter to anyone selling as-is. “Contractual disclaimers such as that relied upon by the Fords do not relieve a party from liability for fraud.” The court added that rescission can be available even for a material nondisclosure that was not fraudulent, and it reversed summary judgment on the buyers’ rescission count.

Timing: fraud actions carry a four-year limit under § 37-1-4. Under § 37-1-7 the claim is not “deemed to have accrued until the fraud … shall have been discovered by the party aggrieved.”

Brokers, not sellers, carry a written-disclosure rule

The New Mexico Real Estate Commission’s broker-duty rule, 16.61.19.8 NMAC, requires “Written disclosure of any adverse material facts actually known by the associate broker or qualifying broker about the property or the transaction.” Its scope clause says Part 19 “applies to all licensed associate brokers and qualifying brokers in New Mexico.” It regulates licensees; it creates no form for the owner. The section was last amended effective January 3, 2021.

Septic systems: an evaluation before the deed changes hands

Here is a real pre-sale duty that falls on the owner, and it comes from the Environment Department, not Article 13. 20.7.3.902(E) NMAC: “Prior to the transfer of a property with an established on-site liquid waste system, the transferor of the property shall have the system evaluated,” by a qualified evaluator on a department-approved form; an unpermitted system must be registered or permitted. For a permitted conventional system the evaluation is non-invasive, “with a report provided to the buyer.” For a permitted advanced treatment system, the evaluation also covers sampling: if no regularly scheduled sampling event has taken place within 180 days of the evaluation, the system is sampled under its permit conditions and the results are included with the report; if one has, those results go in the evaluation report. The system’s permit must also be amended to reflect the change of ownership. The evaluator must send the Department copies of all evaluation reports, completed or not, within 15 days of the evaluation, and whoever is or will be the owner of the property on the 15th day after the evaluation must, within those 15 days, apply for a permit or variance to correct any deficiencies or permit violations the evaluation identified. A new evaluation is not needed if, within 180 days of the transfer, a new or modified system passed a final inspection with final approval, or an existing system had a property transfer evaluation. If a failed system changes hands before it is fixed, “the transferee becomes responsible” for the remedy. The Department’s property transfer page warns that the permit search alone “can take up to 10 days.”

HOA lots and condominium units carry their own clocks

Homeowner associations (§§ 47-16-11 to -13). The seller or seller’s agent obtains a disclosure certificate from the association and gets it to the buyer “no later than seven days before closing.” The buyer may cancel “within seven days after receiving the disclosure certificate,” by hand delivery or prepaid U.S. mail. Payments are refunded “within fifteen days.” The certificate is not required for a disposition by court order, by a government agency, by foreclosure or deed in lieu, or one the buyer can cancel at any time without penalty. The Homeowner Association Act “does not apply to a condominium governed by the Condominium Act.”

Condominiums (§ 47-7D-9). This applies to a condominium governed by the Condominium Act, which under § 47-7A-2 covers condominiums “created within this state after the effective date of that act” (Laws 1982, chapter 27), plus older ones whose unit owners have approved by majority, and recorded, a resolution to come under it. For those units the owner furnishes the declaration, bylaws, rules and a resale certificate “before conveyance.” If the association is late, “the purchase contract is voidable by the purchaser until the certificate has been provided and for seven days thereafter or until conveyance, whichever first occurs.” Under § 47-7D-1(B), no resale certificate is needed for: a gratuitous disposition of a unit; a disposition pursuant to court order; a disposition by a government or governmental agency; a disposition by foreclosure or deed in lieu of foreclosure; a disposition to a person in the business of selling real estate who intends to offer those units to purchasers; a disposition that may be canceled at any time and for any reason by the purchaser without penalty; a disposition to a nonresident alien; or a disposition of a unit restricted to nonresidential use.

Pre-1978 houses: federal lead-paint rules

This part is federal (40 CFR 745, subpart F). Before a buyer is obligated, the seller hands over the EPA pamphlet, discloses known lead-based paint and hazards, and passes on available reports. The buyer gets “a 10-day period (unless the parties mutually agree, in writing, upon a different period of time)” to test, and may waive it in writing. Foreclosure sales are excluded. Housing for the elderly or disabled and 0-bedroom units are outside the rule unless a child under 6 lives there or is expected to.

Other New Mexico guides

• Selling a home, selling with mold
• Buying a home, buyer’s checklist, home inspection, inspection deal-breakers
• New Mexico real estate, New Mexico closing costs, homeowner’s insurance in New Mexico
• Next door: Colorado, Arizona, Texas, Oklahoma, Utah

New Mexico seller and buyer questions

Does a New Mexico statute make me fill out a seller’s disclosure form?

No section of the Real Estate Disclosure Act does. Before accepting an offer, the seller or the seller’s broker must get the assessor’s tax estimate to the buyer (§ 47-13-4). If the house has a septic system, the seller must have it evaluated before the transfer (20.7.3.902 NMAC).

Can I sell as-is and say nothing?

An as-is clause does not protect knowing concealment. McElhannon holds that contractual disclaimers “do not relieve a party from liability for fraud.”

My father died of natural causes in the house. Do I have to tell buyers?

No. Section 47-13-2 removes any duty to disclose that the property was “the site of a natural death.” Section 47-13-3 bars rescission or a lawsuit over not mentioning it.

We found a cracked sewer line after closing. How long can we wait to sue?

A fraud claim must be brought within four years (§ 37-1-4), counted from when you discovered the fraud (§ 37-1-7). For silence to count as fraud, McElhannon requires that the seller actually knew of the problem and knew you were buying without that knowledge.