Having bought a house in New Mexico, you are no doubt hoping it will fulfill all the dreams you had for it. The last thing you want is to discover that it comes with hidden repair needs; for example, that the faucets do not turn on or there's no air conditioning on the second floor. Did the sellers know of these problems when they sold you the home? Weren't they required to disclose it under New Mexico law? And if so, what legal remedies might you have to cover your costs in repairing or otherwise dealing with the defect?
New Mexico statutes do not actually require sellers to tell prospective buyers about defects with their home before the sale. By custom, however, home sellers in New Mexico fill out a "Seller's Property Disclosure - Residential" form, prepared by the state's Realtor association. You should have received one from the property seller before making an offer on the home (most likely via the seller's real estate agent).
Review this form now to see what the seller did or say about the property defects in question. Even without a statute concerning disclosure, New Mexico courts are clear that property sellers can be held liable for fraud or misrepresentation.
So, if you do get an unpleasant surprise after moving into your New Mexico home, what can you do? First, take note that the bottom of the standard disclosure form contains important language. It states in big, bold letters that: "This is not a contract."
In other words, the seller has not guaranteed anything, but merely disclosed defects with the property within his or her "actual knowledge." A seller who doesn't know about a particular problem has no duty to hire an inspector before checking the "no" box on the disclosure form. There could be many issues with the house that the seller was unaware of, and therefore had no duty to tell you about.
On the other hand, the bottom of the disclosure form reminds sellers that: "The law does not protect a Seller who makes an intentional misrepresentation."
If, for instance, the seller knew that the air conditioner does not work, but checked the "no" box on the form anyway, without mentioning the air conditioner, this might constitute fraud. In legal terms, fraud results from one party making a statement that is knowingly false in order to induce another party to take an action, in this case to buy a defective piece of property.
Moreover, you might have a breach of contract cause of action against the seller if the language of your purchase contract made specific promises or representation (beyond whatever is stated in the disclosure form). For example, if the purchase contract promised that the air conditioning would be in good working order, but it was not, this would constitute a breach.
If you discover a defect of this sort in your New Mexico property, you should immediately write to the seller, broker, or both, stating the problem and outlining your damages. Demand letters can sometimes make a potential defendant willing to settle a dispute early on.
Litigation can be costly, and you should weigh the value of a potential recovery against the costs of a lawsuit. For example, if the refrigerator does not work, this might cost a few hundred dollars to repair. But a lawsuit against the seller for fraud or breach of contract might cost far more.