Selling a New Mexico Home: What Are My Disclosure Obligations?

Guidance on what residential real estate sellers must tell prospective home buyers when selling a house in New Mexico.

As you try to sell your home in New Mexico, you face the challenge of convincing buyers of its value: how beautiful it is, how well-made, and how perfect its location. Sellers are always worried about the marketing of their home, so that they can secure a good price relatively quickly. In a difficult housing market, this is no small task. New Mexico, like most states, also requires that you disclose certain conditions about your home to potential sellers, which can add to that challenge. What must you disclose about your home in the Land of Enchantment, and when?

Disclosure Laws in New Mexico for Home Sales

The general requirements of home sellers' disclosures are laid out in New Mexico Statutes § 47-13 et seq., also known as the Real Estate Disclosure Act.

Sellers should provide buyers with a written disclosure of all material defects in their property about which they have actual knowledge. In plain English, this means that you should tell the buyer, in writing, about any serious problems with the property, such as a busted heating pump, a missing window, or a broken pipe.

These disclosures should be given to the buyer before the two of you sign a purchase contract. Intuitively, this makes sense. A buyer who learns of severe defects with the property after signing might quickly renegotiate the price, or back out of the sale entirely.

New Mexico is unique in that its statutory disclosure requirements focus heavily on tax issues. According to New Mexico Statutes § 47-13-4, before you can accept a buyer’s offer to purchase your property, you must: “(1) request from the county assessor the estimated amount of property tax levy with respect to the property and… specify the listed price as the value of the property to be used in the estimate” and “(2) provide a copy of the assessor's response… in writing to the prospective buyer or the buyer’s broker.”

The statute also includes extensive discussion of specifically how the county assessor (sometimes referred to as the county clerk) must calculate the property taxes. Obviously, these requirements are intended to ensure that the buyer is not surprised by the amount of taxes that will be owed, after closing.

What Information Is Covered By the New Mexico Real Estate Disclosure Form?

While the New Mexico statute itself does not contain a specific form that you must fill out, the New Mexico Association of Realtors has created a sample form that contains all of the necessary information. (Check with your real estate agent or attorney to see whether they have a preferred form, or a form that would be somehow customized to your own piece of property.)

The disclosure form asks whether the seller is “aware of” a series of legal as well as physical problems with the property. For example, has there been smoke damage? Are there any outstanding liens on the property, or any easements that would affect the buyer’s rights? Are there any significant cracks in the exterior of the home? Water pressure problems? Remember, if you do not have any “awareness” of these areas of the home, you can answer “no.”

Certain pieces of information are explicitly excluded from disclosure. New Mexico Statutes § 47-13-2 notes that a seller “shall not be liable for failure to disclose and shall not have a duty to disclose… the fact or suspicion that the real property is or has been… the site of a natural death [or] the site of a homicide, suicide, assault, sexual assault or any other crime punishable as a felony.” Moreover, you have no duty to disclose whether your property was “owned or occupied by a person who was exposed to, infected with or suspected to be infected with the human immunodeficiency virus [i.e., HIV].”

The purpose of these carve-outs is to prevent the real estate market from being clouded by irrelevant pieces of information. Still, you should realize that buyers may ask these questions, and if there are any news stories on the Internet, for example about a crime committed on the property, you may want to be prepared with an answer, or to decline to answer. (Never lie.)

Why Should You Be Honest and Open in Making Disclosures About Your New Mexico Home?

All you want to do is sell your New Mexico home. You may feel a natural incentive to make insufficient disclosures, or persuade the buyer that the property is perfect, even when it is not.

This is a mistake. If you are not fully honest and open in your disclosure statement, there's a good chance that the buyer might find out as soon as he or she hires a home inspector. If the inspector turns up a problem, this will lead to a serious trust issue that could undermine the sale.

Moreover, you face future legal liability under the New Mexico statute. For example, imagine that you sell your Sante Fe home. On your disclosure form, you claim that there is no issue with the electric system. After closing, the buyer tries to turn on the lights and half of them fail to work. Any claim that you “didn’t know” about the broken electrical system would be, at best, difficult to believe.

This creates a risk that the buyer may sue you for breach of contract or fraud. Fraud is often defined as an intentional misrepresentation of a material fact made with knowledge of its falsity, and made with the specific purpose of inducing another person to act, resulting in injury to that person. Your misrepresentation—that you did not know about a very obvious defect—could expose you to liability. At a minimum, it could entrap you in costly and time-consuming litigation when you would like thoughts of your old home to be behind you.

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