Contract for Deed (Land Contract) - New Mexico

CONTRACT FOR DEED (REAL ESTATE CONTRACT)

(NEW MEXICO – INSTALLMENT LAND CONTRACT / SELLER FINANCING)

IMPORTANT NEW MEXICO NOTICE. Under New Mexico practice this Contract is a "real estate contract." Upon a Purchaser default, a Seller's principal remedies are (a) contractual forfeiture/termination (commonly facilitated by an escrowed special warranty deed from the Purchaser), and (b) judicial foreclosure of the contract through a court-ordered sale by a special master. New Mexico courts have upheld forfeiture where the contract so provides (Bishop v. Beecher), but a court sitting in equity may decline to enforce a forfeiture and may instead order a foreclosure-type sale where the Purchaser has accumulated substantial equity or where forfeiture would be unconscionable. This document must be reviewed by New Mexico counsel before use.

TABLE OF CONTENTS

1. Parties and Recitals
2. Definitions
3. Property and Legal Description
4. Purchase Price, Down Payment, and Installment Terms
5. Title; Deed Held and Escrow
6. Possession
7. Taxes, Insurance, Maintenance, and Utilities
8. Default and Remedies (New Mexico Forfeiture / Foreclosure)
9. Prepayment
10. Recording
11. Risk of Loss
12. Assignment; Due-on-Sale (Garn–St. Germain)
13. Representations, Warranties, and Disclosures
14. General Provisions
15. Execution, Acknowledgment, and Notary
16. Exhibits and Schedules
17. Sources and References

1. PARTIES AND RECITALS

1.1 Parties. This Contract for Deed (the "Contract") is made effective as of [__/__/____] (the "Effective Date") by and between [SELLER LEGAL NAME], a [INDIVIDUAL/ENTITY TYPE], of [SELLER ADDRESS] ("Seller"), and [PURCHASER LEGAL NAME], a [INDIVIDUAL/ENTITY TYPE], of [PURCHASER ADDRESS] ("Purchaser"). Seller and Purchaser are each a "Party" and collectively the "Parties."

1.2 Recitals.
A. Seller is the owner of fee-simple title to the real property described in Section 3 (the "Property").
B. Seller has agreed to sell, and Purchaser has agreed to buy, the Property on the installment terms set forth herein, with Seller retaining legal title as security until the Purchase Price is paid in full.
C. Purchaser shall receive possession and equitable title upon execution, and Seller shall convey legal title by deed upon full performance.

2. DEFINITIONS

"Contract Balance" – the unpaid principal portion of the Purchase Price outstanding at any time.

"Equitable Title" – the ownership interest the Purchaser acquires upon execution of this Contract, with legal title retained by Seller as security.

"Escrow Agent" – [ESCROW/TITLE COMPANY NAME AND ADDRESS], or a successor agreed in writing.

"Event of Default" – any event described in Section 8.1.

"Installment Payment" – each periodic payment of principal and interest under Section 4.

"Special Warranty Deed" / "Deed" – the conveyance instrument described in Section 5, to be delivered upon full payment.

3. PROPERTY AND LEGAL DESCRIPTION

3.1 Property. Seller agrees to sell and Purchaser agrees to buy the real property located in [COUNTY] County, New Mexico, commonly known as [STREET ADDRESS, CITY, NM ZIP], together with all improvements, fixtures, easements, and appurtenances.

3.2 Legal Description. The Property is legally described as:

[________________________________________________________________
________________________________________________________________]

3.3 Personal Property. The following personal property is included: [________________________________].

4. PURCHASE PRICE, DOWN PAYMENT, AND INSTALLMENT TERMS

4.1 Purchase Price. The total purchase price is $[____________] (the "Purchase Price").

4.2 Down Payment. Purchaser shall pay a down payment of $[____________] on or before the Effective Date, receipt of which Seller acknowledges.

4.3 Financed Amount. The financed balance is $[____________] (Purchase Price less down payment).

4.4 Interest Rate. The financed balance bears interest at [____]% per annum.

4.5 Installment Schedule.

4.6 Application of Payments. Payments apply first to late charges, then accrued interest, then principal, unless otherwise required by law.

4.7 Late Charge. A late charge of $[____] or [____]% of the overdue payment applies to payments more than [____] days late.

4.8 Place of Payment. Payments are made to Seller at [ADDRESS] or to the Escrow Agent as designated.

5. TITLE; DEED HELD AND ESCROW

5.1 Retention of Legal Title. Seller retains legal title to the Property as security until the Purchase Price and all other sums due are paid in full.

5.2 Deed Held in Escrow. Concurrently with execution, Seller shall deposit with the Escrow Agent a duly executed and acknowledged [Special Warranty Deed / Warranty Deed] conveying the Property to Purchaser, to be delivered to Purchaser upon full payment and performance. Purchaser shall, where used to facilitate the forfeiture remedy, deposit with the Escrow Agent a special warranty deed from Purchaser to Seller, to be released to Seller only upon a completed forfeiture in strict accordance with Section 8 and applicable law.

5.3 Title Evidence. Seller shall furnish, at [Seller's/Purchaser's] expense, a title insurance commitment showing marketable title subject only to Permitted Exceptions listed on Schedule 1.

5.4 Conveyance on Payoff. Upon full payment, Seller shall cause the Deed to be delivered and recorded, conveying marketable title free of liens except Permitted Exceptions and matters created by Purchaser.

6. POSSESSION

6.1 Delivery of Possession. Purchaser is entitled to possession of the Property as of [__/__/____], and shall maintain it in good condition.

6.2 Equitable Title. Purchaser holds equitable title and all incidents of ownership except legal title, subject to this Contract.

7. TAXES, INSURANCE, MAINTENANCE, AND UTILITIES

7.1 Taxes and Assessments. Purchaser shall pay, before delinquency, all real property taxes and assessments levied on the Property from the Effective Date forward, and shall provide proof of payment to Seller on request.

7.2 Insurance. Purchaser shall maintain hazard insurance on the improvements for not less than $[____________], naming Seller as an additional insured / loss payee as its interest appears, and shall deliver evidence of coverage to Seller.

7.3 Maintenance. Purchaser shall keep the Property in good repair, commit no waste, and comply with all applicable laws, ordinances, and recorded restrictions.

7.4 Utilities. Purchaser shall pay all utilities and service charges from the date of possession.

8. DEFAULT AND REMEDIES (NEW MEXICO FORFEITURE / FORECLOSURE)

8.1 Events of Default. Each of the following is an Event of Default: (a) failure to make any Installment Payment when due; (b) failure to pay taxes or maintain insurance; (c) commission of waste; (d) unauthorized transfer in violation of Section 12; or (e) breach of any other material covenant.

8.2 Notice and Right to Cure. Before exercising any remedy, Seller shall deliver written notice of default specifying the default and the amount or action required to cure. Purchaser shall have [thirty (30)] days (the "Cure Period") after delivery of notice to cure.

8.3 Seller's Remedies on Uncured Default. If the default is not cured within the Cure Period, Seller may pursue one or more of the following, subject to New Mexico law and equity:

(a) Forfeiture / Termination (Strict Foreclosure). Seller may declare this Contract terminated and forfeited, retain all sums paid as liquidated damages and as reasonable rental value, and recover possession. Where a Purchaser special warranty deed is escrowed under Section 5.2, Seller may obtain its release and recording. New Mexico courts have upheld forfeiture where the contract so provides (Bishop v. Beecher, 67 N.M. 339), but a court may decline to enforce a forfeiture and instead order a judicial sale where the Purchaser has substantial equity or where forfeiture would be unconscionable.

(b) Judicial Foreclosure (Special Master Sale). Seller may elect to foreclose this Contract judicially in the New Mexico district court for the county where the Property is located, obtaining a decree directing sale of the Property by a court-appointed special master, with any surplus paid to Purchaser and any redemption rights determined by the court.

(c) Acceleration / Suit for Price. Where the Contract so provides, Seller may declare the entire Contract Balance immediately due and sue for the unpaid Purchase Price.

(d) Other Relief. Seller may pursue any other remedy available at law or in equity.

8.4 Equitable Relief Reserved to Purchaser. Nothing herein limits a Purchaser's right to seek equitable relief, including a court-supervised opportunity to redeem or to compel a foreclosure-type sale in lieu of forfeiture.

8.5 Attorney Fees. The prevailing Party in any enforcement action is entitled to reasonable attorney fees and costs.

9. PREPAYMENT

Purchaser may prepay all or part of the Contract Balance at any time without penalty. Partial prepayments apply to principal and do not postpone scheduled payments unless Seller agrees in writing.

10. RECORDING

10.1 Recording of Contract. This Contract, as a writing affecting title to real estate, shall be recorded in the office of the County Clerk of [COUNTY] County, New Mexico, as required by NMSA 1978, § 14-9-1. Counsel must confirm that any memorandum used instead contains enough of the transaction and property information to qualify for recording and protect the parties' intended interests. Under § 14-9-3, an unrecorded written instrument does not affect the title or rights of a purchaser, good-faith mortgagee, or judgment-lien creditor without knowledge, and possession under an unrecorded executory real estate contract does not by itself impute that knowledge or a duty to inquire.

10.2 Who Records / Costs. [Seller/Purchaser] shall record this Contract (or memorandum) within [____] days of the Effective Date and pay recording fees.

11. RISK OF LOSS

From the date of possession, risk of loss or damage to the Property is on Purchaser. Insurance proceeds shall be applied, at [Seller's/Purchaser's] election consistent with this Contract, to restoration of the Property or to the Contract Balance.

12. ASSIGNMENT; DUE-ON-SALE (GARN–ST. GERMAIN)

12.1 Assignment by Purchaser. Purchaser shall not assign this Contract or transfer any interest in the Property without Seller's prior written consent, which [shall/shall not] be unreasonably withheld.

12.2 Underlying Financing; Due-on-Sale. If the Property is encumbered by a prior mortgage or deed of trust containing a due-on-sale clause, this Contract may trigger the lender's right to accelerate. The federal Garn–St. Germain Depository Institutions Act, 12 U.S.C. § 1701j-3, preempts most state restrictions on due-on-sale enforcement and contains limited exemptions (e.g., certain intra-family transfers and a transfer into an inter vivos trust). Seller represents the status of any underlying loan on Schedule 2. The Parties should confirm whether this transaction triggers acceleration before closing.

13. REPRESENTATIONS, WARRANTIES, AND DISCLOSURES

13.1 Seller's Title. Seller represents that Seller holds marketable fee-simple title subject only to Permitted Exceptions.

Lead-Based Paint (Covered Target Housing). Before Purchaser is obligated under this Contract, Seller must complete the current federal process for covered target housing: provide the EPA lead-hazard pamphlet; disclose known lead-based paint and known lead-based-paint hazards; provide every available lead-hazard evaluation report; attach the large-type Lead Warning Statement and Purchaser-signed acknowledgments to this Contract; and allow Purchaser a 10-day risk-assessment or inspection opportunity unless the parties mutually agree to a different period. ☐ Federal coverage and any exemption reviewed ☐ Current warning/disclosure attachment completed ☐ Pamphlet and available reports delivered ☐ Inspection period completed, waived, or changed by mutual agreement.

13.3 Property Condition Disclosure. Seller shall provide a New Mexico property condition disclosure consistent with state real estate practice. (Schedule 4.) Purchaser acknowledges the Property is otherwise sold [AS-IS / with the following warranties: ____].

13.4 Consumer-Protection Guidance.

• Purchaser does not receive legal title until the Purchase Price is paid in full.
• Record this Contract promptly to protect your equitable interest against later buyers or creditors.
• Verify whether the Property is subject to a prior mortgage that could be foreclosed even if you make all payments.
• Confirm property taxes are current and titled status before signing.
• Both Parties are strongly encouraged to obtain independent legal counsel and title insurance.

14. GENERAL PROVISIONS

14.1 Governing Law. This Contract is governed by the laws of the State of New Mexico.

14.2 Forum. The state district court for the county where the Property is located has exclusive jurisdiction.

14.3 Time of Essence. Time is of the essence.

14.4 Notices. Notices must be in writing and delivered personally, by certified mail (return receipt requested), or by nationally recognized overnight courier to the addresses above.

14.5 Entire Agreement; Amendments. This Contract is the entire agreement and may be amended only in a signed writing.

14.6 Severability. Invalid provisions shall be reformed to the minimum extent necessary; the remainder remains in effect.

14.7 Successors. This Contract binds and benefits the Parties and their permitted successors and assigns.

14.8 Counterparts; Electronic Signatures. This Contract may be executed in counterparts and by electronic signature.

15. EXECUTION, ACKNOWLEDGMENT, AND NOTARY

IN WITNESS WHEREOF, the Parties have executed this Contract as of the Effective Date.

SELLER

____________________________________
[SELLER LEGAL NAME]
Date: [__/__/____]

PURCHASER

____________________________________
[PURCHASER LEGAL NAME]
Date: [__/__/____]

NOTARY ACKNOWLEDGMENT

State of New Mexico )
County of __________ ) ss.

This instrument was acknowledged before me on [__/__/____] by [NAME(S)].

____________________________________
Notary Public
My Commission Expires: [__/__/____]

16. EXHIBITS AND SCHEDULES

Schedule 1 – Permitted Exceptions / Title Matters
Schedule 2 – Underlying Financing Disclosure
Schedule 3 – Lead-Based Paint Disclosure (pre-1978 dwellings)
Schedule 4 – New Mexico Property Condition Disclosure
Schedule 5 – Memorandum of Contract for Deed (for recording)

17. SOURCES AND REFERENCES

• NMSA 1978, § 14-9-1 (instruments affecting real estate; recording): https://nmonesource.com/nmos/nmsa/en/4383/1/document.do
• NMSA 1978, § 14-9-3 (unrecorded instruments; effect): https://nmonesource.com/nmos/nmsa/en/4383/1/document.do
• Bishop v. Beecher, 1960-NMSC-093, 67 N.M. 339, 355 P.2d 277: https://law.justia.com/cases/new-mexico/supreme-court/1960/6654-0.html
• Garn–St. Germain Depository Institutions Act, 12 U.S.C. § 1701j-3
• Residential Lead-Based Paint Hazard Reduction Act, 42 U.S.C. § 4852d; 24 C.F.R. Part 35; 40 C.F.R. Part 745

END OF DOCUMENT