For those of you that have an interest in the Taos area for Real Estate, pleae take a few minutes and reak the TCAR Postion Paper on the Land Grants that have been filed.
These Grants are affecting the mortagage and title insurance processes in sales and ownership of certain properties in Taos County.
Position Paper
Taos County Association of REALTORS®
Fight Title Issues from New Land Grant Deeds
May 5, 2011
Prepared at the request of:
Taos County Association of Realtors®
1210 Salazar Rd. #H
Taos, NM 87571
(575)758-7411
taoscar@newmex.com
John Kejr, President
(575)737-8006
john@taos-house.com
Taos County Association of REALTORS® Fight Title Issues from New Land Grant Deeds Page 1 of 17
May 5, 2011
Executive Summary
Two warranty deeds, filed in Taos County (N.M.), have put the local economy into uncertain
territory. The deeds, which claimed title to some 40,000 acres of historic land grants,
immediately clouded the title of thousands of properties and hampered the ability to transfer,
buy, or sell those properties. Title insurers and lenders have restricted their issuing policies
and loans, awaiting legal resolution. Thousands of landowners also are in limbo, unclear
about the value of their properties and their rights of property ownership. The Taos County
Association of REALTORS® has undertaken to do whatever necessary to resolve this crisis
now, and for the long term.
Introduction
On Oct. 20, 2010, Leandro and Lawrence Ortiz filed a warranty deed with the Office of the
Taos County (N.M.) Clerk, claiming they had clear title on nearly 21,000 acres and granting title
to the heirs of the Arroyo Hondo land grant. Two months later Robert O. Gonzales, of Ranchos
de Taos, did the same for more than 22,000 acres in the Cristobal de la Serna grant.
Since the time of these filings, every deed within these land grant boundaries has been
clouded, and property transactions and financing have been severely limited in Taos. Title
companies have restricted and, in some cases, stopped issuing title insurance for transactions
within the land grants. Banks and mortgage companies have gotten skittish about refinancing. As
of mid-April 2011, more than $9 million in real estate and financing business has been delayed
or, in some cases, abandoned. No one can say how many other deals have died since then.
Most observers – including Mr. Gonzales himself (as quoted in
The Taos News) – agree that
the filings were primarily strategic political moves, although several foreclosures within the
grants also have been delayed because of the filings. Letters written to and published by
The
Taos News
by these land grant activists want to raise past grievances, reopen old court cases, and
debate long-settled issues of ownership and access.
In good years, the Taos real estate and construction markets represented about 30 percent of
the local business activity – and generated a like number of jobs. Both sectors have suffered
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mightily in the Great Recession; these filings have created third-party obstructions to the
industries’ ability to recover.
Lifting a warranty deed from the Taos County books requires a court order, according to state
law. A number of stakeholders appear ready to take the land grant heirs to court to get such an
order, including the Town of Taos, title companies and banks, and aggrieved landowners.
However, court action takes time, and the Taos District Court docket is one of the most crowded
in the state. In addition, any court order could be appealed. In the meantime the business of real
estate transactions, a major hub of the Taos economy, suffers.
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May 5, 2011
What Could Happen If The Effects Of These Deeds Remain
In her veto message of HB 653, Gov. Susana Martinez called for a criminal investigation into
these filings. She warned that, “This conflict has the potential to pit neighbor against neighbor
and tear the community’s social fabric.” The Taos County Association of REALTORS® agrees,
and fears that ramifications of this filing of deeds may extend far into the future. For example:
•
The ability of private property owners within the land grants to sell would be severely
stifled, and the natural forces of supply and demand will be altered.
•
People who might be looking to relocate in Taos area would be discouraged by the
chaos in the Taos market, and likely look to buy a home somewhere else – or not at
all.
•
The image of a real estate market in disarray would stigmatize the entire Taos market
for years to come, not just properties within the land grants.
•
Property values would be driven downward by this market disruption, destroying
much of the hard-earned wealth of those whose inheritance is mainly in family-held
real estate, and of those many people who saved up in order to live in the Taos area.
•
Hardships in the real estate and related industries would spread to all other segments
of the local economy, creating a localized economic depression that would hurt
regional businesses and individuals for years to come.
•
The Taos County tax base would decline, curtailing the ability of Taos County
government to provide essential services, and placing the county’s ability to issue and
pay for bonds in jeopardy.
•
The potential for heightened racial, social, and economic conflict may increase within
the community, including the possibility of violence.
•
Not matter how long they stay on the books, these filings in Taos County by land
grant activists may empower sympathizers elsewhere to create similar havoc.
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May 5, 2011
The REALTORS® Stance
1. It is the Taos County Association of REALTORS' (TCAR) position that it is imperative
that a court of proper jurisdiction expeditiously determine the validity and legitimacy of
these deeds and that until such time as this is done, that these deeds be given no merit.
Statements made by knowledgeable people to local media suggest nefarious motives for
filing the deeds, thus, calling into question the legitimacy of the deeds and supporting
TCAR's position that until proven otherwise, these deeds should not be given the power
to cloud titles of properties within the grants.
2. These filings should have no bearing upon property transactions, including the right of
landowners with insurable title on a property to enjoy all the rights of transfer.
3. The property owners of record are to be considered the legitimate owners until proven
otherwise.
4. The association is dedicated to protecting private property rights of all citizens, so it
supports all steps that can be taken to put an end to this crisis as soon as possible.
5. Damage to individuals, businesses and local governments -- and tension among cultural
groups within our community -- escalate every day that this issue remains unsolved.
Therefore, we urge aggressive, swift, and decisive action from all who can play a part in
bringing this crisis to an end.
6. The association does not discourage those who believe that they have a legitimate claim
to property not in their possession from taking appropriate action in proper legal
channels. Title insurance should protect the innocent insured, if their title was not valid.
Taos County Association of REALTORS® Fight Title Issues from New Land Grant Deeds Page 5 of 17
May 5, 2011
Facts and Figures
• The Taos County assessor lists 9,681 assessed properties within the Cristobal de la
Serna grant on its tax rolls, and 3,074 assessed properties within the Arroyo Hondo grant.
Heirs and non-heirs alike now populate both areas.
• In the past 40 years, New Mexico courts repeatedly have ruled in favor of non-heir
landowners in clear title lawsuits brought by heirs of Cristobal de la Serna. Those cases have
long passed their deadlines for appeal.
• A 2004 GAO report found that land grant heirs have had ample opportunity in the past
to assert their claims and raise grievances in court.
• A similar filing about 10 years ago in Rio Arriba County, claiming all property for
land grant heirs, was summarily ignored by lawyers and title insurers.
• The Taos County assessor produced a special report that warned of “drastic” tax
increases and precipitous value declines if the warranty deeds were to stand. Likewise, Gross
Receipts Taxes charged for transaction services, such as an appraisal, will be affected.
• A bill in the New Mexico Legislature making filing of a known false deed a crime was
vetoed by the governor, who said existing fraud statutes already have that power. However,
New Mexico’s criminal fraud statutes won’t apply in these cases unless intent to deceive can
be proven; an intention to create chaos and publicity by filing false deeds doesn’t rise to fraud.
Taos County Association of REALTORS® Fight Title Issues from New Land Grant Deeds Page 6 of 17
May 5, 2011
What the REALTORS® Wish To Accomplish
1. Seek declaratory judgments and other legal proceedings to make the deeds invalid, void,
or of no effect.
2. Encourage prosecution of those who are assisting the land grants while practicing law
without a license.
3. Change the regulatory environment to allow title insurers to insure over these deeds.
4. Allow market forces to fairly price and compensate for risk to insurers.
5. Place pressure on underwriters to write new policies.
6. Lobby for legislation that will prevent reoccurrence in the future, including a true slander
of title law for non-fraud situations, with strong consequences.
7. Create a campaign to keep the public informed as to the status of judicial proceedings
related to these deeds and encourage real estate transactions within Taos County.
8. Pursue fast-track agenda items to allow quick relief and prevent compounded damage.
9. Prevent old land grant claims from repeatedly being used to harass and intimidate
property owners.
Taos County Association of REALTORS® Fight Title Issues from New Land Grant Deeds Page 7 of 17
May 5, 2011
Anecdotal Evidence
A number of individuals and businesses already have suffered because of these filings.
Some of examples of these hardships are:
In January 2011, the pastor of a church within the Arroyo Hondo grant attempted to put his
former church building up for sale. His plans died when he couldn’t get title insurance, and an
$85,000 deal fell through.
Owners of a commercial building in Taos sought to sell, but they were stymied in their
attempts to get title insurance.
A couple from Denver who found a foreclosed property within the La Serna grant had
financing in hand, but the lender backed out when it learned of the filings. The prospective
buyers lost $6,000 in pre-closing costs.
A Taos-area woman sought to refinance a house to pay for a $47,000 surgery, but she
failed to get the money because of the filings.
An Arroyo Hondo landowner closed on a $60,000 deal but then backed out, objecting to
having to pay an extra premium for an exception on her title insurance policy.
On the day of closing with clear title in hand, the prospective buyer received notice that the
title company had changed its mind and declined coverage; therefore, the buyer lost the cost
of the appraisal, the Realtor lost commission, and the bank lost future mortgage payments.
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May 5, 2011
Conclusion
The Taos County Association of REALTORS® has taken the lead in defending the citizens’
right to buy and sell property in an unencumbered market. The Taos market is currently under
siege from third-party intrusions, and TCAR has alerted property owners of the situation through
newspaper letters and op-ed articles, email correspondence with the Taos business community,
and interviews on local radio.
The TCAR board stands ready to provide whatever support it can to any stakeholder in court
actions, to lobby for changes in title insurance regulations, and to work to enact laws to keep this
tragedy from ever happening again.
TCAR also encourages all interested parties to utilize proper channels to resolve land grant
issues in New Mexico -- once and for all.
Taos County Association of REALTORS® Fight Title Issues from New Land Grant Deeds Page 9 of 17
May 5, 2011
End Notes
Outside information in this Position Paper came from a variety of sources:
1. Copies of the deeds in question came from
www.taosnews.com/downloads/grantdeeds.pdf
.
2. The statistics on the potential impact of the filed deeds upon the Taos County tax base
came from a Feb. 24 document issued by Assessor Darlene Vigil. Copies can be obtained
from the Taos County Assessor’s Office or viewed at
https://docs.google.com/viewer?a=v&pid=gmail&attid=0.1&thid=12f4bed70aece0e9&mt
=application/pdf&url=https://mail.google.com/mail/?ui%3D2%26ik%3D3ff4faa684%26
view%3Datt%26th%3D12f4bed70aece0e9%26attid%3D0.1%26disp%3Dattd%26zw&si
g=AHIEtbR3R-1b_cYKF07397yAv81RiQKcFQ
.
3. The GAO Report was issued on Sept. 10, 2001, Document GAO-01-951, at the request of
New Mexico Sens. Jeff Bingaman and Pete Domenici, and Rep. Tom Udall. The
document can be downloaded at
http://www.gao.gov/new.items/d01951.pdf.
4. The Treat of Guadalupe Hildalgo can be viewed at
http://memory.loc.gov/cgibin/
ampage?collId=llsl&fileName=009/llsl009.db&recNum=975
.
5. The statement regarding the intention for filing of the deeds can be found in a March 4
story in The Taos News at
http://www.taosnews.com/articles/2011/03/04/news/doc4d703f0caccae197467363.txt
.
6. Gov. Susana Martinez’ veto message on HB 653 can be read at
http://northernnmnewsroom.wordpress.com/2011/04/08/gov-martinez-vetoes-hb-653/
.
7. Anecdotes about specific impacts of the filing of the deeds came from discussions with
Realtors.
8. Information about the position taken by title insurers came from discussion with local
title company executives.
9. The New Mexico statute on fraud is titled “30-16-6. Fraud.”
10. Maps of the Cristobal de la Serna and Arroyo Hondo land grants can be viewed at
https://docs.google.com/viewer?a=v&pid=gmail&attid=0.1&thid=12f78834a16978b3&
mt=application/pdf&url=https://mail.google.com/mail/?ui%3D2%26ik%3D3ff4faa684%
26view%3Datt%26th%3D12f78834a16978b3%26attid%3D0.1%26disp%3Dattd%26zw
&sig=AHIEtbQ4C1F9RL2-pV4bh8Wit0jy_cR0kA&pli=1
.
11. Information on title insurance came from the America Land Title Association website at
www.alta.org
.
Taos County Association of REALTORS® Fight Title Issues from New Land Grant Deeds Page 10 of 17
May 5, 2011
Appendix A
What Is Title Insurance?
The objective of title insurance is to protect the parties in a real estate transaction, assure them
that the property is free of any unknown encumbrances, and provide coverage should any be
discovered after the sale.
Prior to the transaction, a title company conducts a title search to locate potential problems
and rectify them, if possible. Such problems may be mechanic’s liens, tax liens, easements,
rights of way, air or subsurface rights, or other third-party interests. Any of these discrepancies
creates a “cloud” on the title, which must be either resolved, excluded from coverage, or “insured
around” before a transaction can go forward.
If the title search indicates a clear title, then the local title company and its national
underwriters will assume the risk of future claims -- and the costs of fighting them -- and issue an
insurance policy to the owner.
That action gives the lender assurances that the risk of investing in a mortgage has been
minimized to the greatest extent possible. On rare occasions, a lender who is familiar with local
circumstances will write a mortgage despite an apparent cloud -- usually at higher costs to the
borrower to compensate for the additional risk. Typically, however, national lenders and
secondary-market investors who are not familiar with local risks will shy away from backing
such mortgages.
State law permits title companies to include an “endorsement” in a policy that requires an
additional premium to cover the risk of future title challenges on particular known issues, such as
deeds assumed to be false that cover large tracts of land. However, such a premium must first be
adopted by the regulatory agency – in this case, the New Mexico Department of Insurance. The
department must convene a hearing on the proposed endorsement before issuing its ruling.
What Has Changed In Taos County
The clouds placed upon some 11,000 assessed properties in Taos County by these filings have
put property owners, title companies, and lenders on tenuous ground. The three local title
companies in Taos – who act as brokers or agents for national underwriters -- say they will
consider each policy application on a “case-by-case basis.” One national underwriter has insured
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May 5, 2011
several titles only if a prior owner’s policy exists, and only up to the value of that policy. Some
local companies have insured over these deeds, but they are beholden to the policies of their
underwriters who ultimately bear the financial risk of claims against any insurance policy. Others
say they will only insure a title if the cloud from these filings is disclosed to the buyer, and an
exception is included in the policy to exempt coverage related to these filings. In practice, title
insurance with coverage over these deeds is not available for previously uninsured properties,
and extremely limited for those previously insured.
Local lenders say they would like to continue selling mortgages, despite the potential clouds
on titles. However, their financial risk in mortgages is normally higher than other assets, so the
unusual situation in Taos only increases that risk – and turns lenders to more secure, less risky
investments than mortgages.
Until these clouds have been permanently removed from any transactions within the two
affected historic land grants, both title insurers and lenders say they will be cautious. A few
transactions likely will get through despite these potential encumbrances. However, Taos
insurers and lenders say that in order for transactions to close, both parties may have to show
greater financial strength than usual and agree to an exception on the title insurance policy – until
this situation is resolved in court. Meanwhile, the present situation will prevent a sizable
percentage of transactions from successfully consummating.
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May 5, 2011
Appendix B
Parties From Whom REALTORS® Request Assistance
Party Requested Action
Title Insurance Underwriters
and their state and national
associations
•
Identify conditions that necessitate new policies.
•
Pursue steps to implement these policies.
•
File lawsuits to remove impacts of these deeds.
•
Pressure all parties for prompt resolution.
Taos County District Attorney, New
Mexico State Attorney General
•
Investigate and prosecute those who have filed
these allegedly illegal deeds.
•
Assist other parties in enacting laws to make filing
false deeds a crime, and to develop an efficient
means to mitigate their impacts.
•
Pressure all parties for prompt resolution.
State Legislature, Governor
• Enact a law to make slander of title a crime in
New Mexico.
•
Enact a law to permit false deeds to be removed,
or to be made null and void.
•
Lobby the governor to issues proclamations from
her office that can help provide relief.
•
Pressure all parties for prompt resolution.
•
Determine a strategy to prevent any future false
deed filings.
•
Discourage legislation that would strengthen land
grant rights for those wishing to use them to work
against private property rights.
•
Advance a pro-property rights agenda.
Town of Taos and Taos County
officials
•
Seek legal action to remove deeds, or to make
them null and void.
•
Lobby for legislation.
•
Pressure all parties for prompt resolution.
New Mexico Public Regulation
Commission
•
Identify regulations that may prevent insuring
over these false deeds and remove these obstacles
as quickly as possible.
•
Investigate as to whether the underwriters have
performed according to current regulations.
•
Pressure all parties for prompt resolution.
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May 5, 2011
Party Requested Action
Federal lawmakers
• Pursue legislation that prevents false deeds as a
means for attempting to settle land grant issues.
•
Conduct investigations into the effects of these
deeds, and seek permanent solutions.
•
Pursue legislation to settle land grant issues.
•
Enable “fast track” resolutions of issues to prevent
extended damage.
•
Pressure all parties for prompt resolution.
Federal regulators and agencies
• Determine the impact of these deeds upon their
missions.
•
Develop strategies to overcome these impacts.
•
Pressure all parties for prompt resolution.
National Association of
REALTORS®, and
REALTORS® Association of New
Mexico
•
Recognize that this issue is not just a local issue,
because its impacts on property rights could
spread throughout the region and nation.
•
Advise the local REALTOR® association as to
resources, policies, and strategies for dealing with
the issue.
•
Provide contacts and access to influential people
who could bring solutions.
•
Provide legal assistance funds to fight false deeds.
•
Assist in public advocacy issues to assure the
public that it is safe to purchase property within
boundaries of former land grants.
•
Place pressure on other parties to seek quick
resolution of this issue.
•
Advocate for political action in favor of those
seeking property rights issues and against those
who are unwilling to act or act against those
issues.
Other affected associations and
entities
(Homebuilders, chambers of
commerce, federal loan
guaranteeing agencies, major
lenders and owners of foreclosed
properties)
•
Work with REALTORS® to develop solutions.
•
Determine the impact of these deeds upon their
missions. Develop strategies to overcome these
impacts.
•
Pressure all parties for prompt resolution.
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May 5, 2011
Party Requested Action
The public
• Encourage them to notify us of their impacts, and
notify them on how we can help.
The media
• Push for objective and accurate reporting of the
issue.
•
Voice our concerns in interviews, op-ed pieces,
and letters to the editor.
•
Inform other media outlets in the state of the issue
and consequences should similar deeds be filed
elsewhere.
•
Educate the public on the hidden agenda of some
Land Grant activists and the threat that it poses to
private property rights.
The Cristobal de la Serna and
Arroyo Hondo land grant
associations and others
contemplating false deed actions
•
Convince them that false deeds are not a
constructive way to advance their agenda.
•
Let them know that REALTORS® will not object
to attempts to claim lands or recover damages
where they can demonstrate that they are the
rightful owners, provided that they do so using
established legal procedures.
•
Educate them on the negative impacts that false
deed actions are having upon heirs and others
sympathetic to their cause.
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May 5, 2011
Appendix C
Maps
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