BOKF, N.A. v. Unknown Heirs

Decision Date10 December 2020
Docket NumberNo. A-1-CA-37609,A-1-CA-37609
Citation484 P.3d 1020
Parties BOKF, N.A., Plaintiff, v. The UNKNOWN HEIRS and Devisees and Legatees OF Linora P. PACHECO, Deceased; Jose Pacheco ; Santa Fe Community Housing Trust ; New Mexico Mortgage Finance Authority; and Occupants of the Property, Defendants, and Ashok Kaushal, Petitioner-Appellant, v. Santa Fe Community Housing Trust, Petitioner-Appellee.
CourtCourt of Appeals of New Mexico

Holmes Law Firm, PC, Kevin P. Holmes, Albuquerque, NM, High Desert Lawyers, LLC, Eric N. Ortiz, Albuquerque, NM, for Appellant

VanAmberg, Rogers, Yepa & Abeita, LLP, Ronald J. VanAmberg, Santa Fe, NM, for Appellee

HANISEE, Chief Judge

{1} This appeal arises from litigation regarding assignment of redemption rights to Appellant Ashok Kaushal by some, but not all, heirs of decedent Linora Pacheco following a foreclosure judgment and sale of her residence. Kaushal appeals from a district court order granting Appellee Santa Fe Community Housing Trust's (the Trust) petition for redemption and motion for summary judgment, the effect of which was to reject Kaushal's assigned redemption interest. On appeal, Kaushal disputes the district court's determinations that the statutory right of redemption requires a unified interest and possession of title to the property being assigned and redeemed. We reverse and remand.


{2} Pacheco obtained a mortgage on her home in March 2012, from National Banking Association d/b/a Bank of Oklahoma (the Bank). Through a mortgage subordination agreement, the Trust held a subordinate mortgage on Pacheco's property. The Bank initiated foreclosure proceedings in December 2014. Pacheco died before the foreclosure action was brought to judgment and the case continued against her estate. At the time of her death, Pacheco was survived by her four sons: Raymond, Joseph, Bryan, and Richard. The Bank obtained a foreclosure judgment on Pacheco's property in June 2017. During the underlying proceedings, the district court also recognized the Trust's subordinate mortgage. In September 2018 the Bank held a foreclosure sale at which it was the highest bidder. The district court entered an order finalizing the foreclosure sale on October 24, 2017. By that date, Bryan and Richard were deceased.

{3} After the foreclosure sale, Kaushal purchased the statutory right to redeem the property from Pacheco's two surviving sons, Joseph and Raymond. In November 2017 Kaushal tendered payment in the amount of $154,712.93 for the value bid at the foreclosure sale, plus interest and fees, and filed a redemption petition. The Trust subsequently filed its own redemption petition based on its status as a junior lienholder. In connection with its redemption petition, the Trust also attempted to tender a cashier's check in the required amount; however, the district court clerk refused to accept the Trust's payment absent a court order requiring that it do so. The Trust then filed a motion requesting the district court to issue an order allowing the Trust to deposit funds for the property.

{4} Kaushal responded, arguing that the Trust's redemption petition was invalid and that, in any event, Kaushal's right to redeem was superior as the assignee of the owner's right of redemption. The Trust then filed a supplement to its redemption petition asserting that Richard's daughter, Claudia Urioste, had assigned her redemption right to the Trust. In his response thereto, Kaushal maintained that the assignment from Urioste to the Trust was invalid because it was made six weeks after expiration of the redemption period. The Trust then moved for summary judgment, arguing among other things that Kaushal's petition was invalid because he was required to possess one hundred percent of the redemption rights passed from Pacheco to her heirs and did not.

{5} The district court granted both the Trust's petition for redemption and its motion for summary judgement. In its written order, the district court explained:

The basic flaw in [Kashaul's] argument is that he cannot redeem what he does not legally own. There is nothing in the record that transfers title of the property to the part[ies] that allegedly assigned the redemption interest. While the person[s] assigning [their rights of redemption] may be [heirs], they [the assignees] have to establish[ ] legal ownership in the property.

{6} The district court's order relied in part on a decision by the Alabama Supreme Court dealing with the redemption of partnership property, Costa & Head (Birmingham One), Ltd. v. Nat'l Bank of Commerce of Birmingham , which states: "One who has an interest as a partner in mortgaged property may enforce his equitable right to redeem. So, in the case of a mortgage of partnership property, either partner is a debtor entitled to exercise a statutory right to redeem from a sale on foreclosure, and he may redeem the entire property." 569 So. 2d 360, 364-65 (Ala. 1990) (alteration, internal quotation marks, and citation omitted). The district court distinguished Kaushal's right to redeem from that determined to be valid in Costa , concluding that unlike a legal partner, "one heir has no legal right to assign the whole of the interest (an undivided interest) to a third party." Kaushal appeals.


{7} On appeal, Kaushal raises three issues: first, he claims that a redemption petitioner need not possess one hundred percent of the redemption interest to redeem a property after foreclosure. Second, he argues that a former defendant owner's heirs need not first have received title to exercise or assign redemption rights. Third, Kaushal asserts that the Trust's petition for redemption is invalid because his petition has priority and the Trust failed to deposit earnest money in the court registry as required by the redemption statute. The Trust answers that Kaushal's petition was defective, as determined by the district court, because he lacked title to the entirety of the property and failed to obtain a unified interest.1 Regarding the earnest money declined by the district court, the Trust argues that it substantially complied with the statutory redemption requirements. For the reasons explained below, we hold that under New Mexico law, it was not necessary for Kaushal to obtain a unified interest to exercise his assigned rights of redemption, and that Pacheco's heirs need not have first received title to the foreclosed property in order to assign their rights of redemption. Kaushal's interest, however, is limited to those interests possessed by the assignees—two of Pacheco's four surviving sons—at the time of assignment. We also conclude that the Trust substantially complied with the statutory requirements applicable to its own right of redemption. We remand for further proceedings.

Standard of Review

{8} Kaushal's arguments on appeal challenge the application of law to the facts of this case. "We review de novo the trial court's application of the law to the facts in arriving at its legal conclusions." Kokoricha v. Estate of Keiner , 2010-NMCA-053, ¶ 11, 148 N.M. 322, 236 P.3d 41 (internal quotation marks and citation omitted). To the extent determination of the issues presented requires that we engage in statutory interpretation, we engage in a de novo review in which "our charge is to determine and give effect to the Legislature's intent." Little v. Jacobs , 2014-NMCA-105, ¶ 7, 336 P.3d 398 (internal quotation marks and citation omitted).

I. Under the New Mexico Redemption Statute, Kaushal Need Not Possess a Unified Redemption Interest to Redeem

{9} Kaushal argues that the plain language of the redemption statute makes it clear that a redemption petitioner need not possess one hundred percent of the possible redemption interests to redeem a property after a foreclosure sale. In New Mexico, the statutory redemption right is created by the State's foreclosure redemption statute. NMSA 1978, Section 39-5-18 (2007). The redemption statute provides that "real estate may be redeemed by the former defendant owner of the real estate or by any junior mortgagee or other junior lienholder whose rights were judicially determined in [a] foreclosure proceeding[.]" Section 39-5-18(A). Importantly for our purposes, the redemption statute identifies the term "owner" as including an owner's "personal representatives, heirs, successors and assigns." Section 39-5-18(D). Consistent with the express language of the statute, New Mexico courts have held that the right of redemption is an assignable right. See W. Bank of Las Cruces v. Malooly , 1995-NMCA-044, ¶ 9, 119 N.M. 743, 895 P.2d 265 (holding that "our redemption statute authorizes a holder-by-assignment of a junior lien to redeem from the judicial sale of foreclosed property").

{10} The statute also prioritizes the rights of former-defendant owners over the rights of junior lien holders. See § 39-5-18(A)(3) ("[T]he former defendant owner shall have the first priority to redeem the real estate. If the former defendant owner does not redeem the real estate ... each junior mortgagee or junior lienholder shall have a right to redeem the real estate."). In other words, each category of "former defendant owner"—that is, "personal representatives, heirs, successors and assigns"— has the first opportunity to redeem a foreclosed property in New Mexico. However, the statute is silent on whether a prioritized redeeming former defendant owner must possess a unified interest—i.e. one-hundred-percent—of the redemption right.

{11} Section 39-5-18 was amended in 2007 and it is the amended language that the parties argue requires or does not require that every heir assign their percentage interest to a single assignee in order for the right of redemption to accrue in that assignee. See id. Kaushal contends that the district court's holding that "one heir has no legal right to assign the whole of the interest (an undivided interest) to a third party" is not supported by the language of the amended statute. Nowhere in the redemption s...

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