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RECs are the most common seller financing instrument used in New Mexico. With a REC, the seller transfers equitable interest in the property to the buyer upon execution of the REC, while the seller retains legal title to the property until the buyer satisfies all conditions of the REC. However, under long-established New Mexico case law, the buyer is, for all intent and purposes, the “owner” of the property; the seller is considered the trustee and has the right to receive payments for the property.
The REC outlines the details of the agreement between the parties, including but not limited to the payments due under the REC, who pays taxes and insurance on the property, escrow agent instructions and the consequences of default of the REC. In an REC, the buyer generally pays the seller a portion of the sales price up-front and then agrees to make payments on the remaining balance over the time period prescribed in the REC.
