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Seller financing can be accomplished through various instruments: 

  • Mortgage and promissory note

  • Deed of trust and promissory notes

  • Real Estate Contract (“REC”) .  


There are two primary differences between mortgages/deeds of trust and RECs:  

  1. With mortgages and deeds of trust, equitable and legal title is immediately transferred to the buyer at closing. The mortgage or deed of trust serves as a lien against the property.  In contrast, with an REC, equitable interest in the property is immediately transferred to the buyer, but legal title to the property remains with the seller until such time as the buyer has fulfilled all terms of the REC.

  2. Mortgages and residential Deeds of Trust in New Mexico can only be foreclosed through a judicial process (a process initiated and adjudicated through the courts).  This can be a lengthy process which is dictated by statutes in New Mexico.  In contrast, RECs can be non-judicially foreclosed through a formal default process that is detailed in the REC, thus, making the REC forfeiture process much faster and cheaper, in most cases, than the foreclosure process under a Mortgage. Deeds of Trust involving residential property must be judicially foreclosed; however, Deeds of Trust involving commercial property may be non-judicially foreclosed through a process specified in the New Mexico Deeds of Trust Act. 

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