- November 19, 1990
- All Issuing Offices in the State of New Mexico
The case of Western Savings and Loan Association v. CFS Portales Ethanol I, Ltd., 107 N.M. 143, 754 P.2d 520 (1988) cast doubt on the insurability of leases. This case held that a leasehold or a term for years is personalty (a chattel real) and not real property. The issue of whether a leasehold is realty or personalty is important for conveyancing, possibility of citation by publication, redemption, and recording statutes.
You may continue to issue owner's and loan policies on leasehold estates. Our Company will rely upon prior case law. We will assume that the real estate recording statutes apply to leases.
The Supreme Court of New Mexico has previously stated that the conveyancing statutes extend to leasehold interests in the case of Garrison General Tire Service, Inc. v. Montgomery, 75 N.M. 321, 404 P.2d 143 (1965). No case specifically holds that the recording statutes (Sections 14-9-1 to 14-9-9) mandate the recordation of leases or interests in leases, but the Garrison logic should extend to recording. The Uniform Commercial Code does not appear to apply to leases. Section 55-9-104(j); In re Bristol Associates, Inc., 505 F.2d 1056 (3d Cir. 1974) (concerning lessor's interest).
If you have any questions about insurance of leasehold estates, please call our legal department or Mike Hyatt.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.