Supreme Court ruling stresses the importance of notifying a homeowner’s heirs about a foreclosure action
SANTA FE – The state Supreme Court issued an opinion today underscoring the importance for lenders and mortgage holders to properly notify a homeowner and their heirs about a foreclosure action on property.
In a unanimous opinion, the Court ordered a district court to conduct further proceedings to resolve a long-running dispute over ownership of a Santa Fe home that was subject to a foreclosure judgment and sale in 2017.
The Court concluded that the foreclosure judgment “may be void” because a Santa Fe woman who is now deceased, her surviving family members and potential inheritance beneficiaries were not properly served with required legal documents to notify them of a lawsuit to foreclosure on the property.
“Fundamental guarantees of fairness, notice, the opportunity to be heard, and due process undergird both our judicial system and the validity of judgments affecting the rights of parties impacted by those judgments,” the Court wrote in an opinion by District Judge James M. Hudson, who was designated to serve on the Court to consider the case. “This case presents an instance where our obligation to protect those guarantees must take precedence over the consideration and decision of the discrete legal issues that bring this case before us.”
It is a well-established legal principle that someone bringing a lawsuit must notify the other parties – a procedure known as “service of process” – to ensure they have an opportunity to defend themselves and assert their rights. Without that legal notice, the Court explained, any judgment in the case violates due process and is void because the deciding court lacks jurisdiction over those who were sued.
The financial institution BOKF, N.A., which operates as the Bank of Albuquerque, filed a foreclosure case in 2014 that named the homeowner, Linora Pacheco, and others as defendants. Pacheco was not personally served with the required notice of the legal action. The process server was told by a family member she had moved to “Vegas” but no address or phone number was obtained to alert her to the lawsuit.
Pacheco died in 2015. The lawsuit was amended, but two sons were not named as defendants and other family members who might have inherited an interest in the property were not notified of the foreclosure proceeding. The property was sold at foreclosure in 2017, and BOKF acquired it.
Litigation continued because of competing efforts to obtain ownership of the home by the Santa Fe Community Housing Trust, a junior lienholder on the property, and an Albuquerque man, Ashok Kaushal. He obtained rights from two of Pacheco’s sons to acquire the property through a legal process that allows people to regain ownership after a foreclosure by paying the sale price and other fees.
In considering the dispute involving Kaushal and the Housing Trust, the Court on its own raised the issue of whether proper notice about the foreclosure had been given to all necessary parties.
The Court explained that “we must address the issue of service of process to make sure that in this case and any subsequent lawsuit, litigants understand their obligations and the rights of parties are sufficiently protected.”
“It does not appear that the heirs of Linora Pacheco have been given proper notice or given the opportunity to assert any claims they may have had or to protect their interests in the Property,” the Court stated. “Their interests seem to have not been protected in this matter, resulting in the deprivation of their opportunity to assert their rights.”
###
To read the decision in BOKF, N.A. v. Pacheco, No. S-1-SC-40119, please visit the New Mexico Compilation Commission’s website using the following link:
https://nmonesource.com/nmos/
