Property owners and those in the local real estate industry are holding their breath as they await an air-tight decision on a series of documents that have stalled sales on 20,000 acres north of Taos for 21⁄2 years.
Eighth Judicial District Judge Sarah Backus has signed a written order nullifying a deed and other documents filed by the Arroyo Hondo Land Grant Board in October 2010.
While the language in Backus’ order would likely be enough for title insurance companies to resume issuing policies in the grant, real estate experts say the cloud won’t disappear for good until the deadline for an appeal passes and it’s clear Backus’ ruling will stand.
The last day the Hondo board could appeal is May 1. If an appeal is filed before then, the cloud would remain until a final judgment is made.
Santiago Juárez, the attorney representing the Hondo board, told The Taos News he had yet to meet with the board about the possibility of the appeal, but he said Backus’ ruling was “not that important to us.”
That could be good news for the local real estate industry and property owners anxious to sell or refinance.
With the deeds on the books, title companies have stopped issuing clear policies, which in turn scared lenders from issuing mortgages. If the deeds and documents are voided, those transactions could resume.
“It looks like [the order] is going to do what’s needed to set those deeds aside and get the title insurance companies moving again,” said Taos Realtor Ted Terry, quickly adding that everything hangs on the possibility on an appeal.
Local title companies did not return messages for comment, but Ed Roibal with the New Mexico Land Title Association said title underwriters typically wait until a judgment is final before resuming business as usual.
“In instances where title is dependent on a [court] judgment, the industry would seriously consider the possibility of an appeal,” Roibal said.
There are about 3,000 properties under the cloud, and those in the real estate industry have said the deeds have caused a serious decline in transactions.
Only a handful of homes are currently on the market within the grant boundaries, but it’s impossible to know how many owners are waiting for a decision on the Hondo deed before listing their properties.
‘Goes too far’
Judge Backus verbally voided a series of deeds and “declarations” at a hearing in February. The deeds purported to pass ownership of the entire grant from Manuel Ortíz Sr. to the members of the board and to the unnamed heirs of the grant’s original Hispano settlers.
Among the assertions in the attached “declarations” filed by the board was a provision that the land patent for the grant is the “highest evidence of title” and, if unchallenged, the entire land grant would become the property of Lawrence and Leandro Ortíz — two brothers who sit on the board.
The filings also included an eviction notice meant for the buyer of a property once owned by Lawrence Ortíz. That property went to auction as part of a foreclosure the same day that the board filed the documents.
In January, Ortíz pled guilty to one count of fraud related to the filings.
Juárez, the board’s attorney, has since argued that the filings were merely “ceremonial.” He and the board say the land patent issued by the federal government to grant heirs in 1910 establishes an inalienable right to certain common lands within the grant. Júarez contends that title companies ignored those provisions for decades, and he argues that many homeowners now live on former common lands.
Neither Juárez nor the board have presented any maps or property descriptions delineating former common lands. Juárez argues the board filed the deeds to “pick a fight” with property owners, forcing them to prove they have clear title.
Juárez said in an interview that he hopes several pending cases against the board will lead to determinations about the rights the patent affords Hondo grant heirs.
Following her ruling at a hearing in February, Backus asked Spencer Reid — an attorney representing title companies and landowners in the case against the board — to draft an order for her to sign that would invalidate the deeds and related documents.
The order, prepared by Reid and signed by Backus Friday (March 29), states that both the deeds and documents are “invalid, null and void and are hereby canceled and set aside and no right, title or interest to any of the lands within the Arroyo Hondo Land Grant are created by these filings and they do not establish, create, transfer or impair, or establish a basis for anyone to claim, any real property title interests to any of the lands within the Arroyo Hondo Land Grant.”
In an email to Juárez included in the court file, Reid wrote that the title companies have indicated that the legalese in the order would be enough for them to issue clean title insurance policies.
However, a copy of an alternative draft judgment prepared by Juárez allows that the deeds should be invalidated, but it makes no mention of the other documents.
Juárez’ signature does not appear on the order filed Monday (April 1) in the case. He said in an interview that he would not sign the document because the language “goes too far.”