N.M. Admin. Code § 19.2.21.8

Current through Register Vol. 35, No. 23, December 10, 2024

Section 19.2.21.8 - EXCHANGE STANDARDS

A. The commissioner may enter into an exchange when the commissioner determines that the exchange will result in a financial benefit to the trust.

B. When lands are placed for public auction under this rule, the commissioner will accept payment for such lands in the form of in-kind payment through an exchange of non-trust lands for trust lands, monetary payment, or any combination thereof that results in the greatest financial benefit to the trust.

C. Trust lands may be exchanged for non-trust lands owned in fee simple absolute by a governmental entity or by a private entity or entities. The commissioner cannot accept in an exchange any lands subject to a mortgage, lien or other encumbrance.

D. In any exchange, the trust must receive at least true value for the trust lands that are conveyed to an exchange party. To meet this requirement, the commissioner shall require appraisals of the trust lands and the non-trust lands proposed to be exchanged at their true value and can only proceed with an exchange after first determining that the value of the non-trust lands to be received by the state, plus any monetary payment offered, are of equal or greater financial value to the trust. Each appraisal must:

(1) be conducted, by a qualified appraiser (the commissioner may require that the appraisals be performed by the land office staff appraiser, or that the appraiser be selected and approved in advance);

(2) conform to the uniform standards of professional appraisal practice and any other reasonable standards set by the commissioner;

(3) be reviewed by a state land office staff qualified appraiser or a different qualified appraiser and approved by the commissioner, and

(4) whenever possible, utilize an appraisal approach that allows the commissioner to identify raw land value as separate from the value of any improvements. This provision shall not be construed as prohibiting the use of a running exchange account as provided in Subsection G of this section. Appraisals conducted or received by the commissioner in connection with an exchange or proposed exchange under this rule, as well as the commissioner's review of any such appraisal, shall be considered confidential information and not public information until the commissioner has selected an exchange proposal as provided in 19.2.21.12 NMAC. The commissioner may waive confidentiality in the case of any appraisal or any review of an appraisal if the commissioner determines that it is in the best interest of the trust to do so.

E. The non-trust lands, monetary payment or any combination thereof received by the commissioner in an exchange, and any proceeds therefrom, shall be applied to and become a part of the trust for which the trust lands exchanged by the commissioner were originally granted.

F. A single exchange transaction may involve more than one exchange party and may involve trust lands held in trust for the benefit of more than one beneficiary institution. When the exchange involves the commissioner conveying lands held in trust for more than one beneficiary institution, the non-trust lands and any monetary payment received by the commissioner in the exchange shall be apportioned to the different beneficiary institutions in such a way that the value of each beneficiary institution's interest in the newly acquired land and any monetary payment is proportional to its interest in the trust lands conveyed.

G. When the commissioner determines that the best interests of the trust will be promoted thereby, the commissioner may, in the commissioner's discretion, enter into an agreement with a governmental entity, to engage in a series of exchanges over a period of time. Such an agreement will provide for a running exchange account in which both agencies will, among other things:

(1) account for the value of all properties exchanged;

(2) make provision for differences in the property values of one exchange to be offset against property values in subsequent exchanges;

(3) provide for methods of discharge and reduction of account balances;

(4) may, subject to agreement by the parties, provide for interest on account exchange balances which remain un-discharged for over one year;

(5) provide for interagency annual reconciliation of account balance figures; and

(6) provide for termination of the agreement and a method for final resolution of outstanding account balances.

H. The commissioner shall convey the trust lands being exchanged using such instruments of conveyance that are in the best interest of trust, which instruments shall contain such reservations to the trust as are required by law and as are deemed appropriate by the commissioner. Conveyances of trust lands shall be subject to all valid existing rights at the date of conveyance.

(1) A conveyance document by which the commissioner conveys trust lands shall be similar in content to a state land office patent and may be entitled "exchange patent."

(2) A conveyance document by which the commissioner conveys trust land shall reflect any existing oil, gas, mineral or geothermal leases on the property being conveyed by the commissioner.

I. In any exchange, the commissioner shall receive conveyances of non-trust lands by instruments containing acceptable guarantees of title such as patent, government deed or warranty deed, accompanied by such other documents evidencing marketable and unencumbered title as are deemed appropriate by the commissioner, including, if not waived by the commissioner, policies of title insurance.

(1) Such instruments shall contain language stating that the conveyance is made for and in consideration of the exchange of trust lands.

(2) An instrument of conveyance executed by individual exchange parties shall disclose the marital status of the exchange party and shall also be executed by the spouse of a married exchange party.

(3) Instruments of conveyance received by the commissioner in exchanges shall be executed, acknowledged and filed of record with the state land office and, if appropriate, with the counties in which the non-trust lands conveyed by such instruments are located, and the exchange party shall pay all costs and fees associated with such filing.

J. Exchange parties shall deposit with the commissioner, for the benefit of the owner of improvements located on the trust lands proposed for exchange, the improvement value as determined by an appraisal made or approved by the commissioner. This requirement does not apply where the exchange party is the owner of the improvements. The provisions of this subsection also shall not apply to improvements placed on trust lands for the exploration, development or production of oil and gas, geothermal resources, sand, gravel, coal, shale, clay, building stone or materials, potassium, sodium, phosphorus, salt or any other minerals or natural deposits of whatsoever kind located in, under or upon the trust lands proposed for exchange where only the surface of the trust lands is proposed for exchange.

(1) In lieu of payment of improvement value, an exchange party may file with the commissioner a bill of sale from, or a waiver of payment signed by, the owner of the improvements.

(2) The commissioner may require the costs of improvement appraisal to be paid by the exchange applicant or exchange party.

(3) For purposes of compensation, improvements shall include:

(a) those placed, created, developed or moved upon the trust lands that were approved by the commissioner or otherwise in compliance with Section 19-7-51 NMSA 1978;

(b) those placed, created, developed or moved upon the trust lands prior to March 1, 1955, whether or not their values exceed the amounts prescribed by Section 19-7-51 NMSA 1978; and

(c) those placed, created, developed or moved upon the trust lands on or after March 1, 1955, but prior to March 1, 1975, and subsequently approved in writing by the commissioner.

(4) Property placed, created, developed or moved upon leased trust lands on or after March 1, 1955, by a lessee in violation of Section 19-7-51 NMSA 1978 and not subsequently approved by the commissioner, may be approved as an improvement by the commissioner if the commissioner determines it benefits the trust lands on which it is located for purposes of a proposed exchange. For purposes of compensation paid to the owner of such improvements, however, an undivided twenty-five percent of the value of all such permanent improvements that are valued in excess of the amounts specified in Section 19-7-51 NMSA 1978 shall be and remain a part of the trust lands offered for exchange.

(5) Property placed, created, developed or moved on trust lands by mistake on or after March 1, 1975, by one not acting in the capacity of a lessee shall not be recognized as an improvement by the commissioner for purposes of compensation paid to the owner of the property unless:

(a) the commissioner determines the property was placed on the trust land in the good faith, non- negligent belief it was being located on adjacent non-trust land; and

(b) the property enhances the value of the trust land for purposes of the proposed exchange.

K. Exchange applicants or exchange parties shall pay all costs of exchanges, including but not necessarily limited to costs of publication, land appraisal, appraisal of improvements, surveying and recording, unless such requirement is waived by the commissioner. The commissioner may require an exchange applicant or exchange party either to pay such costs to the commissioner for payment to service providers or to pay such costs directly to the providers.

N.M. Admin. Code § 19.2.21.8

19.2.21.8 NMAC - Rp, 19.2.21.8 NMAC, 06/29/12, Amended by New Mexico Register, Volume XXX, Issue 11, June 11, 2019, eff. 6/11/2019