FAQ: How do I get court approval to sell a house and pay off the mortgage in New Mexico?

This FAQ explains the typical steps people follow in New Mexico when they need a court’s permission to sell real estate so the outstanding mortgage can be paid from the sale proceeds. The most common situations that require court approval are probate (selling estate property after someone dies) and guardianship/conservatorship (selling property owned by a person who cannot manage their affairs). If you are the sole owner with capacity, or a trustee acting under a valid trust, you usually do not need court approval. This is general information only and not legal advice.

Detailed Answer — Step‑by‑step process (probate/guardian scenarios)

1. Confirm who has authority to act.

   Determine whether the property belongs to an estate, to a ward (guardian/conservator situation), or to a trust or living owner. In probate, the personal representative (executor or administrator) is the person who must ask the court for authority to sell estate real property. In guardianship or conservatorship cases the guardian/conservator must seek court permission before selling the protected person’s real estate. If the property is held in a living trust, the trustee normally can sell without court approval under the trust terms.

   See New Mexico laws on probate and guardianship for governing rules: New Mexico Statutes (Chapter 45 — Probate and related provisions): https://www.nmlegis.gov/Legislation/Statutes and the New Mexico Courts self‑help/probate resources: https://www.nmcourts.gov/.

2. Collect documentation and determine the property’s value and encumbrances.

   Prepare the will (if any), letters testamentary or letters of administration (showing you are the personal representative), deeds, mortgage statements, and any title records. Get a market appraisal or at least a broker’s opinion of value. Obtain a current mortgage payoff statement from the lender and identify all liens, property taxes, and special assessments that must be paid from sale proceeds.

3. File a petition with the probate court or guardianship court asking permission to sell.

   Prepare and file the required petition (sometimes called a “Petition to Sell Real Property” or similar). The petition typically states why sale is necessary (to pay debts including the mortgage, to preserve estate value, to distribute proceeds), describes the property, the proposed terms of sale (listing price or minimum acceptable price), and attaches supporting documents (appraisal, payoff quote, proposed purchase contract if already in hand).

   Use the local district court/probate division forms and filing procedures for your county. The New Mexico Courts website lists probate and related forms and local rules: https://www.nmcourts.gov/.

4. Give notice to interested parties.

   After filing the petition, the court will require notice to heirs, beneficiaries, known creditors, the mortgagee, and sometimes unknown creditors or the public (by publication). Notice requirements vary depending on whether the estate is being administered formally or informally and on the county’s local rules. The notice gives interested parties an opportunity to object to the sale or request a hearing.

5. Attend a court hearing (if required) and obtain a court order authorizing the sale.

   The court will review the petition, any objections, and evidence about value and the proposed sale terms. If the court finds the sale is in the estate’s or ward’s best interest and that creditors’ interests are protected, it will issue an order authorizing the sale and specifying any conditions (e.g., minimum price, who pays closing costs, how proceeds will be held/disbursed).

6. Market and sell the property pursuant to the court order.

   List the property and complete the sale in accordance with the court’s order and any timeframe the court sets. The purchase agreement should reference that the sale is “subject to court approval” if the buyer is aware of the process.

7. Close escrow, pay the mortgage and other priority claims, and file closing papers with the court.

   At closing, the mortgage is typically paid off from the sale proceeds. Obtain lien releases and the lender’s payoff confirmation. After closing, file a report of sale or an accounting with the court showing sale proceeds, mortgage payoff, payment of estate debts, commissions, and the proposed distribution of remaining funds. The court may require a final accounting and may need to approve distributions to heirs or beneficiaries before funds are disbursed.

8. Obtain discharge from the court.

   After the court reviews the accounting and is satisfied, it will enter an order allowing distribution and eventually close the estate or terminate the guardianship/conservatorship’s authority to sell this property. Keep copies of court orders and closing statements for your records.

Important legal points under New Mexico law

• Authority: Probate and guardianship statutes govern when court approval is required. Confirm which rules apply by checking New Mexico statutes and local court procedures: https://www.nmlegis.gov/Legislation/Statutes and https://www.nmcourts.gov/.
• Creditor priority: Mortgage liens are secured claims that normally must be paid from sale proceeds before distributions to heirs. If the mortgage balance exceeds value, the estate may need to consider a short sale or negotiate with the lender.
• Homestead and exemption claims: Some survivors or the decedent’s spouse may have statutory protections that affect sale or distribution—check New Mexico exemptions under the probate statutes and statutes that address homestead or family allowances.
• Trusts vs. estates: Real property in a living trust generally can be sold by the trustee under the trust’s terms without court involvement; consult the trust document and a lawyer.

When you do NOT need court approval

You normally do not need court approval if:

• You are alive, of capacity, and the sole record owner of the property (you can sell directly).
• The property is held in a revocable living trust and the trustee has authority to sell under the trust document.
• Ownership is by joint tenants with rights of survivorship and the surviving joint tenant is selling their own property interest (but title issues should be checked).

Practical timeline and costs

Probate sales that require court approval usually take several months (often 3–9 months depending on complexity, notice periods, and whether objections arise). Expect costs for appraisals, court filing fees, publication, probate attorney fees, real estate commissions, and possible bond requirements if the court requires a fiduciary bond.

Helpful Hints

• Start by locating the will, death certificate (if applicable), mortgage payoff statement, and title documents.
• Contact the mortgage lender early for a written payoff figure and to learn the lender’s requirements for payoff at sale.
• Obtain at least one professional appraisal or a broker price opinion to justify the proposed sale price to the court.
• Use the local probate court’s forms and read local rules—many counties provide a standard petition form for sale of real property.
• Provide clear notice to heirs, beneficiaries, and creditors. Good notice reduces the risk of post‑sale objections.
• Consider hiring a probate attorney. A lawyer familiar with New Mexico probate or guardianship practice can prepare the petition, manage notices, and appear at hearings to reduce delays and mistakes.
• If the mortgage balance exceeds the likely sale proceeds, talk with the lender about a short sale or deficiency options before incurring listing costs.
• Keep contemporaneous records of marketing, offers, communications with the lender, and closing documents to facilitate the court accounting.

Where to look for official guidance

• New Mexico Statutes (probate and related statutes): https://www.nmlegis.gov/Legislation/Statutes
• New Mexico Courts — probate information, local rules, and forms: https://www.nmcourts.gov/