New Mexico bill would have required owner-occupants on new condo boards — it died on referral
New Mexico bill would have required owner-occupants on new condo boards — it died on referral
2026-09-15 · New Mexico · Legislation · Did not pass
A 2025 bill would have been the first time New Mexico law told a community association who may sit on its board. House Bill 122 never got a hearing and died at sine die on March 22, 2025.1
Two ratios, written into the Condominium Act
HB 122, from Rep. Kathleen Cates, amended Section 47-7B-1 NMSA 1978 — the creation-of-a-condominium section — so that a newly built condominium of twelve or more units, or any condominium receiving government subsidy, land, tax abatement or deferred tax, would:
“(1) for the purpose of furthering access to federal homeowner loans that have an owner-occupancy requirement, require that at least fifty-five percent of the units of a condominium created by a declaration recorded on or after July 1, 2025 be owner-occupied; and (2) require that at least thirty-five percent of the members of the governing body of an association that manages a condominium created on or after July 1, 2025 own and occupy units within that condominium.”
The bill states its own rationale in the text: owner-occupancy percentage is what decides whether a condominium building is financeable with federal-backed mortgage money.
How it died
The bill was prefiled and referred to House Government, Elections & Indian Affairs on January 27, 2025, with a second referral to House Commerce. HGEIC never heard it. API at sine die. It was not reintroduced in 2026.
The financing problem the bill was aimed at
Owner-occupancy ratio is the quiet switch on a condominium's mortgage market. A project whose investor share climbs past a threshold can find its units unfinanceable, which depresses resale prices, which attracts more investor purchases — the loop that turns a for-sale building into a rental building one unit at a time. HB 122 would have set the ratio at the moment of creation rather than leaving it to the declarant and to later purchases.
The secondary market has since moved in the opposite direction. On March 18, 2026, Fannie Mae and Freddie Mac each retired the 50 percent investor-concentration and owner-occupancy limit for established projects — Fannie: “We are retiring the investment property concentration limit of 50% in established projects reviewed as part of the Full Review option on investor loans”; Freddie: “We have retired the 50% owner occupancy requirement in Section 5701.5(b) for investment properties.”2 Presale requirements for new and newly converted projects remain.
That change removes much of the financing pressure HB 122 was responding to, at least for established New Mexico projects. It is genuine relief for resort-adjacent associations in Ruidoso, Angel Fire, Red River and Taos Ski Valley, where second homes and rentals are the majority and the 50 percent test was the binding constraint.
The board-composition idea is the part with no substitute
The owner-occupancy ratio has effectively been answered by the secondary market. The 35 percent owner-occupant board requirement has not been answered by anything.
New Mexico law does not require that a director live in the community, own a unit, or be anything other than what the declaration and bylaws say. In a building where most units are investor-owned, nothing in state law prevents a board composed entirely of people who do not live there — and the interests of an owner who rents out a unit and an owner who lives in one diverge predictably on exactly the questions boards decide: reserve funding, special assessments, amenity spending, rental restrictions and enforcement intensity.
What governs board composition instead
Three documents, in this order. The declaration and bylaws set eligibility, term, and the mechanics of election. The Nonprofit Corporation Act, Chapter 53, Article 8 NMSA 1978, supplies the corporate default rules for most incorporated New Mexico associations. And the declarant-control provisions of the Condominium Act govern the transition period, during which the developer appoints the board regardless of who owns or occupies anything.
A board seeking an owner-occupancy requirement for directors would have to amend its own bylaws to get one. Nothing in New Mexico law supplies it, and HB 122 was the only bill that would have.
What to watch next
No sponsor has announced a 2027 successor and nothing is prefiled. Prefiling opens January 4, 2027.
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