Our firm represents FEMA victims of the Hermits Peak Calf Canyon fires. The Hermit’s Peak/Calf Canyon Fire Assistance Act created an extraordinary federal compensation program for New Mexicans harmed by the largest wildfire in our state’s history. But as claims have progressed, increasingly complicated questions have arisen: What happens when damaged property has more than one owner? What if ownership changes while a claim is pending? What about a life tenant and remainderman? And who is entitled to compensation for damage that continues years after the original fire?
FEMA’s own rules and guidance provide important answers—and they are considerably more nuanced than simply asking whose name appeared on the original claim.
The Act Compensates “Injured Persons”
A fundamental starting point is the purpose of the Hermit’s Peak/Calf Canyon Fire Assistance Act.
As FEMA explained in the Federal Register:
“The Act provides compensation to injured persons impacted by the Fire.”
FEMA’s regulatory framework establishes procedures for presenting and administering claims, but the underlying statute is a compensation law for people injured by the Fire. As our recent court briefing explains, questions concerning entitlement therefore may require consideration of the particular injury being compensated, the ownership interests involved, and who bears responsibility for the damaged property—not simply the identity of the person who originally opened the FEMA claim.
FEMA itself warned against reading its regulations too narrowly. In discussing the Hermit’s Peak/Calf Canyon program, FEMA expressly stated:
“Each claim will be reviewed on its unique facts and merits. Claimants should not assume that an injury resulting from the Fire is not compensable simply because the regulation fails to address it specifically.”
That is an important principle for unusual property arrangements. The absence of a regulation expressly describing a particular ownership situation does not, standing alone, mean that an otherwise compensable fire-related injury disappears.
FEMA Specifically Anticipates Multiple Owners
FEMA’s own Policy Guide recognizes that damaged property may have multiple owners.
According to the Guide, FEMA personnel reviewing ownership documentation must determine whether the claimant is the sole owner or whether other owners exist. Where deeds, titles, or similar documents establish additional ownership interests, FEMA’s guidance states that those owners are “legally entitled a share in the compensation.”
FEMA’s process accordingly requires participating owners to be incorporated into the claim-resolution process. For property with multiple owners, FEMA contemplates a single Proof of Loss rather than competing claims over the same damaged property. Additional owners identified during the ownership review may be required to sign the Proof of Loss and Release and Certification.
FEMA further states that payment must address the interests of owners able to participate in the claims process and provides mechanisms for prorating compensation according to ownership interests when appropriate. Its guidance even anticipates agreements concerning the “payment disbursement structure,” including split payments.
In other words, the HPCC framework itself recognizes that the person who initially files a claim and the people legally entitled to compensation associated with the damaged property are not necessarily identical concepts.
That distinction can become particularly important with ranches, family property, estates, trusts, life estates, remainder interests and other forms of divided ownership common throughout Northern New Mexico.
“Real Property” Includes More Than Simple Record Title
FEMA also uses a notably broad definition of real property.
Its Policy Guide includes within “Real Property” not merely land and buildings, but:
“every estate, interest, right and use, legal or equitable, therein”
That language matters where property rights are divided among different people. A remainder interest, life estate, leasehold, lien or other legally recognized interest cannot necessarily be treated as though it does not exist merely because another person was the administrative claimant.
The Fire Did Not Stop Causing Damage When the Flames Went Out
Another critically important feature of the HPCC program is FEMA’s recognition of “cascading impacts.”
FEMA defines cascading impacts as:
“subsequent and ongoing damages from the fire, including but not limited to flooding, landslides, mudslides, debris flow, and rockfalls that cause additional/new damage to land property and structures.”
These are not hypothetical losses. When vegetation and forests are destroyed, the resulting landscape can remain vulnerable to erosion, flooding, debris flows and other damage for years.
FEMA expressly allows compensation for cascading impacts when the additional or new damage resulted from conditions directly caused by the Fire.
The concept has important consequences for property ownership.
A person’s entitlement cannot necessarily be analyzed solely by asking who owned the property on the day the original fire burned. FEMA recognizes later and continuing losses. Its guidance permits claims to be reopened for additional losses caused by cascading impacts and recognizes restoration and risk-reduction expenses associated with continuing fire-related conditions.
Thus, where ownership interests change after the original fire but while cascading damage continues, determining entitlement may require identifying when the particular injury occurred, what loss FEMA compensated, who held an ownership interest at that time, and who is financially or legally responsible for the damaged property.
Ownership Is Not the Only Relevant Question: Legal Responsibility Matters Too
FEMA’s guidance contains another significant provision:
“A claimant is only eligible for compensation for damaged or destroyed property to the extent that they own the property or are legally responsible for the damaged property.”
The phrase “or are legally responsible” matters.
Restoration money is intended to address actual damage. Where one person ultimately owns the damaged land and bears the responsibility for remediation, reforestation, stabilization or other restoration, those circumstances can be relevant to determining entitlement to compensation associated with that work.
The HPCC program recognizes numerous land-based losses, including land stabilization, removal of burned trees, reforestation and revegetation, infrastructure damage, diminution in real-property value and other qualifying property losses.
These categories illustrate why the nature of the particular FEMA award matters. Money calculated to compensate for restoring damaged land raises different questions from compensation for an individual’s lost wages or temporary living expenses.
A Property Transfer Is Not Necessarily an Assignment of a FEMA Claim
Another source of confusion involves the federal rules concerning assignments.
There is an important legal distinction between transferring an interest in real property and assigning a claim against the United States.
A deed transfers property. It is notable that a life estate deed is more like a bequest whereas a fee simple deed or quitclaim deed is not. This distinction is important because according to FEMA’s most recent HPCC guide an estate plan document just needs to be current. However, a deed that does not function as an estate planning document would only entitle the grantee to proceeds from FEMA from the cascading impacts in place as of the date of their deed. An assignment transfers a claim or an interest in the claim—or authorizes another person to receive payment of that claim. Treating every post-fire deed, inheritance, trust transfer, gift or other conveyance of damaged property as an assignment of the owner’s federal FEMA claim would collapse two legally different concepts.
Federal law also shows that an assignment of a federal claim is a highly specific legal instrument. Under 31 U.S.C. § 3727, an assignment may be made only after the claim has been allowed, the amount has been determined, and a warrant for payment has been issued. The statute then prescribes formal requirements for executing and acknowledging that assignment.
At the same time, FEMA’s HPCC regulation, 44 C.F.R. § 296.14, provides that assignments of claims and the right to receive HPCC compensation will not be recognized by FEMA. That FEMA-facing prohibition should not be confused with a determination that every transfer of an underlying property interest is itself an assignment, or that every dispute over already-paid proceeds is necessarily resolved by the anti-assignment regulation.
This distinction can be crucial in estate and property disputes.
The question may not be, “Was the FEMA claim assigned?”
The question instead may be: Who is legally or equitably entitled to identifiable proceeds that were paid to compensate for injury to particular real property?
Those are not necessarily the same inquiry.
Why These Issues Matter for Northern New Mexico Property Owners
Hermit’s Peak/Calf Canyon claims frequently involve property that has remained within families for generations. Ownership structures may include multiple family members, estates, life estates, remainder interests, trusts and other divided interests.
FEMA’s own guidance recognizes that reality.
It recognizes injured persons. It recognizes multiple owners. It recognizes legal and equitable property interests. It recognizes people who are legally responsible for damaged property. And critically, it recognizes that the Fire continues to cause cascading impacts long after the flames were extinguished.
For that reason, FEMA’s own admonition bears repeating:
“Claimants should not assume that an injury resulting from the Fire is not compensable simply because the regulation fails to address it specifically.”
The proper analysis is necessarily fact-specific. It requires looking at the ownership documents, the timing and nature of the loss, the particular categories of compensation, the claim history, the FEMA Policy Guide and applicable federal and New Mexico law.
For partial owners, remaindermen, estate beneficiaries and others with legal interests in fire-damaged land, the name appearing on the original FEMA claim may therefore be only the beginning of the analysis—not necessarily the end.
What About Assignments?
The federal government’s own discussion of the Hermit’s Peak/Calf Canyon rules recognizes an important distinction concerning assignments.
Federal law does not simply say that a federal claim can never be assigned. The Assignment of Claims Act, 31 U.S.C. § 3727, establishes a specific procedure governing when an assignment may occur. FEMA itself explained that a claim against the federal government may be assigned only after the claim has been allowed, the amount has been determined, and a warrant for payment has been issued.
FEMA went even further in discussing how that rule relates to the Hermit’s Peak/Calf Canyon process, explaining:
“Thus, FEMA can only allow for an assignment of a claim after the Authorized Official’s Determination has been issued and accepted by the claimant” and the remaining requirements of federal law have been satisfied.
Those requirements include formal safeguards: the assignment must reference the warrant or award, be freely made, be witnessed by two witnesses, and be formally acknowledged and certified.
FEMA ultimately retained its separate HPCC regulation stating that assignments of claims and the right to receive compensation will not be recognized by FEMA. But the federal government’s discussion is nevertheless significant because it demonstrates why the timing and nature of a claimed transfer matter. Federal assignment law distinguishes between an attempted transfer of an unresolved federal claim and the formal post-determination procedure described in 31 U.S.C. § 3727.
Even more importantly for partial owners, a deed conveying an ownership interest in fire-damaged real estate is not automatically the same thing as an assignment of the former owner’s FEMA claim. A deed transfers an interest in property. An assignment transfers a federal claim or the right to receive payment on that claim. Those are distinct legal concepts.
That distinction is particularly important where FEMA compensation concerns restoration, remediation, diminution in value, reforestation, revegetation, stabilization, or cascading damage to land in which more than one person possesses a legally recognized interest.
Anti-assignment laws were enacted in part to prevent federal claims from being exploited or transferred through predatory transactions without appropriate safeguards. FEMA itself has identified concerns about “predatory assignments” and unscrupulous trafficking in claims against the federal government.
For example, imagine that a fire victim has an HPCC claim ultimately worth $1 million but desperately needs immediate cash. Before the claim has been valued or resolved, an investor offers the victim $100,000 in exchange for the right to collect the eventual FEMA payment. Without anti-assignment protections, a vulnerable claimant could unknowingly surrender a $1 million federal recovery for a fraction of its value.
Federal assignment safeguards are designed to prevent precisely this type of transaction. Under 31 U.S.C. § 3727, an assignment cannot be made until the federal claim has been allowed, its amount has been determined, and a warrant for payment has been issued. The statute also imposes formal execution, witnessing, acknowledgment, and certification requirements. Those protections help ensure that the person making the assignment knows the established value of the federal claim and deliberately chooses to transfer it.
That concern is fundamentally different from a deed conveying an ownership interest in the underlying fire-damaged real estate. A property owner who executes a legitimate deed as part of an estate plan is not selling an unresolved FEMA claim to a third party for pennies on the dollar. The transaction concerns ownership of the land itself. Conflating the two would transform ordinary deeds, gifts, inheritances, trusts, and estate-planning conveyances into prohibited assignments merely because the property happened to have been damaged by the Hermit’s Peak/Calf Canyon Fire.
If you have questions about your rights to compensation under the Hermit’s Peak/Calf Canyon Fire Assistance Act, or how property ownership, estate planning, or cascading impacts may affect an HPCC claim, Coleman Injury Law is available to help. Contact our office to schedule a consultation and learn how we can evaluate your claim and explain your legal options.