Breakdown of New Mexico Construction Law: What You Need to Know

The New Mexico Regulation and Licensing Department (NMRLD) sets the standards and regulations for industry and business in New Mexico. Out-of-state companies need to be aware of New Mexico construction law and should be familiar with these regulations when accepting contracts and projects in New Mexico.

The Construction Industries Department (CID) is specifically concerned with protecting New Mexicans. The main concern of the Construction Industries Department (CID) is to protect New Mexicans. They do this through policies that promote business growth, safety, and the general welfare of the public.

Their role is ensuring that professional contractors complete projects using licensed contractors. They also enforce construction laws and regulations. They also resolve any disputes that will arise from construction activities.

New Mexico Construction Law

New Mexico laws may be similar to the laws in your state for a site under construction. You are still advised to be familiar with NMRLD regulations in case of litigation and liability. We'll lay these out for you in simple terms without referring to case law. 

If you want detailed information about case law relating to the various clauses of New Mexico construction law, you can consulate a New Mexico legal firm's website.

Contract Issues

In New Mexico, construction law contracts work in exactly the same way as any other contracts between parties. This means that oral contracts also work in the same way as written contracts.

Some contracts will include a "No Oral Modification" (NOM) clause. You can overrule this clause in your contract even if it does prohibit oral modifications.

If you believe these NOM clauses protect you, you still need to exert caution. If you are discussing terms of amendments, your informal discussion can still lead to litigation.

Construction contracts can include limitation of liability clauses. New Mexico law does allow these because the contracting party "still bears substantial responsibility for its actions".

You cannot require one party to indemnify another for the indemnitee's negligence. This situation may arise in a contract between a contractor, sub-contractor, and homeowner.

In some cases, after making a construction contract, the client will express dissatisfaction with the work. They will then seek to withdraw from the contract.

Contracts will sometimes have liquidated damage provisions. These damage provisions will be awarded in New Mexico unless the stipulated amount is extravagant or disproportionate. 

New Mexico law will also award delay-related liquidated damages as long as these damages are not included in awarded property-related liquidated damages.

If litigation arises for a contract taken in New Mexico, it must be litigation in the state of New Mexico and not anywhere else.

Licensing

According to the Construction Industries Licensing Act, its purpose is "to promote the general welfare of the people of New Mexico by providing for the protection of life and property by adopting and enforcing codes and standards for construction, alteration, installation, connection, demolition, and repair work." As a result, New Mexico law insists that contractors must be licensed through CID. This includes all sub-contractors.

A contractor cannot maintain an action for collection against a customer if a sub-contractor is not licensed by CID and the customer refuses to pay for work. This would also make the contractor fully liable for any litigation against the work done by the sub-contractor.

Insurance and Indemnification

Contractors, sub-contractors, and project owners in New Mexico have a variety of insurance options they can access. These can include builder's risk insurance, errors and omission coverage, worker's compensation, and general liability. Construction contracts may contain indemnity provisions as well.

New Mexico's Construction Anti-Indemnity Statute prohibits one party to indemnify, insure or defend another party who is liable for negligence or improper work completion. This means no indemnity provisions can remove the fault of a party who is responsible for negligence or property damage. Negligence cannot be contracted away to another party.

Environmental Statutes

The New Mexico Environment Department regulates the disposal of construction waste at your construction site. The department has rules governing hazardous waste disposal, ground and surface water protection, and solid waste disposal. Contractors are responsible for ensuring proper compliance with the NMED rules.

For complete guidelines on these regulations and what you can do to ensure you're following all environmental regulatory rules, you can go to Paylessrolloff's website.

Mechanic's Liens

In New Mexico, you can file a mechanic's lien against a specific piece of property if the property was used as payment security. The liens can extend to suppliers of materials as well as contractors. Contractors and sub-contractors are eligible to file these liens should the owner not pay for their work. 

The law allows for the filing of a mechanic's lien within 60 days after initially furnishing work, materials, or both. General contractors who have a contractual deal with the owner must file their lien within 120 days of completion of the contract. If you are a contractor or sub-contractor, you can only file a mechanic's lien if you are licensed with CID.

Prompt Payment

The general rule for owners is that they must pay the contractor within 21 days of undisputed completion of a project.

Should the owner note that the invoice is improperly completed, he has seven days to notify the contractor with detailed information about the inaccuracies. There is no interest that will accrue on the unpaid invoice until it is resubmitted as complete and correct.

General contractors must make payment to downstream contractors or suppliers within seven days after they receive payment from the owner. 

The final payment for a project from the owner to the contractor must be made within ten days after the project is certified as being complete. A properly executed release and payment voucher must be submitted before declaring the project complete. 

Should the project owner not make the payment, interest will begin to accrue at the rate of 1.5% monthly or fraction of a month.

Following Construction Law

As a contractor, sub-contractor, materials provider or property owner, abiding by New Mexico construction laws will ensure your projects are completed without legal challenges. New Mexico road construction and building construction projects follow clearly outlined laws and it is the contractor's responsibility to ensure full compliance.

With growing concerns about environmental issues, you should ensure your construction site abides by NMED rules. Contact us today to find out how we can help you ensure this compliance.