What about large landscape projects? In our state, we can hold retainage for up to a year to ensure that all plantings survive.

4 weeks ago

The State of New Mexico outlaws holding retention on subcontractors. What about landscape contractors? We have a large subcontract for landscaping around a large development and want assurance that the plantings survive. The wording on their warranty is not acceptable to us!

Chief Legal Officer Levelset

This is an interesting question. As stated, New Mexico has fairly strict payment provisions set forth by statutory law. Payment to subcontractors must be made within 7 days of receipt of payment above (which is required within 21 days from request for payment). Further, § 57-28-5(E) states that: “When making payments, an owner, contractor or subcontractor shall not retain, withhold, hold back or in any other manner not pay amounts owed for work performed.”

This seems to be a pretty clear prohibition against retainage. While, potentially, some argument could be made that the retainage ban exists with respect to “construction contracts” since the other subsections of the the statute quoted above specifically discuss such contracts, and that a contract for landscaping is not a “construction” contract – that is not likely a fruitful approach. First, the section about retainage doesn’t specifically mention construction contracts like the other subsections do, and second, there is a strong argument that landscaping work pursuant to a construction project is likely a construction contract in any event.

In the face of a retainage ban, however, there may be other options to help ensure the acceptable completion of the work. If the landscaping contract has not yet been executed, the warranty provision can potentially be modified to be sufficient. Or, potentially, the contract could be modified such that a portion of the amount due is tied to continued “maintenance” of the landscaping project such that certain amounts due for that work wouldn’t be due for some time after the 1st section of the job.

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