New Mexico Prompt Payment Overview

New Mexico’s prompt payment statutes set forth specific timeframes when general contractors, subcontractors, suppliers, and others involved with a construction project must be paid.  This page provides an overview of these regulations, and addresses some frequently asked questions related to the New Mexico prompt payment laws.

New Mexico Prompt Payment for Private Projects FAQs

Prompt Payment Frequently Asked Questions

Do I Have To Send A Letter or File Anything To Qualify For Prompt Payment Penalties or Remedies in New Mexico?

In order for the provisions of the New Mexico prompt pay act to apply, an undisputed request for payment must be submitted. If an improper invoice or payment request is given, the party submitting the invoice must be notified within 7 days of the error, but there is no obligation to pay until the invoice is resubmitted as complete. An award of attorneys’ fees requires an action to enforce the provisions of the prompt pay act.

Can I Include Prompt Payment Fees In My New Mexico Mechanics Liens Claim or Bond Claim?

No. New Mexico doesn’t allow miscellaneous amounts to be included on the face of a mechanics lien.

If I am paid late according to prompt payment statutes, can I obtain interest or other penalty payments?

Interest begins to accrue in New Mexico immediately upon the day after which payment was due. Interest accrues at a rate of 1.5% of the undisputed amount per month (or part month).

Are there reasons for which payment may be withheld past the general deadline?

New Mexico statutes don’t specifically set forth reasons for which payment may be withheld, and so specific reasons will likely be determined by contract.

What is the best practice for making a demand to a non-paying party to get prompt payment fees?

Sending a notice of intent to lien and prompt payment demand is generally the best method for encouraging parties to make payment.

New Mexico Prompt Payment for Public Projects FAQs

Prompt Payment Frequently Asked Questions

Do I Have To Send A Letter or File Anything To Qualify For Prompt Payment Penalties or Remedies in New Mexico?

In order for the provisions of the New Mexico prompt pay act to apply, an undisputed request for payment must be submitted. If an improper invoice or payment request is given, the party submitting the invoice must be notified within 7 days of the error, but there is no obligation to pay until the invoice is resubmitted as complete. An award of attorneys’ fees requires an action to enforce the provisions of the prompt pay act.

Can I Include Prompt Payment Fees In My New Mexico Mechanics Liens Claim or Bond Claim?

No. New Mexico law does not allow for the recovery of miscellaneous amounts in a bond claim.

If I am paid late according to prompt payment statutes, can I obtain interest or other penalty payments?

Interest begins to accrue in New Mexico immediately upon the day after which payment was due. Interest accrues at a rate of 1.5% of the undisputed amount per month (or part month).

Are there reasons for which payment may be withheld past the general deadline?

New Mexico statutes don’t specifically set forth reasons for which payment may be withheld, and so specific reasons will likely be determined by contract.

New Mexico Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of New Mexico’s prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. New Mexico’s specific laws can be found in: N.M. Stat., §§ 57-28-1 – 57-28-11, and are reproduced below.

Prompt Payment Statute on Private Projects

57-28-1: Short Title

Repealed.

57-28-2: Definitions

As used in the Prompt Payment Act:

A. “construction” means building, altering, repairing, installing or demolishing in the ordinary course of business any:

(1) road, highway, bridge, parking area or related project;

(2) building, stadium or other structure;

(3) airport, subway or similar facility;

(4) park, trail, athletic field, golf course or similar facility;

(5) dam, reservoir, canal, ditch or similar facility;

(6) sewage or water treatment facility, power generating plant, pump station, natural gas compression station or similar facility;

(7) sewage, water, gas or other pipeline;

(8) transmission line;

(9) radio, television or other tower;

(10) water, oil or other storage tank;

(11) shaft, tunnel or other mining appurtenance;

(12) electrical wiring, plumbing or plumbing fixture, gas piping, gas appliances or water conditions;

(13) air conditioning conduit, heating or other similar mechanical work;

(14) leveling or clearing land;

(15) excavating earth;

(16) drilling wells of any type, including seismographic shot holes or core drilling; and

(17) similar work, structures or installations;

B. “contractor” means a person performing construction through a contract with an owner;

C. “owner” means a person, local public body or state agency other than the department of transportation;

D. “person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture or similar legal entity; and

E. “subcontractor” means a person performing construction for the owner not through a contract with the owner.

57-28-3: Applicability of Act

The provisions of the Prompt Payment Act do not apply to construction contracts for residential property containing four or fewer dwelling units.

57-28-4: Repealed

Repealed.

57-28-5: Payments; Prompt Pay Required; Withholding Prohibited

A. Except as provided in Subsection B of this section, all construction contracts shall provide that payment for amounts due shall be paid within twenty-one days after the owner receives an undisputed request for payment. Payment by the owner to the contractor may be made by first-class mailing, electronic funds transfer or by hand delivery of the undisputed amount of a pay request based on work completed or service provided under the contact. If the owner fails to pay the contractor within twenty-one days after receipt of an undisputed request for payment, the owner shall pay interest to the contractor beginning on the twenty-second day after payment was due, computed at one and one-half percent of the undisputed amount per month or fraction of a month until the payment is issued. If an owner receives an improperly completed invoice, the owner shall notify the sender of the invoice within seven days of receipt in what way the invoice is improperly completed, and the owner has no further duty to pay on the improperly completed invoice until it is resubmitted as complete.

B. A local public body may make payment within forty-five days after submission of an undisputed request for payment when grant money is a source of funding, if:

(1) the construction contract specifically provides in a clear and conspicuous manner for a payment later than twenty-one days after submission of an undisputed request for payment; and

(2) the following legend or substantially similar language setting forth the specified number of days appears in clear and conspicuous type on each page of the plans, including bid plans and construction plans: “Notice of Extended Payment Provision

This contract allows the owner to make payment within ____________ days after submission of an undisputed request for payment.”.

C. All construction contracts shall provide that contractors and subcontractors make prompt payment to their subcontractors and suppliers for amounts owed for work performed on the construction project within seven days after receipt of payment from the owner, contractor or subcontractor. If the contractor or subcontractor fails to pay the contractor’s or subcontractor’s subcontractor and suppliers by first-class mail or hand delivery within seven days of receipt of payment, the contractor or subcontractor shall pay interest to the subcontractors and suppliers beginning on the eighth day after payment was due, computed at one and one-half percent of the undisputed amount per month or fraction of a month until payment is issued. These payment provisions apply to all tiers of contractors, subcontractors and suppliers.

D. A creditor shall not collect, enforce a security interest against, garnish or levy execution on those progress payments or other payments that are owed by an owner, contractor or subcontractor to a person, or the owner’s contractor’s or subcontractor’s surety, who has furnished labor or material pursuant to a construction contract.

E. 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.

57-28-6: Repealed

Repealed.

57-28-7: Care and Protection of Work

All material and work covered by partial payments become the property of the owner, but the contractor and subcontractor are not relieved from the sole responsibility for the care and protection of materials and work for which payments have been made; provided, however, the contractor and subcontractor have no duty for the care and protection of materials and work after the owner has assumed occupancy or use of the work.

57-28-8: Final Completion

Ten days after certification of completion, any amounts remaining due the contractor or subcontractor under the terms of the contract shall be paid upon the presentation of the following:

A. a properly executed release and duly certified voucher for payment;

B. a release, if required, of all claims and claims of lien against the owner arising under and by virtue of the contract other than such claims of the contractor, if any, as may be specifically excepted by the contractor or subcontractor from the operation of the release in stated amounts to be set forth in the release; and

C. proof of completion.

57-28-9: Repealed

Repealed.

57-28-10: Repealed

Repealed.

57-28-11: Attorney Fees

In an action to enforce the provisions of the Prompt Payment Act, the court may award court costs and reasonable attorney fees.

Prompt Payment Statute on Public Projects

57-28-1: Short Title

Repealed.

57-28-2: Definitions

As used in the Prompt Payment Act:

A. “construction” means building, altering, repairing, installing or demolishing in the ordinary course of business any:

(1) road, highway, bridge, parking area or related project;

(2) building, stadium or other structure;

(3) airport, subway or similar facility;

(4) park, trail, athletic field, golf course or similar facility;

(5) dam, reservoir, canal, ditch or similar facility;

(6) sewage or water treatment facility, power generating plant, pump station, natural gas compression station or similar facility;

(7) sewage, water, gas or other pipeline;

(8) transmission line;

(9) radio, television or other tower;

(10) water, oil or other storage tank;

(11) shaft, tunnel or other mining appurtenance;

(12) electrical wiring, plumbing or plumbing fixture, gas piping, gas appliances or water conditions;

(13) air conditioning conduit, heating or other similar mechanical work;

(14) leveling or clearing land;

(15) excavating earth;

(16) drilling wells of any type, including seismographic shot holes or core drilling; and

(17) similar work, structures or installations;

B. “contractor” means a person performing construction through a contract with an owner;

C. “owner” means a person, local public body or state agency other than the department of transportation;

D. “person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture or similar legal entity; and

E. “subcontractor” means a person performing construction for the owner not through a contract with the owner.

57-28-3: Applicability of Act

The provisions of the Prompt Payment Act do not apply to construction contracts for residential property containing four or fewer dwelling units.

57-28-4: Repealed

Repealed.

57-28-5: Payments; Prompt Pay Required; Withholding Prohibited

A. Except as provided in Subsection B of this section, all construction contracts shall provide that payment for amounts due shall be paid within twenty-one days after the owner receives an undisputed request for payment. Payment by the owner to the contractor may be made by first-class mailing, electronic funds transfer or by hand delivery of the undisputed amount of a pay request based on work completed or service provided under the contact. If the owner fails to pay the contractor within twenty-one days after receipt of an undisputed request for payment, the owner shall pay interest to the contractor beginning on the twenty-second day after payment was due, computed at one and one-half percent of the undisputed amount per month or fraction of a month until the payment is issued. If an owner receives an improperly completed invoice, the owner shall notify the sender of the invoice within seven days of receipt in what way the invoice is improperly completed, and the owner has no further duty to pay on the improperly completed invoice until it is resubmitted as complete.

B. A local public body may make payment within forty-five days after submission of an undisputed request for payment when grant money is a source of funding, if:

(1) the construction contract specifically provides in a clear and conspicuous manner for a payment later than twenty-one days after submission of an undisputed request for payment; and

(2) the following legend or substantially similar language setting forth the specified number of days appears in clear and conspicuous type on each page of the plans, including bid plans and construction plans: “Notice of Extended Payment Provision

This contract allows the owner to make payment within ____________ days after submission of an undisputed request for payment.”.

C. All construction contracts shall provide that contractors and subcontractors make prompt payment to their subcontractors and suppliers for amounts owed for work performed on the construction project within seven days after receipt of payment from the owner, contractor or subcontractor. If the contractor or subcontractor fails to pay the contractor’s or subcontractor’s subcontractor and suppliers by first-class mail or hand delivery within seven days of receipt of payment, the contractor or subcontractor shall pay interest to the subcontractors and suppliers beginning on the eighth day after payment was due, computed at one and one-half percent of the undisputed amount per month or fraction of a month until payment is issued. These payment provisions apply to all tiers of contractors, subcontractors and suppliers.

D. A creditor shall not collect, enforce a security interest against, garnish or levy execution on those progress payments or other payments that are owed by an owner, contractor or subcontractor to a person, or the owner’s contractor’s or subcontractor’s surety, who has furnished labor or material pursuant to a construction contract.

E. 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.

57-28-6: Repealed

Repealed.

57-28-7: Care and Protection of Work

All material and work covered by partial payments become the property of the owner, but the contractor and subcontractor are not relieved from the sole responsibility for the care and protection of materials and work for which payments have been made; provided, however, the contractor and subcontractor have no duty for the care and protection of materials and work after the owner has assumed occupancy or use of the work.

57-28-8: Final Completion

Ten days after certification of completion, any amounts remaining due the contractor or subcontractor under the terms of the contract shall be paid upon the presentation of the following:

A. a properly executed release and duly certified voucher for payment;

B. a release, if required, of all claims and claims of lien against the owner arising under and by virtue of the contract other than such claims of the contractor, if any, as may be specifically excepted by the contractor or subcontractor from the operation of the release in stated amounts to be set forth in the release; and

C. proof of completion.

57-28-9: Repealed

Repealed.

57-28-10: Repealed

Repealed.

57-28-11: Attorney Fees

In an action to enforce the provisions of the Prompt Payment Act, the court may award court costs and reasonable attorney fees.