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AN ACT

RELATING TO LIENS; EXEMPTING ORIGINAL CONTRACTORS FROM

PRE-LIEN NOTICE REQUIREMENTS; ALLOWING ORIGINAL CONTRACTORS

TO CANCEL LIENS; ALLOWING ORIGINAL CONTRACTORS TO DEPOSIT

SECURITY FOR THE CANCELING OF LIENS; ALLOWING USE OF

ARBITRATION TO ENFORCE LIENS; ADDRESSING CONTINGENT PAYMENT

CLAUSES; REQUIRING CONTRACTORS TO DEFEND ALL LIEN CLAIMS

EXCEPT THOSE DUE TO THE CONTRACTOR IN CASE OF OWNER

NONPAYMENT; CLARIFYING FEES AND COSTS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 48-2-2.1 NMSA 1978 (being Laws 1990,

Chapter 92, Section 2, as amended) is amended to read:

"48-2-2.1. PROCEDURE FOR PERFECTING CERTAIN MECHANICS'

AND MATERIALMEN'S LIENS.--

A. The provisions of Subsections B through D of

this section do not apply to claims of liens made on

residential property containing four or fewer dwelling units,

to claims of liens made by an original contractor or to

claims of liens made by mechanics or materialmen who contract

directly with the original contractor. For purposes of this

section, "original contractor" means a contractor that

contracts directly with the owner.

B. No lien of a mechanic or a materialman claimed

in an amount of more than five thousand dollars ($5,000) may

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be enforced by action or otherwise unless the lien claimant

has given notice in writing of the claimant's right to claim

a lien in the event of nonpayment and that notice was given

not more than sixty days after initially furnishing work or

materials, or both, by either certified mail, return receipt

requested, facsimile with acknowledgement or personal

delivery to:

(1) the owner or reputed owner of the

property upon which the improvements are being constructed;

(2) the original contractor, if any.

C. If the owner or the original contractor claims

lack of notice as a defense to the enforcement of a lien

described in Subsection B of this section, the owner or

contractor shall show that upon the request of the mechanic

or materialman that the owner or contractor furnished to the

lien claimant not more than five days after such request was

made:

(1) the original contractor's name, address

and license number, if there is an original contractor on the

project;

(2) the owner's name and address;

(3) a description of the property or a

description sufficiently specific for actual identification

of the property; and

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(4) the name and address of any bonding

company or other surety that is providing either a payment or

performance bond for the project.

D. The notice required to be given by the claimant

pursuant to the provisions of Subsection B of this section

shall contain:

(1) a description of the property or a

description sufficiently specific for actual identification

of the property;

(2) the name, address and phone number, if

any, of the claimant; and

(3) the name and address of the person with

whom the claimant contracted or to whom the claimant

furnished labor or materials, or both.

E. A person required by the provisions of

Subsection B of this section to give notice to enforce the

person's claim of lien may elect not to give the notice, but

may give the required notice at a later time. If the person

elects to do so, the lien shall apply only to the work

performed or materials furnished on or after the date thirty

days prior to the date the notice was given. The provisions

of Subsections C and D of this section apply to any notice

given under this subsection."

Section 2. Section 48-2-9 NMSA 1978 (being Laws 1975,

Chapter 68, Section 1) is amended to read:

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"48-2-9. PETITION TO CANCEL LIEN--SECURITY.--

A. The owner of any building, mining claim,

improvement or structure subject to a lien under Sections

48-2-1 through 48-2-17 NMSA 1978 or an original contractor

having a contract with that owner may petition the district

court for the county in which the property or a part of it is

located for an order canceling the lien.

B. Upon the filing of the petition, the district

court judge shall examine the lien claimant's recorded

demands and determine an amount sufficient to satisfy the

recorded demands and any other damages, court costs or

attorney fees that may be recovered by the lien claimant.

Security, in the amount set by the judge and of a type

approved by the judge, shall be deposited by the owner of the

property or original contractor with the district court

conditioned on the payment of any sum found to be validly due

to the lien claimant. An owner or original contractor may

not provide a single security for the cancellation of the

lien of more than one claimant.

C. When the security is deposited under this

section, the judge of the district court shall immediately

issue an order canceling the lien and shall notify the county

clerk with whom the lien was filed. Upon the recording of

the order, the county clerk shall mark the filed lien as

canceled. When an order is issued under this subsection, the

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claimant's lien attaches to the security and is enforceable

as to the security in the district court in which it is

deposited to the same extent as any other lien provided for

in Sections 48-2-1 through 48-2-17 NMSA 1978."

Section 3. Section 48-2-10 NMSA 1978 (being Laws 1880,

Chapter 16, Section 9, as amended) is amended to read:

"48-2-10. LIMITATION OF ACTION TO ENFORCE.--No lien

provided for in Sections 48-2-1 through 48-2-17 NMSA 1978

remains valid for a longer period than two years after the

claim of lien has been filed unless proceedings have been

commenced in a court of competent jurisdiction or in binding

arbitration within that time to enforce the lien. A

contingent payment clause in a contract shall not be

construed as a waiver of the right to file and enforce a

mechanic's or materialman's lien pursuant to Sections 48-2-1

through 48-2-17 NMSA 1978."

Section 4. Section 48-2-12 NMSA 1978 (being Laws 1880,

Chapter 16, Section 12, as amended) is amended to read:

"48-2-12. CONTRACTOR LIABLE FOR LIENS OF

SUBCONTRACTORS.--The contractor shall be entitled to recover

upon a lien filed by the contractor only such amount as may

be due to the contractor according to the terms of the

contract, after deducting all claims of subcontractors under

the contractor who have filed liens for work done and

materials furnished, and during the pendency of the action,

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the owner may withhold from the contractor the amount of

money for which the lien is filed unless the lien was

asserted as a result of the owner's failure to pay the

contractor for work done and materials furnished, and in case

of judgment against the owner or the owner's property upon

the lien, the owner shall be entitled to deduct from any

amount due or to become due by the owner to the contractor

the amount of the judgment. If the amount of the judgment

exceeds the amount due by the owner to the contractor, or if

the owner settles with the contractor in full, the owner

shall be entitled to recover back from the contractor any

amount paid by the owner, in excess of the contract price,

and for which the contractor was originally the party

liable."

Section 5. Section 48-2-14 NMSA 1978 (being Laws 1880,

Chapter 16, Section 14, as amended) is amended to read:

"48-2-14. JOINDER OF ACTIONS--ATTORNEY FEES--COSTS.--

Any number of persons claiming liens may join in the same

action, and when separate actions are commenced, the court

may consolidate them. A prevailing party in a dispute

arising out of or relating to a lien action is entitled to

recover from the other party the reasonable attorney fees,

costs and expenses incurred by the prevailing party."