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F I S C A L I M P A C T R E P O R T

SPONSOR Vigil

ORIGINAL DATE

LAST UPDATED

2/22/07

HB 1092

SHORT TITLE

Lease and Rental Contract Indemnification

SB

ANALYST Wilson

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$0.1

$0.1

$0.1 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB 69

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Attorney General’s Office (AGO)

General Services Department (GSD)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

House Bill adds a new NMSA Section 56-7-3 which states that a provision of a lease or rental

contract for goods or equipment that requires a party to the agreement to indemnify, hold

harmless, insure or defend the other party to the agreement, including the other party's officers,

employees or agents, against liability, claims, damages, losses or expenses, including attorney

fees, arising out of bodily injury to a person or damage to property caused by or resulting from,

in whole or in part, the negligence, act or omission of the indemnitee, its officers, employees or

agents, is void, unenforceable and against the public policy of this state.

The bill also provides that a lease or rental contract for goods or equipment may contain a

provision that requires one party to the contract to indemnify, hold harmless or insure the other

party to the contract, including its officers, employees or agents, against liability, claims,

damages, losses or expenses, including attorney fees, only to the extent that the liability,

damages, losses or cost are caused by or rise out of the acts or omissions of the indemnitor or its

officers, employees or agents.

House Bill 1092– Page

2

The bill prohibits any requirement to name the indemnified party as an additional insured in the

indemnitor's insurance coverage for the purpose of providing indemnification for any liability

not otherwise allowed.

FISCAL IMPLICATIONS

There will be a minimal administrative cost for statewide update, distribution and documentation

of statutory changes. Any additional fiscal impact on the judiciary would be proportional to an

increase in lease disputes heard in New Mexico’s courts. There may be an increase in the

amount of work that needs to be done by the courts, thus requiring additional resources to handle

the increase.

SIGNIFICANT ISSUES

This bill attempts to correct the situation when a renter of equipment is forced to indemnify a

rental company for the company’s negligence and wrongful acts

The bill also applies to agreements for the temporary use of goods or equipment without a

transfer of their ownership.

ADMINISTRATIVE IMPLICATIONS

There may be an administrative impact on the courts as the result of an increase in caseload or in

the amount of time necessary to dispose of cases.

RELATIONSHIP

Relates to SB 69, Judicial Forum for Rental Contracts

TECHNICAL ISSUES

The AOC notes that on page 2, line 11: “… damages, losses or costs are caused by or rise out of

the acts…" Perhaps this language should read, “…or arise out of the acts…"

DW/nt