New Mexico

New Mexico Construction Lien Law

Lien Waiver Summary

New Mexico’s lien laws are governed primarily by N.M. Stat. Ann. §§ 48-2-1 to 48-2-17, which outline the rights of contractors, subcontractors, laborers, and material suppliers to file a lien against real property for unpaid work or materials. The law applies to private construction and improvement projects and provides strict requirements on timing, notice, and enforcement.

A valid lien in New Mexico must:

• Be filed by someone who has contracted to furnish labor, materials, or equipment for the improvement of real property.
• Be recorded within 120 days of completion for original contractors, or 90 days for subcontractors and suppliers who do not have a direct contract with the property owner (§ 48-2-6).
• Include a statement of the amount due, the name of the property owner, and a legal property description (§ 48-2-6).

Liens are enforced through a foreclosure lawsuit that must be initiated within two years of the lien being filed (§ 48-2-10).

Distinctions by Project Type

New Mexico lien law applies broadly to most private construction and improvement projects, with some variations based on project type:

• New Construction vs. Improvements/Renovations: No significant legal distinction exists between new construction and improvements. Both are treated equally in terms of lien rights, timelines, and filing procedures.
• Residential vs. Commercial Projects: The statute does not create separate filing processes for residential vs. commercial properties, although lenders and title companies may use different internal risk controls based on property type.
• Public vs. Private Works: mechanics liens do not apply to public works projects. Instead, payment protections for subs and suppliers are provided by bond requirements under the New Mexico Little Miller Act, N.M. Stat. Ann. § 13-4-18.

Lien Waiver Overview

• State Stance: New Mexico does not have a statutory form for lien waivers and does not prohibit their use.
• Enforceability: Lien waivers are generally enforceable under New Mexico contract law principles (see N.M. Stat. Ann. § 57-1-1 et seq., Uniform Commercial Code and general common law). However, any waiver made in advance of furnishing labor or materials may be challenged as contrary to public policy unless tied to actual payment. This interpretation is supported by out-of-state case law including T.W. Morton Builders, Inc. v. von Buedingen, 835 N.E.2d 1096 (Ind. Ct. App. 2005), and Amelco Elec. v. Donald M. Dreyer, Inc., 44 Cal. App. 4th 1914 (1996), and is consistent with equitable enforcement principles applied in New Mexico.
• Best Practice: Waivers should be tied to actual payments and clearly state whether they are conditional or unconditional.

Statutory Forms or Language

• Provided by State? No statutory lien waiver form is provided under New Mexico law.
• Use: Parties may use custom forms, but they must be carefully drafted to avoid ambiguity.

Notarization Requirement

• Required? No statute requires notarization of lien waivers in New Mexico.
• Best Practice: Lenders and owners may request notarization for added evidentiary weight, particularly for unconditional waivers.

Electronic Signatures

• Permitted? Yes. New Mexico permits electronic signatures under the Uniform Electronic Transactions Act, N.M. Stat. Ann. §§ 14-16-1 et seq.

Note: Because Connecticut strictly enforces lien timeframes and service requirements, construction lenders should ensure timely lien searches and track notice compliance on all tiered construction projects. Additionally, lenders may benefit from requiring evidence that the general contractor filed a Contractor’s 15-day Affidavit within 15 days of commencement. This filing enables the general contractor to receive Notice of Intent from subcontractors or suppliers, increasing transparency for the lender and creating early visibility into potential payment issues or lien risk.

Lien Priority

New Mexico’s lien priority rules determine where a mechanics lien falls in relation to other encumbrances, such as mortgages. The state generally follows a “first to record” system, but mechanics liens operate under unique timing and relation-back rules that make priority analysis essential for construction lenders.

Mechanics Liens vs. Mortgages

• Under N.M. Stat. Ann. § 48-2-5, mechanics liens relate back to the date of commencement of work, not the date the lien is recorded.
• Under N.M. Stat. Ann. § 48-2-6, a lien must be filed within 120 days after completion of work.
• A properly perfected mechanics lien can take priority over a mortgage that is recorded after construction begins, due to the lien’s relation-back to the commencement of work under § 48-2-5., even if the lien itself is filed later.
• Recording the mortgage recorded **before visible construction begins can establish a superior interest unless construction had commenced in a way visible from inspection (§ 48-2-5).

Best Practices for Construction Lenders

To ensure lien priority, lenders should:

1.Record the Mortgage Before Construction Starts

• Record the mortgage before any visible work or material delivery occurs on the project site.

2.Obtain Evidence of Non-Commencement

• At or just before loan closing, obtain a site inspection or photographic documentation showing that no construction activity (e.g., grading, framing, material staging) has started.
• Include a contractor’s affidavit or owner’s statement (lender-requested, this is not a statutory set of forms but rather a best practice) confirming that work has not yet commenced.
• Consider adding this documentation to the loan file to support priority protection.

3.Coordinate with Title Insurer

• Obtain ALTA 32 (Construction Loan) and ALTA 33 (Disbursement) endorsements to protect against post-closing lien risks.
• Use title date-down endorsements at each draw to detect newly filed liens.

Notices

This section outlines traditional lien-related notices and how they are recognized under New Mexico law. While New Mexico’s statute recognizes the importance of preliminary notices to preserve lien rights, it does not recognize or mandate the use of a Notice of Commencement or Notice of Completion. These terms may appear in loan documents or private agreements but have no statutory effect under state law.

Notice of Commencement (or similar like event)

• Recognized by State? No.
• Requirement: Not required or defined in New Mexico statute.
• Effect: No legal effect recognized under New Mexico lien law.

Preliminary Lien Notifications

• Recognized by State? Yes (N.M. Stat. Ann. § 48-2-2.1).
• Statutory Reference: N.M. Stat. Ann. § 48-2-2.1
• Requirement: Subcontractors and suppliers who do not have a direct contractual relationship with the property owner must serve a preliminary notice (also called a “Notice of Right to Claim a Lien”) within 60 days of first furnishing labor or materials to the project (§ 48-2-2.1(A)).
• Who Must Provide: Any party that does not have a direct contract with the owner, including lower-tier subcontractors and material suppliers.
• How to Serve: The notice must be sent by certified mail to the property owner (§ 48-2-2.1(B)). If the claimant is unable to identify the owner, they should use county property records or request this information from the general contractor.
• Exceptions: Preliminary notice requirements under § 48-2-2.1 do not apply to the following cases, as stated in § 48-2-2.1(A):
  • Claims made on residential property containing four or fewer dwelling units
  • Claims made by an original contractor (i.e., someone contracting directly with the owner)
  • Claims made by subcontractors or material suppliers who contract directly with the original contractor
  • If a party required to give notice fails to do so, they forfeit their right to file a lien under New Mexico law (§ 48-2-2.1(C)).
  • Applies to most private residential (3+ units) and commercial construction projects. Does not apply to public works projects (see Little Miller Act).

Notice of Completion

• Recognized by State? No.
• Requirement: Not required or defined in New Mexico statute.
• Effect: No legal effect recognized under New Mexico lien law.

Stop Payment Notice (Public Residential Projects)

• Recognized by State? Yes, for public works projects involving residential property with four or fewer dwelling units.
• Statutory Reference: N.M. Stat. Ann. §§ 48-2A-1 to 48-2A-12
• Who Can File: Subcontractors and suppliers who have not been paid.
• Purpose: Stops the disbursement of public funds due to non-payment.
• Trigger: Failure of the general contractor to pay a lower-tier contractor or supplier.
• Filing Requirements: Must be filed in writing with the contracting public entity. May require accompanying bond documentation.
• Effect: Freezes funds held by the public agency, requiring resolution of the payment issue.

Best Practice: Lenders and project owners involved in public residential work should ensure that bond coverage and notice procedures are in place early in the project. Although stop notices are not applicable to private works, they play a critical role in protecting unpaid parties on certain public projects.

Title Practices

New Mexico does not impose statutory requirements mandating that construction lenders use title companies to manage disbursements. However, title companies play a vital role in mitigating lien risk through title insurance and endorsements.

ALTA Endorsements Commonly Used

• ALTA 32 (Construction Loan) – Insures against loss from mechanics’ liens arising from unpaid construction costs.
• ALTA 33 (Disbursement) – Provides coverage if lien priority is lost due to improper or unauthorized disbursements.
• ALTA 9 – Covers restrictions, encroachments, and minerals that could affect title status.

Title Company Involvement (Best Practice)

• Perform title searches and issue title commitments prior to loan closing.
• Provide date-down endorsements at each draw to confirm no intervening liens have been recorded.
• Coordinate with the lender to verify that lien waivers and statutory timelines are met, including preliminary notice requirements under § 48-2-2.1 and lien filing deadlines under § 48-2-6.

Best Practices for Lenders

• Request ALTA 32 and 33 endorsements as part of the title policy to ensure lien protection.
• Include requirements in loan documents for borrower cooperation in clearing title exceptions or liens.
• Ensure that title updates and waiver verifications are obtained before each loan disbursement.