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SPONSOR: |
Cervantes |
DATE TYPED: |
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HB |
964/aHBIC |
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SHORT TITLE: |
Mechanics’ and Materialmen’s Lien Laws |
SB |
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ANALYST: |
Maloy |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
Minimal— See Narrative |
Recurring |
General
Fund |
|
|
|
|
|
|
(Parenthesis
( ) Indicate Expenditure Decreases)
The
Construction Industries Division, Regulation and Licensing Department
SUMMARY
Synopsis
of HBIC Amendment
The amendment also corrects the information in the repealer.
Synopsis of Origina Bill
House Bill 964 amends
the lien laws of
·
Makes
the procedures for perfecting a lien applicable to anyone except mechanics or
materialmen who contract directly with a property owner. The current law
exempts liens made on certain residential property and liens filed by mechanics
or materialmen who contract directly with the original contractor.
·
Provides
that mechanics/materialmen liens in excess of $2,000 may not be enforced unless
the claimant gives preliminary notice of the right to claim a lien no later
than the first day of the second calendar month following the month in which
all or part of the claimant’s labor was performed or materials delivered. The current law does not apply to liens under
$5,000, and the notice period is not more than 60 days after furnishing the
labor or materials.
·
Provides
that the preliminary notice may be delivered by fax.
·
Requires
that the preliminary notice be served on a bonding company or corporate surety
that is providing coverage on the property, and any subcontractor or other party
to whom the claimant furnished labor or materials for the project in addition
to the owner and contractor.
·
Provides
a new definition for “original contractor” and also defines “labor,” “materialman,”
and “owner.”
·
Adds
a requirement that the notice contain a description of the labor or materials
furnished by the claimant.
·
Deletes
the provision in the current law allowing the claimant to give notice at a
later time provided that the lien would then only apply to the work or labor
provided in the 30 day period prior to the notice.
·
Provides
that liens filed by anyone, except an original contractor or person who
contracted directly with an owner, are limited to $2,000 unless the notice provisions,
added by this bill, are net.
Significant Issues
·
HB 964 makes it more difficult to file a lien for
claims between $2,000 and $5,000 because it requires the claimant to go through
this process. Under the current law, these liens are exempt from any process.
·
The bill makes it more difficult to file a lien on
residential construction because it requires the claimant to go through this
process. Under the current law these liens are exempt from any process.
·
The bill repeals the law giving the
contractor control over payment by the owner of amounts owed for labor or materials,
for which the mechanic or materialman has not provided a waiver of lien.
·
Contractors and suppliers, who have not
contracted directly with an owner, will be subject to more pre-requisites
before they are able to perfect a “mechanic’s” lien, and these prerequisites
will apply to residential liens as well as commercial liens. These prerequisites will give some protection
to owners, particularly home owners, against frivolous liens and liens that are
not specifically described and timely noticed.
·
Liens against residential property will be
enforceable, even if the notice requirements of the bill are not followed, up
to $2,000. However, if original contractors
are not required to file affidavits regarding unpaid costs on residential projects,
the courts may have difficulty in verifying that the mechanic or materialman
was not paid for the amount claimed in the lien.
FISCAL IMPLICATIONS
There are no known direct fiscal implications
for the state. However, there will be
increased administrative costs for the courts in absorbing the filings for
additional liens. These costs should not be significant, and the courts can
likely manage them within existing budget and FTE resources.
RELATIONSHIP
This bill does not appear to change the provision in Section 60-13-30 B. NMSA 1978, requiring a contractor to be licensed before he/she may file an enforceable lien. This requirement should remain in place.
TECHNICAL ISSUES
The Construction Industries Division notes that the bill is not easy to read or understand, and cites the following examples:
·
Paragraph
A states that the provisions of the section apply to everyone except materialmen
and mechanics who contract directly with an owner. However, paragraph B states that “no lien of
a mechanic or a materialman claimed in an amount of more than . . .”
·
The
word “preliminary,” which apparently means that notice before filing a lien is
required or the lien will not be enforced for more than $2,000.00. It takes careful
reading and thought to understand that the word “preliminary” does not indicate
a different or additional kind of notice than the one already required. The primary gist of the bill is that the
notice requirements now also apply to lower amounts of claims and to residential
properties.
·
The
notice period may be somewhat difficult to calculate for a lay person.
The Construction
Industries Division offers the following suggested amendments:
·
Page 2 line 4, add the words “who is not in direct
contract with the owner” after the word “materialman.”
·
Page 2 line 11, use a number of days rather than
referring to months.
SJM/njw:yr