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AN ACT

RELATING TO TRADE PRACTICES; CHANGING THE NAME OF THE

RETAINAGE ACT TO THE PROMPT PAYMENT ACT; ELIMINATING

PROVISIONS OF CHAPTER 57, ARTICLE 28 NMSA 1978 CONCERNING

RETAINAGE; PROHIBITING THE WITHHOLDING OF AMOUNTS DUE FOR

WORK PERFORMED; AMENDING AND REPEALING SECTIONS OF THE NMSA

1978.

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

Section 1. Section 57-28-1 NMSA 1978 (being Laws 2001,

Chapter 68, Section 1) is amended to read:

"57-28-1. SHORT TITLE.--Chapter 57, Article 28 NMSA

1978 may be cited as the "Prompt Payment Act"."

Section 2. Section 57-28-2 NMSA 1978 (being Laws 2001,

Chapter 68, Section 2) is amended to read:

"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

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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

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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."

Section 3. Section 57-28-3 NMSA 1978 (being Laws 2001,

Chapter 68, Section 3) is amended to read:

"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."

Section 4. Section 57-28-5 NMSA 1978 (being Laws 2001,

Chapter 68, Section 5) is amended to read:

"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

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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

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____________ 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

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subcontractor shall not retain, withhold, hold back or in any

other manner not pay amounts owed for work performed."

Section 5. Section 57-28-11 NMSA 1978 (being Laws 2001,

Chapter 68, Section 11) is amended to read:

"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."

Section 6. REPEAL.--Sections 57-28-4, 57-28-6, 57-28-9

and 57-28-10 NMSA 1978 (being Laws 2001, Chapter 68, Sections

4, 6, 9 and 10) are repealed.