New Mexico House Bill 179, signed into law by Governor Michelle Lujan Grisham, went into effect June 16, 2023. Under this new law, credit professionals must change the way they serve a copy of the recorded mechanic's lien to the owner for protection measures in New Mexico.
Prior to this bill, New Mexico's lien laws did not require contractors to send a notice after filing a lien claim. But the new law incentivizes contractors to provide notice to the property owner. It also tightens the filing window from 120 to 15 days.
HB 179 states: "A person filing a claim for a lien with a county clerk pursuant to Subsection A of this section shall mail, email, send by certified mail with return receipt requested or hand deliver a copy of the filed claim for a lien to the owner or reputed owner, if known, stated in the claim within fifteen days of filing the claim with the county clerk. The copy of the filed claim for a lien shall be sent or delivered to owner or reputed owner at the owner or reputed owner's last known address. If the owner or reputed owner's address is not known, the copy of the filed claim for a lien shall be sent to the address of the owner of the property as listed in the county's assessor's files. The failure of the claimant to serve the notice may preclude the recovery of interest, attorney's fees or costs."
"It's more likely they'll get paid if the owner knows the lien claim attaches to the property," said Jim Reed, partner at Udall Shumway (Mesa, AZ). Compared to some other states, serving the owner within 15 days of the recording date also means you can get paid sooner. "If there's money left over in the budget, it makes it easier for you to be paid without having to seek foreclosure of the lien claimant in court. The sooner the owner knows you haven't been paid and that you have a lien claim reported against the property, the more money they're likely to have in that budget."
The new statute may add an extra step in the claimant's process, but it serves the maximum amount of protection and ensures a higher likelihood of getting paid before spending time and money on law proceedings. It is also important to note the statute requires service of a copy of the recorded lien claim, meaning the unrecorded copy should not be served without a stamp from your county clerk. Both the copy and date must be recorded.
Some state statutes are not obligated to notify the property owner of a lien being filed, such as Arizona, Vermont and Missouri, however, it is still recommended to send a copy or notice of claim in order to receive compensation of dispute. "Anyone who does their own lien filings or has an attorney complete their lien filings should make sure to double check and ask," said Chris Ring of NACM's Secured Transaction Services. "When you file the mechanic's lien, under the statute, you must legally notify the property owner. If not, the lien itself is invalid."
The addition of email as a means of proper service to the new law is an effective way to deliver recorded mechanic's liens to the owner, however, it can come with some difficulties if precautionary measures are not taken. For example, technology complication may occur. Sending large attachments to new email addresses could trigger the recipient's junk folder or may not deliver at all. It also is essential to include key words and double check for any spelling errors in the sender's domain.
Overall, changes to New Mexico's statute are seen to have a more positive than negative impact for all parties involved. Ultimately, it is to protect both the owner and claimant. More times than not, the owner typically pays, Ring said. "If a subcontractor or general contractor has not paid, it is best for the owner to find out if a lien is on the piece of property to figure out who did not pay and get the material supplier paid."
-Kendall Payton, editorial associate