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Construction Contract Survival in New Mexico
10th Annual Construction Law Conference
February 20 & 21, 1997
Austin, Texas
Carl A. Calvert
Crider, Calvert & Bingham, P.C.
Albuquerque, New Mexico
Craig T. Othmer
Sommner, Fox, Udall, Othmer, Hardwick & Wise, PA
Santa Fe, New Mexico
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Abstract
This paper summarizes the principal legal issues confronting a foreign construction company wishing to do business successfully in New Mexico. The authors are both lawyers, primarily representing construction industry clients. Over the past years, each has observed, and even participated in, the cases in which Texas contractors have been exposed to serious liabilities due to failure to comply with peculiar New Mexico laws. It is the purpose of this paper to allow Texas counsel to know the principal problems that will confront their construction clients when moving into the New Mexico construction market
TABLE OF CONTENTS
I. FORWARD 1
II. DOING BUSINESS AS A CONSTRUCTION COMPANY IN NEW MEXICO 2
A. Qualifying to do Business in New Mexico 2
B. Construction Industry Licensing 2
1. On the Civil Side 2
2. On the Criminal Side 3
3. Who is Required to Have a Construction License9 3
4. Special Concerns 4
5. When Must the Contractor be Licensed9 5
6. The Application Process 5
7. Licenses are Specific to Types of Construction Work 6
8. Licenses are Specific to Each Type of Legal Entity 7
C. New Mexico Gross Receipts Tax 8
1. Tax Applies to Federal, State and Private Projects 9
2. System of Non-Taxable Transactions Avoids Some Layering of Taxation in Construction 9
3. Principal Deductions from Gross Receipts are for Suppliers and Subcontractors 11
IV. THE NEW MEXICO MECHANICS AND MATERIALMEN'S LIEN LAW 14
A. Right to Claim a Lien 14
B. Property which may be Liened 16
C. Prefiling Notice Requirements 18
D. Filing Requirements for Claim of Lien 19
1. Time for Filing 19
2. Residential Construction Discharge 20
3. Location of Filing Claim of Lien 20
4. Contents of Claim of Lien 20
5. Verification and Acknowledgment 21
E. Petition to Cancel Lien 21
F. Court Foreclosure 22
1. Limitations 22
2. Priorities 22
3. Priorities Among Liens 23
4. Priorities With Respect To Other Encumbrances 23
V. PUBLIC CONTRACTS 23
A.Construction Procurement 23
1. Procurement Code Followed 23
2. Exempted Purchases 25
3. Local Coverage 27
4. Multiple Primes and Design Build 27
5. Unique Financing Arrangements 27
B. Architect/Engineering Procurement 28
1. State and Agency Processes 28
2. Local Government Processes 28
3. Claims Against Designers 28
4. Public Ownership of Plans 29
C. Bidding Preferences 29
1. In-State Preferences 29
2. Small Business 31
3. Other Preferences 31
D. Little Davis-Bacon Act 32
E. Contract Award 32
1. Competition Required 32
2. Public Notice 32
3. Bid Opening 32
4. Responsiveness and Responsibility 33
5. Mistakes 33
6. Limited Negotiations 33
7. Licensing Requirements 33
F. Contract Administration 34
1. Who Speaks for the Owner 34
2. Architect/Engineer Decision 34
G. Construction Claims 34
1. Standard Terms and Conditions 34
2. Liability for Specification Defects 35
3. Differing Site Conditions/Disclaimers 35
4. Stop Work/Suspension Clauses 35
5. Delays 35
6. Liquidated Damages 35
7. Contract Interpretation Rules 35
8. Cost Issues 36
9. Retainage for Public Works Projects 36
10. Prompt Payment 36
11. Bad Faith 36
H. Subcontractor Issues 37
1. Subcontractor Quotes (promissory estoppel) 37
2. Subcontractor Prompt Payment 37
3. Subcontractor Listing 37
I. Bonds and Insurance, including Little Miller Bonds 40
1. Bid Bonds or Bid Security 40
2. Performance Bonds and Payment Bonds 40
3. Insurance Requirements 42
J. Protests 42
1. Disputes Procedures 42
2. Process Stopped 42
3. Determination 42
4. Court Jurisdiction 43
5. Cancellation Issues 43
6. Bid Preparation Costs 43
K. Other Remedies 44
1. Arbitration 44
2. Public Works Mediation 44
V. MISCELLANEOUS CONSTRUCTION RELATED ISSUES 45
A. Sovereign Immunity and Statutes of Limitation 45
1. State Agencies 45
2. Local Agencies 46
3. Claims against Designers 46
4. Local Agency Claims against Contractor 46
B. Indemnity and Frauds 46
C. Statute
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