Who this applies to
New Mexico's rule binds every link in the payment chain: owners, contractors and subcontractors [2]. An "owner" under the Act includes a local public body or a state agency, other than the Department of Transportation [2], so the same prohibition reaches private and public work.
One category of project is outside the Act. It does not apply to construction contracts for residential property containing four or fewer dwelling units [2].
What the rule says
When making payments, an owner, contractor or subcontractor may not retain, withhold, hold back or in any other manner fail to pay amounts owed for work performed [2]. The retainage figure is therefore 0% [2], in both regimes.
With nothing held back, there is no retainage release to schedule. The statute's timing rules cover prompt payment, late-payment interest and final payment instead. Interest runs at one and one-half percent [2] of the undisputed amount per month, or fraction of a month, until payment is issued. For an owner's payment it starts on the 22nd day [2] after the payment was due; for payments from contractor to subcontractor and further down the chain it starts on the eighth day [2]. A local public body paying with grant money may instead take up to 45 days [2] after an undisputed request, if the contract and every page of the plans state the longer period conspicuously.
How to comply
- Contract review. A retainage clause in a covered contract conflicts with § 57-28-5(E) [2]. That applies to the prime contract and to every subcontract under it [2].
- Project type. Check first whether the job is residential property of four or fewer dwelling units; if so, the Act does not apply [2]. Department of Transportation work is also outside the definition of owner [2].
- Late payment. Interest on an owner's late payment starts on the 22nd day [2] after it was due; for payments down the chain it starts on the eighth day [2]. The rate is one and one-half percent a month [2] on the undisputed amount.
- Final payment. Amounts remaining due are paid ten days [2] after certification of completion, on presentation of a release and certified voucher, any required release of claims and liens, and proof of completion (§ 57-28-8). Attorney fees are dealt with in § 57-28-11 [2].
This page states what the Act provides; it cannot decide whether a particular contract or project falls under it. The chapter text in the Sources below, the contract and a lawyer answer that.
What changed recently
Section 57-28-5 was enacted by Laws 2001, ch. 68, § 5 [2] and amended by Laws 2007, ch. 213, § 4 [1], effective June 15, 2007 [2]. The 2007 act removed the retainage provisions, renamed the Retainage Act the Prompt Payment Act, and repealed §§ 57-28-4, 57-28-6, 57-28-9 and 57-28-10 [1].
Related
- Retainage calculator: the dollar math for a percentage holdback, where one is allowed.
- Retainage laws by state: New Mexico's outright prohibition against other states' caps.