2023 New Mexico Statutes › Chapter 48 - Liens and Mortgages › Article 2 - Mechanics' and Materialmen's Liens › Section 48-2-5 - Preference over other encumbrances.

A. The liens provided for in Sections 48-2-1 through 48-2-17 NMSA 1978 are preferred to any lien, mortgage or other encumbrance which may have attached subsequent to the time when the building, improvement or structure was commenced, work done or materials were commenced to be furnished; also to any lien, mortgage or other encumbrance of which the lienholder had no notice and which was unrecorded at the time the building, improvement or structure was commenced, work done or the materials were commenced to be furnished.
B. Liens filed by registered surveyors shall have priority equal with other mechanics' and materialmen's liens, but work performed by registered surveyors shall not constitute the commencement of construction.
History:
Laws 1880, ch. 16, § 5; C.L. 1884, § 1523; C.L. 1897, § 2220; Code 1915, § 3322; C.S. 1929, § 82-205; 1941 Comp., § 63-205; Laws 1947, ch. 8, § 1; 1949, ch. 18, § 1; 1953 Comp., § 61-2-5; Laws 1991, ch. 43, § 2.
ANNOTATIONS
Compiler's notes.
— The words "this article" were substituted for "this act" by the 1915 Code compilers and refer to art. 1 of ch. 67, Code 1915 compiled herein as 48-2-1 to 48-2-8, 48-2-10 to 48-2-16 NMSA 1978.
The 1991 amendment,
effective April 1, 1991, in Subsection A added the subsection designation and substituted "Sections 48-2-1 through 48-2-17 NMSA 1978" for "this article" and added Subsection B.
Notice.
— Sections 48-2-2, 48-2-2.1, 48-2-5 NMSA 1978 indicate that timing and actual or constructive notice not a general public policy favoring materialmen are the principal considerations in determining priority between suppliers and other creditors, at least in the context of private construction projects.
Hasse Contracting Co., Inc. v. KBK Fin., Inc.
, 1999-NMSC-023, 127 N.M. 316, 980 P.2d 641.
In order for work to constitute a "commencement"
such work must have been done on the "building, improvement or structure" upon which the lien is claimed. Accordingly, work done that is not a part of the "building, improvement or structure" is irrelevant in assessing lien priorities.
Pioneer Sav. & Trust v. Rue
, 1989-NMSC-079, 109 N.M. 228, 784 P.2d 415;
First Interstate Bank v. Hutchens
, 1991-NMSC-086, 112 N.M. 497, 816 P.2d 1119.
Determination of priority of subcontractor's lien
on a home for providing materials and labor, vis-a-vis that of a mortgage recorded after work has already commenced on the construction project, relates back to the date when any construction actually commenced, even though the subcontractor's work commenced after the mortgage was recorded.
Valley Fed. Sav. & Loan Ass'n v. T-Bird Home Ctrs., Inc.
, 1987-NMSC-067, 106 N.M. 223, 741 P.2d 826.
Prior recorded mortgages protected.
— Although the statute in terms prefers mechanics' and materialmen's liens, the court has construed its language to protect mortgage liens recorded prior to commencement of work.
House of Carpets, Inc. v. Mortg. Inv. Co.
, 85 N.M. 560, 514 P.2d 611 (1973).
As the mortgage was recorded prior to commencement of any work or the delivery of any materials to the construction site, absent any other facts, the mortgage lien would clearly prevail over the materialmen's liens by reason of this statute.
House of Carpets, Inc. v. Mortgage Inv. Co.
, 1973-NMSC-095, 85 N.M. 560, 514 P.2d 611.
Priority of obligatory advances under mortgage previously recorded.
— A first mortgagee making future advances, which are optional and not obligatory under the first mortgage, with actual knowledge of an intervening lien, cannot obtain priority for subsequent advances over the intervening lien; however, where the making of the advances is obligatory upon the mortgagee or beneficiary, the lien of a mortgage or trust deed receives priority over mechanics' liens when the mortgage or deed has been recorded before the mechanics' lien attaches, despite the fact that advances are actually given subsequently to this time.
House of Carpets, Inc. v. Mortgage Inv. Co.
, 1973-NMSC-095, 85 N.M. 560, 514 P.2d 611.
If no default, mortgagee's advances obligatory.
— Note which concludes with a statement that if it becomes immediately due and payable, as a result of an event of default, the appellant will be under no obligation to advance any additional portion of this note and shall incur no liability for refusing to do so, infers that if there are no events of default, the mortgagee was obligated to continue making advances under the note and, hence, the making of future advances is obligatory rather than optional.
House of Carpets, Inc. v. Mortgage Inv. Co., 1973-NMSC-095
, 85 N.M. 560, 514 P.2d 611.
Mortgagee retains priority with contemporaneous discharge and new mortgage.
— Where the holder of a senior mortgage discharges it of record, and contemporaneously therewith takes a new mortgage, he will not, in the absence of paramount equities, be held to have subordinated his security to an intervening mechanic's lien.
Houston Lumber Co. v. Skaggs
, 1980-NMSC-068, 94 N.M. 546, 613 P.2d 416.
Lien precedes any mortgage or trust deed not recorded.
Stearns-Roger Mfg. Co. v. Aztec Gold Mining & Milling Co.
, 1908-NMSC-001, 14 N.M. 300, 93 P. 706.
Mortgage without priority where continuing contract.
— Where owner contracted to buy materials and pay within 30 days after each shipment, it was a continuing contract during construction, and fact that owner paid for all deliveries made before a mortgage was recorded, did not give the mortgagee priority over materialman for materials furnished later.
Maxwell Lumber Co. v. Connelly
, 1930-NMSC-034, 34 N.M. 562, 287 P. 64.
Attachment with priority.
— Plaintiff seizing real estate under writ of attachment and service of lis pendens notice acquired lien having priority over mechanic's lien for work done after the filing of lis pendens notice.
Bell v. Gaylord
, 1891-NMSC-032, 6 N.M. 227, 27 P. 494.
Law reviews.
— For article, "The Warehouseman vs. the Secured Party: Who Prevails When the Warehouseman's Lien Covers Goods Subject to a Security Interest?" see 8 Nat. Res. J. 331 (1968).
Am. Jur. 2d, A.L.R. and C.J.S. references. —
53 Am. Jur. 2d Mechanics' Liens § 265 et seq.
Rights of seller of fixtures, retaining title thereto or a lien thereon, as against holder of mechanic's lien, 13 A.L.R. 459, 73 A.L.R. 748, 88 A.L.R. 1318, 111 A.L.R. 362, 141 A.L.R. 1283.
Priority of vendor's lien under executory contract for sale of realty, over mechanic's lien for labor or materials furnished purchaser, 58 A.L.R. 947, 102 A.L.R. 233.
Right of one who pays, or advances money or assumes obligation to pay, labor or materialman, to mechanic's lien or priority, 74 A.L.R. 522.
Remedy available to holder of mechanic's lien which has priority over antecedent mortgage or vendor's title or lien as regards the improvement but not as regards the land, where it is impossible or impracticable to remove the improvement, 107 A.L.R. 1012.
Constitutionality of statute giving to lien for alteration of property pursuant to public requirement, mechanic's lien or similar lien, preference over pre-existing mortgage or other lien, 121 A.L.R. 616, 141 A.L.R. 66.
Amount of owner's obligation under his guaranty of subcontractor's or materialman's account, as deductible from amount otherwise due principal contractor, as against claims of other subcontractors as materialmen, 153 A.L.R. 759.
Priority between mechanics' liens and advances made under previously executed mortgage, 80 A.L.R.2d 179.
56 C.J.S. Mechanics' Liens §§ 220 to 245.