Bulletin: NM2016005

Dear Associates:

The New Mexico Court of Appeals recently provided important guidance on what constitutes a valid claim of lien. In Sonida, LLC v. Spoverlook, LLC, 2016-NMCA-026 (Dec. 8, 2015), the New Mexico Court of Appeals reversed the lower court ruling and held that an unverified claim of lien was void ab initio, meaning it had no effect whatsoever.  

The court of appeals reiterated that under the New Mexico mechanic’s lien statute a claim of lien “must be verified by the oath of the [claimant] or of some other person.” (Emphasis added). The facts were undisputed that none of the plaintiff’s claims of lien included any language verifying upon oath the truth of the contents of the claims of lien. The court rejected the plaintiff’s arguments that (1) the word “must” was not obligatory; (2) that substantial compliance with the verification requirement should suffice under a liberal statutory interpretation standard; and (3) that the acknowledgement was the functional equivalent of a verification.[1]

The court’s decision is a reminder of the importance of complying with the specifics of a statute, and will provide an additional tool to confirm the validity of a recorded claim of lien.

Underwriting Guideline. If during your examination you find an unverified claim of lien where the two year period for enforcing the claim of lien has not yet elapsed, please contact your underwriter to determine whether the lien needs to be released as a condition of insuring the transaction or whether the lien does not pose a material risk in the circumstances. 

[1] The court’s opinion suggests that a jurat form of acknowledgement (i.e., “subscribed and sworn to”) would suffice as a verification.   

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