How Much Deposit Can a Contractor Ask For in New Mexico?
New Mexico regulates who may contract, licensing, unfair practices, and a buyer's cancellation right on certain home sales, but none of these provisions sets a ceiling on a contractor's deposit.
New Mexico does not put a dollar figure or percentage limit on the deposit a contractor may request before starting work. Instead, the state's protections for homeowners run through its licensing rules, its Unfair Practices Act, and its door-to-door sales cancellation right. The pages below describe what New Mexico actually regulates, so you can judge a deposit demand against the rules that do exist rather than a cap that does not.
Rules that bear on your deposit
New Mexico's Construction Industries Licensing Act provides that no person may act as a contractor without a license issued by the division and classified to cover the type of work to be undertaken. 1
The Act defines a contractor broadly, reaching any person who undertakes, or purports to have the capacity to undertake, contracting work. 2
The Act also provides that no bid on a contract may be submitted unless the contractor holds a valid license to bid and perform the type of work involved. 3
New Mexico law provides that an unlicensed contractor cannot bring or maintain a court action to collect compensation for work for which a license is required. 4
Separately, New Mexico's Unfair Practices Act declares unfair, deceptive, and unconscionable trade practices in the conduct of any trade or commerce to be unlawful. 5
Sources
New Mexico's Construction Industries Licensing Act provides that no person may act as a contractor without a division-issued license classified for the type of work.
Under the Act, a contractor is defined as any person who undertakes, or purports to have the capacity to undertake, contracting work.
The Act provides that no bid on a contract may be submitted unless the contractor holds a valid license to bid and perform the work.
New Mexico law provides that an unlicensed contractor cannot maintain a court action to collect compensation for work requiring a license.
New Mexico's Unfair Practices Act declares unfair, deceptive, and unconscionable trade practices in trade or commerce to be unlawful.
Frequently asked questions
- Does New Mexico cap how much deposit a contractor can ask for?
- New Mexico's statutes do not set a specific dollar or percentage limit on a contractor's deposit or down payment. The state instead regulates contractor licensing under the Construction Industries Licensing Act, prohibits unfair and deceptive trade practices under the Unfair Practices Act, and gives buyers a three-business-day right to cancel certain door-to-door sales. A homeowner concerned about a large deposit should weigh it against those rules and any written contract terms.
Last reviewed August 4, 2026
This page is general information about state law, not legal advice. Laws change, and how they apply depends on the facts of your situation.