The New Mexico Business and Law exam is the business-knowledge gate every contractor license applicant must clear. It does not test your trade skills. It tests whether you know the licensing law, tax rules, labor rules, lien deadlines, and contract rules that govern a contracting business in New Mexico. Here is exactly what to expect.
This is an independent guide, not affiliated with the New Mexico Construction Industries Division, the Regulation and Licensing Department, PSI, or NASCLA. Licensing details change, so verify current requirements against the official publications before you act.
The format
The exam is administered by PSI at its test centers, in English or Spanish. The format:
- 50 questions, multiple choice
- 75 percent to pass, which means 38 correct answers
- 130 minutes on the clock
- Open book: you may bring three allowed references into the exam room
- Exam fee: $68.88
The allowed references are specific: the NASCLA Contractors Guide to Business, Law and Project Management, Basic 14th Edition; NMSA Chapter 60, Article 13 (the Construction Industries Licensing Act); and NMAC Title 14, Chapter 6, Part 3 (the Contractor's License Requirement rule). Your references must be bound. You may highlight, underline, and index them before the exam, and you may use permanent tabs only. No Post-It notes, no written notes, no loose papers, and no writing in your references during the exam. A silent, nonprinting, nonprogrammable calculator is allowed.
The 9 content areas
The official content outline divides the 50 questions into 9 areas:
- Licensing Requirements (8 questions): the $7,200 exemption, classifications, qualifying-party rules, the $10,000 bond, fees, and renewal.
- Estimating and Bidding (5 questions): bid math, the prime-bidding rule, and bid disclosure penalties.
- Business Organization and Financial Management (8 questions): LLC and corporation rules, financial ratios, and accounting methods.
- Tax Laws (5 questions): the 4.875% gross receipts tax, compensating tax, and construction deductions.
- Labor Laws (5 questions): workers' comp, unemployment insurance, minimum wage, final pay, and prevailing wage.
- Project Management and Lien Law (8 questions): pre-lien notice, recording deadlines, the Stop Notice Act, and prompt payment.
- Contracts (4 questions): anti-indemnity, limitations and repose, penalties, and door-to-door sales.
- Risk Management (5 questions): the Little Miller Act, payment bond suits, and insurance.
- Environmental and Safety (3 questions): New Mexico's OSHA state plan, asbestos, lead, and stormwater.
What makes this exam different
Three things set the New Mexico exam apart from other states' business and law exams.
First, it is open book, and the book is the test. With 130 minutes for 50 questions, you have about 2.6 minutes per question. That is enough time to look things up if you know exactly where to go, and not enough if you do not. The exam rewards preparation of the references, not memorization. Build a tabbing map: permanent tabs for each topic in your NASCLA 14th Edition and statute volumes, so you can flip to the right page in seconds. Our open-book strategy post walks through this in detail.
Second, the exam is not the only route. New Mexico law (NMSA 60-13-16(C)) lets applicants satisfy the business-and-law requirement with a certificate of completion from an approved business and law course instead of taking the PSI exam. The PSI bulletin itself confirms both paths. If you are a strong test-taker, the exam is usually faster and cheaper. If test anxiety is your problem, the course alternative is real and worth comparing. We break down the trade-offs.
Third, New Mexico's numbers are its own. The gross receipts tax rate is 4.875%, not 5%. The license bond is $10,000. The Little Miller Act kicks in at $25,000, not the federal $100,000. Prompt payment gives owners 21 days with interest at 1.5% per month. These New Mexico-specific figures are exactly what the exam tests, and they are exactly what generic study materials from other states get wrong.
Timing rules that trip people up
Know these before you schedule:
- Both the Business and Law exam and your trade exam must be passed within 1 year of each other.
- Once eligible, you must test within 6 months of the eligibility date or reapply.
- Passing scores are valid for 1 year; the exam fee is valid for 1 year from the date PSI receives it.
- You may not take the same exam more than twice within a 30-day period. After two failures inside 30 days, you wait 30 days from the first attempt before retesting.
- Cancel at least 2 days before the appointment or you forfeit the fee.
How to prepare
The most common mistake is assuming trade experience covers the business exam. It does not. The exam tests statutes, and statutes have exact numbers. The full path to a New Mexico contractor license puts the exam in context, and our study guide post covers the open-book method that turns the allowed references into your biggest advantage.
Start with the free practice quiz to see where you stand. The 12 questions below are a warmup; the quiz is the scored version with email results.
Try the free practice quiz
See where you stand on New Mexico Business and Law before exam day. Start the free quiz