New Mexico LLC operating agreements: the defaults a majority can rewrite

New Mexico never adopted a uniform LLC act, despite three attempts and despite what several compliance sites currently claim. That story is told in full on the protection page. The consequence for governance is that every New Mexico LLC runs on the Limited Liability Company Act of 1993, an early-generation statute whose defaults differ sharply from the uniform acts most published guidance describes. If you read a generic article about LLC member rights and assumed it applied here, most of it does not.

Every New Mexico LLC runs on a 1993 statute. Guidance written for the uniform acts describes a law New Mexico declined to pass three times.

One definitional rule before the defaults, because it disqualifies half of what people think their deal is. Section 53-19-2 defines an operating agreement as a written agreement, amended in writing. The handshake terms, the email thread, the understanding everyone remembers differently: none of it is an operating agreement under this act. New York demands a written agreement within 90 days; New Mexico simply refuses to see anything else. If it is not written, the statute’s defaults below are your deal.

What the statute decides when you say nothing

Everything is weighted by contribution

New Mexico stacks all three economic levers on the same axis. Voting power follows the value of each member’s capital contributions, adjusted for later contributions and withdrawals, under Section 53-19-17. Profits and losses allocate in proportion to contribution value under Section 53-19-22. Distributions follow unreturned contribution value under Section 53-19-23. There is no per-capita anything in this act.

In New Mexico, votes, profits, and distributions all default to contribution value. The member who put in more money holds all three levers.

This is the California family of defaults, and it produces the opposite ambush from the equal-shares states. In Wyoming or Florida, the ambush hits the 90 percent contributor who discovers the 10 percent partner votes as an equal. Here it hits the sweat-equity member who discovers that services counted for less capital value than the money partner’s check, and that voting, profits, and distributions all read off that same number. Whichever side of that table you sit on, the number that controls is the recorded contribution value, which is why Section 53-19-19’s required statement of each member’s contributions is not bookkeeping trivia. It is the ledger your rights hang from. The cross-state picture is on the distributions page.

A majority can amend the agreement itself

Section 53-19-17(B)(1) requires the affirmative vote of members holding a majority share of voting power to amend the articles of organization or an operating agreement. Read that twice. Under the default rule, the operating agreement is not a contract that binds until everyone agrees to change it. It is a document a contribution-weighted majority can rewrite.

Under New Mexico’s default, the operating agreement is not locked by unanimity. A majority of contributed capital can amend it.

The uniform acts New Mexico declined to pass require unanimous consent to amend an operating agreement by default. New Mexico’s rule inverts the protection: a 60 percent contributor can amend the agreement over the 40 percent contributor’s objection, unless the agreement itself says otherwise. The statute offers one piece of built-in armor, in 53-19-17(C): any provision requiring a supermajority can only be amended by that same supermajority. An entrenchment clause works here. An unwritten assumption does not.

Management, and the one vote that needs everyone

The company is member-managed unless the articles of organization vest management in managers, under Section 53-19-15. Managers are appointed and removed by majority voting power, need not be members, and hold exclusive authority over decisions not reserved to members. One default cuts the other way: removing a member from membership requires the affirmative vote of all the other members under 53-19-17(B)(2). Majorities amend documents; they do not expel people.

Every member holds a cash-out button

Here is the default that should stop a planner cold. Under Section 53-19-37, a member of a perpetual-duration LLC may withdraw voluntarily on 30 days written notice, and on withdrawal is entitled to receive, within a reasonable time, the fair market value of their interest. Not the right to resign and hold a bare economic interest, which is the modern default. A statutory buyout at fair market value, on demand.

New Mexico’s default hands every member a 30-day cash-out at fair market value. Left in place, it is a liquidation right wearing a governance costume.

Now cross two disciplines that rarely meet, because this is where the default does real damage. First, creditors. The protection page explains that a charging order gives a creditor the debtor-member’s distribution stream. A member entitled to a fair-market-value payout on withdrawal turns that trickle into a lump sum: the debtor withdraws, the buyout becomes a distribution obligation, and the charging order captures it whole. The weak charging order and the strong withdrawal right compound each other. Second, valuation. Estate and gift planning around LLC interests leans on discounts for lack of control and marketability. An interest its holder can convert to fair market value on 30 days notice supports neither discount. The appraiser’s report and the operating agreement have to tell the same story, and under the New Mexico default they do not. Killing or restricting the withdrawal right is the single highest-value clause in a New Mexico operating agreement, and the exit-planning guide covers how the pieces fit.

Transfers and the unanimity gate

An interest is assignable, but the assignee receives only distributions and returns of capital; becoming a member requires unanimous consent of the other members under Sections 53-19-32 and 53-19-33. The assignor remains a member, with voting rights, until the assignee is admitted. One quiet subsection worth knowing: under 53-19-32(B), pledging an interest as collateral is not an assignment and does not disturb the pledging member’s rights. Lenders take note; so should partners who assumed a pledge required their consent.

Duties, at the gross negligence floor

Section 53-19-16 sets the liability standard for managers and managing members at gross negligence or willful misconduct, by statute, before any operating agreement says a word. Non-managing members bear no liability for acts in their capacity as members. Self-dealing gets a statutory cleansing path: full disclosure plus approval by disinterested managers or members, or proof the transaction was fair. This is a manager-friendly baseline that most states reach only by drafting.

How far you can contract around it

Almost all the way, and the statute says so out loud. Section 53-19-65 declares the act’s policy is to give maximum effect to the principle of freedom of contract and to the enforceability of operating agreements. Nearly every default above opens with “except as provided in the articles of organization or an operating agreement.” New Mexico will enforce the deal you write; it just wrote a starting deal most members would never choose.

New Mexico enforces the agreement you write. The statute’s own policy clause promises maximum effect to freedom of contract.

The drafting agenda writes itself from the defaults. Replace contribution-weighted voting and economics with the percentages the members actually intend, and reconcile them with the contribution records Section 53-19-19 requires. Raise the amendment threshold, and entrench it under 53-19-17(C) so the threshold protects itself. Eliminate or tightly restrict the Section 53-19-37 withdrawal right, or the agreement contains a cash-out button any member, or any member’s creditor, can eventually press. Override the bankruptcy dissociation default. Adjust the duty and self-dealing standards deliberately rather than inheriting the gross negligence floor. And put every word of it in writing, because in this state the unwritten version does not exist. The clause-by-clause work lives in The Rulebook, and the broader doctrine of statutes-as-default-settings is on the freedom of contract page.

The bottom line

New Mexico LLCs are governed by the 1993 act, not the uniform act that compliance sites wrongly report was adopted in 2024. Voting, profits, and distributions all default to contribution value, so the largest check controls all three. A contribution-weighted majority can amend the operating agreement itself; only a supermajority clause, entrenched under 53-19-17(C), stops that. Every member of a perpetual LLC holds a default right to withdraw on 30 days notice and be paid fair market value, a clause that undermines both creditor protection and valuation discounts until the agreement removes it. Only written agreements count. The statute promises maximum effect to freedom of contract, which means every one of these defaults is a choice once you know it exists.

What this page does not cover

What creditors can reach, the dead recodification bill, and the charging order’s missing exclusivity clause are on the protection page. The privacy architecture and what the public record does and does not show are on the structure and cost page. Fees, filings, and the report that does not exist are on the filing page.

Last verified July 2026.