Overview
Security deposit regulations in New Mexico are designed to protect tenants’ rights while ensuring landlords can recover legitimate costs related to lease violations. The laws outline clear rules for the collection, storage, and return of deposits.
Under New Mexico Statutes Chapter 47, Article 8, landlords must manage security deposits in accordance with the Uniform Owner-Resident Relations Act. Non-compliance can result in penalties, including the return of the full deposit and potential damages.
This guide covers:
How much landlords can charge
Where deposits must be stored
Rules for returning security deposits
Penalties for non-compliance
Related Statute: N.M. Stat. Ann. § 47-8-18
1. Security Deposit Limits & Storage Requirements
Maximum deposit: For rental agreements lasting less than one year, landlords may not charge more than one month’s rent as a security deposit. For leases longer than one year, there is no maximum limit, provided the deposit is reasonable.
Storage requirements: Security deposits must be held in a bank, credit union, or savings and loan association in New Mexico. Landlords are not required to place deposits in a separate or interest-bearing account unless they exceed one month’s rent.
Tenant notification: While not required to disclose account details by law, landlords must provide written notice of any interest payments owed if applicable.
Law Reference: N.M. Stat. Ann. § 47-8-18(A)
2. Security Deposit Returns & Allowable Deductions
Return deadline: Landlords must return the deposit within 30 days of lease termination and receipt of the tenant’s forwarding address.
Permissible deductions: Deductions are allowed for unpaid rent, damage beyond normal wear and tear, and other breaches of the rental agreement.
What landlords cannot deduct: Normal wear and tear, including worn carpet or minor wall scuffs, cannot be deducted from the deposit.
Itemized statement required: If any part of the deposit is withheld, landlords must provide an itemized statement detailing all deductions within the same 30-day period.
Law Reference: N.M. Stat. Ann. § 47-8-18(B)
3. Interest Payments & Documentation Requirements
Interest payments: If the deposit exceeds one month’s rent and is held for more than one year, landlords must pay annual interest to the tenant.
Move-in condition report: Although not explicitly required, it is highly recommended for both parties to document the unit’s condition at the start and end of the tenancy.
Tenant review period: Tenants are advised to review and confirm the property’s condition to ensure accurate assessment during move-out.
Failure to provide documentation: If a landlord fails to return the deposit or provide an itemized statement within 30 days, they may lose the right to retain any part of the deposit and could be liable for damages.
Law Reference: N.M. Stat. Ann. § 47-8-18(C)
4. Penalties for Mishandling Security Deposits
New Mexico law holds landlords accountable for mishandling deposits.
Failure to return the deposit within 30 days may result in the landlord forfeiting their right to withhold any portion and becoming liable for damages in court.
Failure to pay required interest when applicable may also result in financial penalties.
Law Reference: N.M. Stat. Ann. § 47-8-18(D)
Key Takeaways
Landlords may not charge more than one month’s rent for leases under one year but may charge more for longer leases.
Deposits must be returned within 30 days of lease termination and receipt of the tenant’s forwarding address.
Deposits exceeding one month’s rent held over one year must accrue interest payable to the tenant.
Itemized statements must be provided if any portion of the deposit is withheld.
Non-compliance may result in full forfeiture of the deposit and legal liability.
By understanding and following New Mexico security deposit laws, landlords can remain compliant, and tenants can better protect their rights and finances.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. Readers should not act or refrain from acting based on any information included in this post without seeking legal counsel or other professional guidance specific to their situation. The information is provided “as is” without any representations or warranties of any kind, express or implied, including but not limited to the accuracy, completeness, or reliability of the content. Laws and regulations may change and vary by jurisdiction.
