7 Basics of New Mexico's Security Deposit Law
Learn the security deposit limits and deductions in New Mexico
New Mexico landlords can collect security deposits from their tenants, but they must follow certain laws that the state has created. Every landlord in the state should have a good understanding of these rules in case there is a security deposit conflict with a tenant in the future. Here are seven basic questions about New Mexico’s security deposit law.
1. Maximum Amount New Mexico Landlords Can Charge
2. 4 Reasons You Can Deduct From the Security Deposit
3. 30 Days to Return the Security Deposit
4. Does the Security Deposit Have to Earn Interest?
5. Do You Have to Notify a Tenant After Receiving Their Security Deposit?
6. Do New Mexico Landlords Have to Do a Walk-Through Inspection?
7. Rules for the Security Deposit If You Sell Your Property
Maximum amount New Mexico landlords can charge as a security deposit
The maximum amount a New Mexico landlord can collect from a tenant will depend on the length of the lease term.
- Lease Term Less Than One Year:
If the tenant has a lease that is less than one year, the most a landlord can collect as a security deposit is one month’s rent.
- Lease Term of One Year or More:
If a tenant has a lease term of one year or more, a landlord has two options:
- Collect a security deposit of one month’s rent.
- Collect a security deposit of more than one month’s rent but the deposit must earn interest. This interest rate must be equal to the current passbook interest rate in savings and loan accounts in the state. The interest must be paid to the tenant each year.
Four reasons you can deduct from the security deposit in New Mexico
In the state of New Mexico, a landlord may be able to hold onto all, or a portion of, a tenant’s security deposit for the following reasons:
Thirty days to return a tenant’s security deposit in New Mexico
- Written Notice:
If a New Mexico landlord wants to make deductions from a tenant’s security deposit, the landlord must provide the tenant with a written itemized list of these deductions. This notice should state what deductions have been taken and the amount of each deduction.
- 30 Days:
A New Mexico landlord has 30 days from the end of the lease agreement or tenant move-out, whichever is later, to return the portion of the security deposit that is owed back to the tenant. This includes the written itemized list of deductions, if necessary. These items should be mailed to the last known address of the tenant.
- Wrongful Withholding:
If a New Mexico landlord fails to return the tenant’s security deposit within the lawful time frame, does not include a written itemized list, or wrongfully withholds any portion of the deposit, the landlord may lose his or her ability to keep any portion of the tenant’s security deposit or to pursue any further judgment against the tenant. The tenant may be awarded any amount wrongfully withheld plus penalties of up to $250 and reasonable court costs and attorney fees.
Does the security deposit have to earn interest in New Mexico?
There are no specific requirements for how landlords in the state of New Mexico must store tenants' security deposits unless the security deposit is greater than one month’s rent. In that case, the deposit must earn interest at a rate equal to the passbook interest rate on savings accounts in the state.
Do you have to notify a tenant after receiving their security deposit in New Mexico?
No. New Mexico landlords do not have to notify a tenant in writing after they receive the tenant’s security deposit.
Do New Mexico landlords have to do a walk-through inspection?
No. In New Mexico, landlords are not required to perform walk-through inspections before tenant move-out. Walk-through inspections, however, can be helpful to both landlord and tenant.
This inspection allows the landlord to document the condition of the rental unit and to notify the tenant if there are any existing damages that could result in deductions from the tenant’s security deposit. This can help avoid security deposit disputes because the tenant can repair the damages or is at least aware of why deductions were taken.
Rules for the security deposit if You sell your property
If you sell your property in the state of New Mexico, you must either:
- Transfer the tenants’ security deposits to the new owner minus any allowable deductions. You must notify the tenants that their deposits have been transferred to the new owner.
- Return the security deposits to the tenants, minus any allowable deductions. You must notify the new owner that the tenants' security deposits have been returned to them.
What is New Mexico’s security deposit law?
If you are interested in viewing the text of the law that governs the security deposit in the state of New Mexico, please consult New Mexico Statutes Annotated § 47-8-18 (2013).