Tenants' Security Deposit Rights in New Mexico

Amount Collected, Deductions and Date of Return

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In New Mexico, landlords have the right to require a security deposit from their tenants, but they must follow certain roles to do so. There are laws in place which set limits on how much the landlord can collect, the reasons the landlord can keep the tenant’s security deposit and how long after tenant move-out the landlord must return the deposit. Here are seven important security deposit rules in New Mexico.

Security Deposit Amount in New Mexico

New Mexico landlords have to follow different security deposit rules depending on the length of the lease agreement they have signed with their tenants. There are different rules for short term leases and long term leases.

  • Leases Less Than One Year:
    • In New Mexico, the maximum amount a landlord can collect for lease terms that are less than one year is the equivalent of one month's rent.
  • Leases of One Year or More:
    • If the landlord has signed a lease agreement with the tenant or one year or longer, the landlord has two choices when setting the security deposit amount.
      • Collect a security deposit of one month’s rent.
          • OR
      • 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 earned must be paid to the tenant each year.

    4 Times You Can Take Deductions From the Security Deposit

    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:

    30 Days After Move Out to Return Security Deposit

    • 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.

    Do Security Deposits in New Mexico Have to Earn Interest?

    If the security deposit amount is equal to one month's rent or less, there are no specific requirements for the deposit to earn interest. If the security deposit amount is greater than one month's rent, the deposit must earn interest at a rate equal to the passbook interest rate on savings accounts in the state.

    Is Notification Required After Receipt of Security Deposit?

    No. New Mexico landlords do not have to notify a tenant in writing after receiving the tenant’s security deposit.

    Are Walk-Through Inspections Required in New Mexico?

    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.

    Security Deposit Rules When Selling 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 and then notify the tenants that their deposits have been transferred to the new owner.

    Or

    • 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 actual text of New Mexico's security deposit law, please see New Mexico Statutes Annotated § 47-8-18 (2013).