Overview
New Mexico security deposit laws are governed by the Owner-Resident Relations Act (NMSA § 47-8-1 to 47-8-51). New Mexico caps deposits at one month's rent for leases under one year, requires interest-bearing accounts, and mandates written statements of property condition. Passive's deposit management platform helps landlords stay compliant with these requirements.
Maximum Security Deposit
Under NMSA § 47-8-18:
- For leases of less than one year: Maximum of one month's rent
- For leases of one year or more: No statutory limit
Pet Deposits
Landlords may collect additional pet deposits, but these are typically included within the one-month limit for short-term leases. Service animals and emotional support animals cannot be charged pet deposits.
Return Timeline
Landlords must return the security deposit within 30 days after the tenant moves out and the landlord receives the tenant's forwarding address.
- Must include a written itemized statement of all deductions
- The remaining balance must be sent to the tenant's forwarding address
- If tenant fails to provide forwarding address, landlord must hold the deposit for a reasonable time
Interest Requirements
New Mexico has conditional interest requirements: (Arizona follows comparable guidelines—see Arizona security deposit laws.)
- Deposits must be held in a federally insured interest-bearing account
- Interest accrues to the tenant's benefit
- The landlord must pay the tenant the interest accrued at the end of the tenancy
Storage Requirements
Security deposits must be deposited in a federally insured interest-bearing account in New Mexico within 30 days of receipt. The landlord is not required to disclose the account location to the tenant.
Allowable Deductions
Landlords may deduct from the security deposit for:
- Unpaid rent
- Damages beyond normal wear and tear
- Cleaning costs if the unit is not left in the same condition (minus normal wear and tear)
- Other amounts owed under the rental agreement
Property Condition Statement
The landlord must prepare a written statement describing the condition of the rental unit at the beginning of the tenancy. The tenant should sign this document and receive a copy. This helps protect both parties regarding damage claims.
Penalties for Non-Compliance
If a landlord wrongfully withholds a security deposit:
- The tenant may recover the amount of the deposit wrongfully withheld
- Plus actual damages
- Plus court costs
- If the landlord's wrongful withholding is willful and not in good faith, the court may award reasonable attorney's fees
Common Compliance Questions
What counts as "normal wear and tear"?
Normal wear and tear includes minor scuffs on walls, slightly worn carpet in high-traffic areas, small nail holes from hanging pictures, and faded paint from sunlight. It does not include large holes in walls, stained or burned carpet, broken fixtures, or damage from pets. When in doubt, document the condition at move-in with dated photos.
How should I document the unit's condition?
Complete a detailed move-in checklist with the tenant, noting existing damage, appliance conditions, and overall cleanliness. Take timestamped photos or video of every room. At move-out, repeat the process. This documentation protects both parties and makes deduction decisions defensible if disputed. Schedule a demo to learn how Passive simplifies property condition documentation.
Can I deduct for unpaid utility bills?
Only if your lease specifically allows it and the utilities are in your name. If utilities are in the tenant's name, contact the utility company directly—they have their own collection processes. Never make unauthorized deductions, even for amounts you believe the tenant owes.