New Mexico security deposit rules
New Mexico limits security deposits to 1 month's rent for rental agreements shorter than 1 year; no cap for annual (1-year) leases, but deposits above 1 month's rent on an annual lease must earn interest paid to the tenant. The deposit must be returned 30 days after termination of the rental agreement or the resident's departure, whichever is later; itemized written list of deductions plus balance; failure forfeits right to withhold any of the deposit and to counterclaim, plus costs and attorney fees; $250 civil penalty for bad-faith retention. No interest is owed on the deposit under state law.
What the law requires
1 month's rent for rental agreements shorter than 1 year; no cap for annual (1-year) leases, but deposits above 1 month's rent on an annual lease must earn interest paid to the tenant. Returned 30 days after termination of the rental agreement or the resident's departure, whichever is later; itemized written list of deductions plus balance; failure forfeits right to withhold any of the deposit and to counterclaim, plus costs and attorney fees; $250 civil penalty for bad-faith retention. Interest required only when an annual lease deposit exceeds 1 month's rent (passbook rate). Last month's prepaid rent is not a deposit. Statute text read via Wayback snapshot of Justia (2023 NM Statutes) and the 2025 UORRA compilation; § 47-8-18 not amended by 2025 legislation.
- Deductions: unpaid rent and damage beyond normal wear and tear, itemised in writing. Cleaning and repainting after ordinary use are normal wear in most states.
- Deadline: the 30-day clock usually starts when the tenant moves out and, in many states, when a forwarding address is provided. Missing it typically forfeits the landlord’s right to keep any of the deposit and can add statutory damages.
- Interest: none required under state law. Cities in some no-interest states have their own ordinances, so check the municipal code where you rent.
Move-out checklist
- Give written notice of the move-out date and a forwarding address; many deadlines only start when the landlord has the address.
- Photograph every room after cleaning, with a timestamp. Request a joint inspection where the state allows one.
- If the deadline passes, send a written demand citing NMSA 1978 § 47-8-18. Small-claims court handles deposit disputes in every state and most cap the claim well above a typical deposit.
Related New Mexico rules
- Late fees: Up to 5% of the rent for each rental period in default, only if the lease provides for a late fee. Calculated on rent only (excluding deposits, other fees, utilities). Landlord must give notice of the fee charged no later than the last day of the next rental period or it is not collectible. NOTE: cap was 10% until Laws 2025, ch. 122 (SB 267) cut it to 5% effective June 20, 2025; older sources (including Justia's 2024 text) still show 10%. Late fee calculator.
- Notice to end a tenancy: Either party: written notice at least 30 days before the periodic rental date for month-to-month; 7 days for week-to-week Notice calculator.
- All rules on one page: New Mexico landlord and tenant law.
Frequently asked questions
How much can a landlord charge for a security deposit in New Mexico?
1 month's rent for rental agreements shorter than 1 year; no cap for annual (1-year) leases, but deposits above 1 month's rent on an annual lease must earn interest paid to the tenant. Interest required only when an annual lease deposit exceeds 1 month's rent (passbook rate). Last month's prepaid rent is not a deposit. Statute text read via Wayback snapshot of Justia (2023 NM Statutes) and the 2025 UORRA compilation; § 47-8-18 not amended by 2025 legislation.
How long does a landlord have to return a security deposit in New Mexico?
30 days after termination of the rental agreement or the resident's departure, whichever is later; itemized written list of deductions plus balance; failure forfeits right to withhold any of the deposit and to counterclaim, plus costs and attorney fees; $250 civil penalty for bad-faith retention. The statute is NMSA 1978 § 47-8-18.
Does a New Mexico landlord have to pay interest on the security deposit?
No. New Mexico law does not require interest on residential security deposits.