Security deposits in New Mexico are regulated by New Mexico Statutes § 47-8-1 to § 47-8-21. Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area.

Maximum Security Deposit

New Mexico state law does not currently limit security deposits for lease terms of 1 year or longer. For lease terms shorter than 1 year, the limit is one month’s rent.

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Holding & Interest Requirements

Holding Requirements: New Mexico state law requires security deposits to be held in a bank account that is able to earn the passbook interest rate permitted by the Federal Home Loan Bank Board for savings and loan associations in New Mexico.

‍Interest on Deposits: Landlords/property managers must pay interest on security deposits of more than one month’s rent. Interest equal to the passbook interest rate permitted by the Federal Home Loan Bank Board for savings and loan associations in New Mexico must be paid to the tenant on an annual basis.

Information Provided to Tenant: New Mexico state law does not currently require landlords/property managers to disclose where the security deposit is held.

Deposit Refunds

Timeline: Within 30 days of vacancy, the landlord/property manager must either (1) return the full security deposit and accrued interest (if applicable), or (2) provide the tenant with an itemized list of any deductions to the deposit together with the portion of the deposit and accrued interest (if applicable) being returned.

Permissible Deductions: Landlords/property managers may deduct the following from security deposit funds:

• Unpaid rent or utilities
• Damages beyond normal wear and tear
• Damages caused by the tenant’s noncompliance with the lease
• Other lawful charges due under the lease

Documentation of Deductions: New Mexico state law does not currently require the landlord/property manager to submit any specific documentation or provide a certain level of detail for the required itemized list.  

‍Penalties for Violations: Failure to return the security deposit or provide the itemized list of deductions as required by New Mexico state law may result in the landlord/property manager being liable for the deposit and interest wrongfully withheld, plus attorney’s fees and court costs if the tenant wins in a lawsuit.

Sale of the Rental Property

If the property is sold, the landlord/property manager must provide written notice to the tenant of the sale.