New Mexico security deposit law

You may ask for a reasonable deposit to cover damage the tenant causes. Under a rental agreement of less than one year, you may not demand or receive a deposit of more than one month's rent. Under an annual rental agreement a larger deposit is allowed, but a deposit over one month's rent earns the tenant interest each year.

NMSA 1978 § 47-8-18(A)

• The Act defines a deposit as money or an instrument the tenant hands over as a pledge to abide by the rental agreement, and sets no separate rule for pet deposits. NMSA 1978 § 47-8-3(F)
• The deposit section does not cover last month's rent paid in advance, and a damage deposit may not be treated as prepaid rent. NMSA 1978 § 47-8-18(B)
• Unless you and the tenant agree in writing, a rent payment may not be applied to deposits or damages. NMSA 1978 § 47-8-15(G)
• For the yearly interest on a larger deposit under an annual agreement, see deposit interest. NMSA 1978 § 47-8-18(A)(1) See Deposit interest and accounts on the New Mexico page

When the residency ends you may apply the deposit to unpaid rent and to damages from the tenant's breach of the rental agreement or of the tenant's duties, but no deposit may be kept for normal wear and tear. If you keep any part, give the tenant an itemized written list of deductions and the balance, if any, within 30 days after the rental agreement ends or the tenant leaves, whichever is later. Mailing the list and any payment to the tenant's last known address is enough.

NMSA 1978 § 47-8-18(C)

• Miss the 30 days and you lose the right to keep any part of the deposit and to counterclaim in a suit over it, owe the tenant's court costs and reasonable attorneys' fees, and lose the right to sue the tenant separately for damage to the home. NMSA 1978 § 47-8-18(D)
• Keeping a deposit in bad faith adds a $250 civil penalty payable to the tenant. NMSA 1978 § 47-8-18(E)
• Normal wear and tear is deterioration from ordinary intended use, without negligence, carelessness, accident, abuse or intentional damage. Uncleanliness is not normal wear and tear. NMSA 1978 § 47-8-3(K)
• You may keep amounts for unpaid rent or utilities, repair work or other legitimate damages. NMSA 1978 § 47-8-18(C)
• If mail comes back undeliverable, or the last known address is the home the tenant left, serve at least one more notice at any other address the tenant gave you. NMSA 1978 § 47-8-13(F)

Under an annual rental agreement, if you demand or receive a deposit of more than one month's rent, you pay the tenant interest on the deposit every year. The rate is the passbook interest the federal home loan bank board permitted savings and loan associations in New Mexico; the statute states no figure. The Act does not require a separate or trust account for deposits.

NMSA 1978 § 47-8-18(A)(1) NMSA 1978 §§ 47-8-1 to 47-8-52

• A rental agreement of less than one year may not carry a deposit over one month's rent at all. NMSA 1978 § 47-8-18(A)(2) See Security deposit limit on the New Mexico page

The Owner-Resident Relations Act does not require a move-in checklist or inspection report. At move-out the tenant must leave the home as clean as it was at move-in, apart from ordinary wear and tear, and no part of the deposit may be kept for normal wear and tear.

NMSA 1978 §§ 47-8-1 to 47-8-52 NMSA 1978 § 47-8-22(B) NMSA 1978 § 47-8-18(C)

• The tenant must keep the part of the premises they use as clean and safe as its condition permits. NMSA 1978 § 47-8-22(B)
• At move-in you must deliver possession in line with the rental agreement and your repair duties. If you do not, rent abates in full until you do, and the tenant may end the agreement by written notice. NMSA 1978 § 47-8-26(A), (B)