New Mexico Security Deposit Law: Limits, Deadlines, and Penalties
What New Mexico landlords can charge, when deposits must be returned, and what it costs to get it wrong. Last reviewed 2026-08-12.
How much can a landlord charge in New Mexico?
For rental agreements with a term of less than one year, the deposit cannot exceed one month's rent. For a lease of one year or longer there is no cap, but if the landlord takes more than one month's rent as deposit, they must pay the tenant annual interest on it.
No separate pet deposit statute; on leases under one year, any pet deposit counts toward the one-month cap, while annual leases have no cap but trigger the interest rule above one month.
When must the deposit be returned?
The landlord must deliver the balance of the deposit and an itemized written statement of deductions within 30 days of termination of the tenancy. There are no statutory extensions.
A written statement listing each deduction and the balance due must be provided within the 30-day window; deductions cannot cover normal wear and tear.
What happens if a landlord misses the deadline?
A landlord who misses the 30-day statement deadline forfeits the right to withhold any portion of the deposit, to assert any counterclaim in the tenant's recovery suit, and to bring an independent damages action against the tenant, and is liable for court costs and reasonable attorney's fees. Bad-faith retention adds a $250 civil penalty payable to the tenant.
Interest and holding requirements
Interest is required only in one situation: when a landlord on a one-year-or-longer lease collects a deposit larger than one month's rent, annual interest is owed at the passbook savings rate. Ordinary deposits of one month or less earn no statutory interest.
No statutory requirement. New Mexico does not require a separate account, escrow, or bond for holding deposits.
What New Mexico landlords get wrong
The trap for small landlords is the forfeiture rule: miss the 30-day itemized statement and you lose not just the deductions but also the right to counterclaim or sue the tenant separately for property damage — the strongest forfeiture provision in the region. The under-one-year cap is why many New Mexico landlords prefer 12-month leases, which have no deposit cap but owe passbook-rate interest on anything above one month. Deductions are limited to unpaid rent and damages from the tenant's noncompliance; normal wear and tear can never be withheld.
The law itself
Frequently asked questions
How much can a landlord charge for a security deposit in New Mexico?
It depends on the lease length. Leases shorter than one year are capped at one month's rent. Leases of a year or longer have no statutory cap, but if the landlord collects more than one month's rent, they owe you annual interest on the deposit at the passbook savings rate. Most landlords keep deposits at one month to avoid the interest obligation.
How long does a New Mexico landlord have to return a security deposit?
Thirty days from the termination of the tenancy. Within that window the landlord must deliver the remaining balance along with an itemized written statement of every deduction. Deductions can only cover unpaid rent and damages caused by your noncompliance with the lease — never normal wear and tear from ordinary living.
What happens if a New Mexico landlord misses the 30-day deadline?
The consequences are severe. The landlord forfeits the right to withhold any of the deposit, loses the ability to counterclaim in your lawsuit to recover it, cannot bring a separate damages action against you, and owes your court costs and reasonable attorney's fees. If the landlord kept the deposit in bad faith, a $250 civil penalty is added on top.
Do New Mexico landlords have to pay interest on security deposits?
Usually not. Interest is only required when a landlord on a lease of one year or longer collects a deposit exceeding one month's rent — then annual interest at the passbook savings rate is owed on the deposit. A standard one-month deposit on any lease earns no statutory interest, and there is no required separate account.
Keep reading
Deposit deadlines are easy to miss — until they cost you triple.
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Start Free TrialThis page is general information, not legal advice. Statutes change — verify against the official text linked above or consult a local attorney before acting.