N.M. Stat. Ann. § 47-8-18
Deposits.
Operative Text
47-8-18. Deposits.
A. An owner is permitted to demand from the resident a reasonable deposit to be
applied by the owner to recover damages, if any, caused to the premises by the
resident during his term of residency.
(1) Under the terms of an annual rental agreement, if the owner demands or
receives of the resident such a deposit in an amount greater than one month's rent, the
owner shall be required to pay to the resident annually an interest equal to the
passbook interest permitted to savings and loan associations in this state by the federal
home loan bank board on such deposit.
(2) Under the terms of a rental agreement of a duration less than one year, an
owner shall not demand or receive from the resident such a deposit in an amount in
excess of one month's rent.
B. It is not the intention of this section to include the last month's prepaid rent, which
may be required by the rental agreement as a deposit as defined in Subsection D [E] of
Section 47-8-3 NMSA 1978. Any deposit as defined in Paragraph (1) of Subsection A of
this section shall not be construed as prepaid rent.
C. Upon termination of the residency, property or money held by the owner as
deposits may be applied by the owner to the payment of rent and the amount of
damages which the owner has suffered by reason of the resident's noncompliance with
the rental agreement or Section 47-8-22 NMSA 1978. No deposit shall be retained to
cover normal wear and tear. In the event actual cause exists for retaining any portion of
the deposit, the owner shall provide the resident with an itemized written list of the
deductions from the deposit and the balance of the deposit, if any, within thirty days of
the date of termination of the rental agreement or resident departure, whichever is later.
The owner is deemed to have complied with this section by mailing the statement and
any payment required to the last known address of the resident. Nothing in this section
shall preclude the owner from retaining portions of the deposit for nonpayment of rent or
utilities, repair work or other legitimate damages.
D. If the owner fails to provide the resident with a written statement of deductions
from the deposit and the balance shown by the statement to be due, within thirty days of
the termination of the tenancy, the owner:
(1) shall forfeit the right to withhold any portion of the deposit;
(2) shall forfeit the right to assert any counterclaim in any action brought to
recover that deposit;
(3) shall be liable to the resident for court costs and reasonable attorneys'
fees; and
(4) shall forfeit the right to assert an independent action against the resident
for damages to the rental property.
E. An owner who in bad faith retains a deposit in violation of this section is liable for
a civil penalty in the amount of two hundred fifty dollars ($250) payable to the resident.
History: 1953 Comp., § 70-7-18, enacted by Laws 1975, ch. 38, § 18; 1985, ch. 146, §
2; 1989, ch. 340, § 2.Section 47-8-18 of New Mexico's Uniform Owner-Resident Relations Act governs how security deposits are collected, held, and returned in residential rental relationships. Under an annual rental agreement, a deposit exceeding one month's rent triggers an obligation to pay annual interest to the resident; under shorter-term agreements, the deposit may not exceed one month's rent at all. When a tenancy ends, the owner has thirty days to return the deposit or provide an itemized written list of deductions — excluding normal wear and tear — and failure to do so carries significant legal consequences, including forfeiture of the right to withhold any portion of the deposit and, for bad-faith retention, a civil penalty of $250 payable to the resident.
Plain English — not legal advice.
Operators subject to NMSA § 47-8-18 generally collect deposits within the statutory limits — no more than one month's rent for leases under one year, and with annual interest paid to the resident when a deposit exceeds one month's rent under an annual agreement. At move-out, compliant owners document all legitimate deductions (excluding normal wear and tear) in an itemized written statement and deliver or mail that statement along with any remaining balance to the resident's last known address within thirty days of termination or departure, whichever is later. Owners who miss that thirty-day window under § 47-8-18 risk forfeiting the right to retain any portion of the deposit, the right to assert counterclaims or independent damage actions, and may be held liable for the resident's court costs and reasonable attorneys' fees.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under NMSA § 47-8-18, residents have a right to receive an itemized written accounting of any deposit deductions — along with any remaining balance — within thirty days after the tenancy ends or they depart, whichever is later, and normal wear and tear cannot be charged against the deposit. If an owner fails to provide that statement on time, the law strips the owner of the right to withhold any part of the deposit, bars counterclaims, and entitles the resident to court costs and reasonable attorneys' fees; an owner who retains a deposit in bad faith faces an additional $250 civil penalty payable directly to the resident. Residents who believe their deposit rights under § 47-8-18 have been violated may consider consulting a tenant-rights organization, a legal aid office, or reviewing options available through New Mexico's court system.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 26, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
Effective Timeline
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