New Mexico: Security Deposit Return Deadlines & Deductions

Requirements one by one

Governing law

New Mexico's deposit rules live in one section of the Uniform
Owner-Resident Relations Act, NMSA 1978 § 47-8-18. The statute uses
"owner" and "resident" rather than "landlord" and "tenant."

Deadline to return the deposit

The 30-day clock starts on "the date of termination of the rental
agreement or resident departure, whichever is later" (§ 47-8-18(C)) —
unlike several other states in this survey, New Mexico doesn't require you
to make a separate demand to start the clock; the later of these two dates
alone triggers it. The landlord "is deemed to have complied with this
section by mailing the statement and any payment required to the last
known address of the resident."

Itemized statement required?

Yes, whenever the landlord has "actual cause... for retaining any portion
of the deposit" — it must provide "an itemized written list of the
deductions from the deposit and the balance of the deposit, if any,"
inside the same 30-day window (§ 47-8-18(C)).

What can be deducted

The deposit may be applied to "rent and the amount of damages which the
owner has suffered by reason of the resident's noncompliance with the
rental agreement," including "nonpayment of rent or utilities, repair work
or other legitimate damages" (§ 47-8-18(C)). The same subsection is
explicit about what's off-limits: "No deposit shall be retained to cover
normal wear and tear" — one of the few states in this survey where that
exact phrase appears directly in the statute itself, rather than only in
secondary paraphrase.

Maximum deposit amount

It depends on the lease length. "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"
(§ 47-8-18(A)(2)). For an annual rental agreement, there's no cap at
all — but see the interest rule below, which kicks in once the deposit
passes that same one-month threshold.

Interest on the deposit?

Conditionally. "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" (§ 47-8-18(A)(1)). If the lease is shorter than a
year, or the deposit doesn't exceed one month's rent, no interest is
owed.

Penalty for a late/bad-faith withholding

Missing the 30-day itemization deadline triggers an automatic set of
forfeitures: the landlord "shall forfeit the right to withhold any portion
of the deposit," "shall forfeit the right to assert any counterclaim in
any action brought to recover that deposit," "shall be liable to the
resident for court costs and reasonable attorneys' fees," and "shall
forfeit the right to assert an independent action against the resident for
damages to the rental property" (§ 47-8-18(D)). Separately, "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" (§ 47-8-18(E)) — a flat dollar figure, not tied to the
deposit's size, stacked on top of the forfeiture remedy.

Separate account or bond required?

No. Nothing in § 47-8-18 requires a landlord to hold a deposit in a
segregated account, an interest-bearing account, or a bond.

What trips people up

No forwarding-address or demand gate here — the clock starts on its own.
Some states in this survey only start the return deadline once the tenant
demands the deposit or gives a forwarding address. New Mexico doesn't:
the 30 days run automatically from the later of lease termination or your
actual move-out, whether or not you say anything.

The interest rule depends on your lease's length, not how long the
deposit sits. Interest is owed only under an "annual rental agreement"
where the deposit tops one month's rent — a month-to-month or short-term
lease owes no interest at all, no matter how long the landlord ends up
holding the money.

Missing the deadline is a big deal for the landlord, not a small one.
Because a late or missing itemization forfeits the landlord's right to
keep anything, plus the right to sue you separately over damage, plus
attorney's fees, a landlord who's late has strong incentive to settle
quickly.

Common questions

My landlord never sent anything 30 days after I moved out — what am I
owed? The full deposit — the landlord has forfeited the right to
withhold any portion, forfeited any counterclaim against you, and owes
your court costs and reasonable attorney's fees. If the retention was in
bad faith, add a flat $250 civil penalty.

Is there a cap on my deposit? Only if your lease is for less than a
year — then it's capped at one month's rent. A year-long or longer lease
has no statutory cap.

Do I get interest on my deposit? Only if your lease is annual (a
one-year-or-longer term) and the deposit is more than one month's rent.

Statutes and sources

• NMSA 1978 § 47-8-18(A) — deposit caps and the conditional interest duty.
  https://law.justia.com/codes/new-mexico/chapter-47/article-8/section-47-8-18/ (accessed 2026-07-06)
• NMSA 1978 § 47-8-18(C) — permitted deductions, wear-and-tear bar, and the 30-day itemization deadline.
  https://law.justia.com/codes/new-mexico/chapter-47/article-8/section-47-8-18/ (accessed 2026-07-06)
• NMSA 1978 § 47-8-18(D) — forfeiture penalties for a missed deadline.
  https://law.justia.com/codes/new-mexico/chapter-47/article-8/section-47-8-18/ (accessed 2026-07-06)
• NMSA 1978 § 47-8-18(E) — $250 bad-faith civil penalty.
  https://law.justia.com/codes/new-mexico/chapter-47/article-8/section-47-8-18/ (accessed 2026-07-06)