New Mexico security deposit interest
New Mexico links interest to the size of the deposit. On a lease of a year or more, a landlord who demands more than one month’s rent as a deposit must pay annual interest on the whole deposit at the passbook savings rate prevailing in New Mexico when the lease was signed. Deposits of one month or less, and all deposits on shorter leases, earn nothing.
Print this page for a dated statement showing the rate applied to each year and the statute.
How New Mexico deposit interest works
For leases shorter than a year the deposit is simply capped at one month’s rent. Deposits are returned within 30 days with an itemised list, and a landlord who fails to do so forfeits the right to keep any of it and may owe the tenant’s attorney fees.
The rules in brief
- Lease of one year or longer plus deposit above one month’s rent: annual interest on the whole deposit.
- Rate is the New Mexico passbook savings rate on the date the lease began.
- Leases under one year: deposit capped at one month’s rent, no interest.
- Return within 30 days with itemised deductions.
Prevailing New Mexico passbook rate on the lease date. Fixed at the start of the lease.
Worked examples: one year held
Assuming an account rate of 0.5%. Enter the real rate from the landlord’s notice in the calculator.
| Deposit | Interest-bearing portion | Interest owed |
|---|---|---|
| $1,000.00 | $1,000.00 | $5.00 |
| $1,500.00 | $1,500.00 | $7.50 |
| $2,500.00 | $2,500.00 | $12.50 |
Other New Mexico deposit rules
- Maximum deposit: 1 month's rent for rental agreements shorter than 1 year; no cap for annual (1-year) leases, but deposits above 1 month's rent on an annual lease must earn interest paid to the tenant.
- Return deadline: 30 days after termination of the rental agreement or the resident's departure, whichever is later; itemized written list of deductions plus balance; failure forfeits right to withhold any of the deposit and to counterclaim, plus costs and attorney fees; $250 civil penalty for bad-faith retention.
- Late fees: Up to 5% of the rent for each rental period in default, only if the lease provides for a late fee. Calculated on rent only (excluding deposits, other fees, utilities). Landlord must give notice of the fee charged no later than the last day of the next rental period or it is not collectible. NOTE: cap was 10% until Laws 2025, ch. 122 (SB 267) cut it to 5% effective June 20, 2025; older sources (including Justia's 2024 text) still show 10%.
Full page: New Mexico landlord and tenant rules.
Frequently asked questions
When does a New Mexico landlord owe deposit interest?
When the lease runs a year or more and the deposit is more than one month’s rent. Then interest is owed every year on the full deposit, not just the excess.
What rate applies?
The passbook savings rate prevailing in New Mexico on the day the lease was signed, fixed for the life of the lease.