As per New Mexico security deposit law, a landlord in New Mexico have a right to ask for a security deposit from their tenant. The deposit acts as financial protection against negligent or careless tenant actions that could lead to financial hardship for the landlord.
A good example of such hardship for the landlord is excessive rental property damage from the tenant that exceeds normal wear and tear. As the landlord, the New Mexico deposit rules state that you would be able to use part or all your tenant’s deposit to fix the damage. This helps keep the rental property in great condition, which will help the landlord maintain tenant interest.
Besides excessive damage caused by the tenant to the rented unit, a security deposit can also help in other situations. Such as, if the tenant stops paying rent, moves out without clearing their utility bills, or breaks their rental agreement without a legally justified reason. The security deposit can be used to help with many unanticipated problems related to the tenant and their rental.
Even though the state’s security deposit law is there to help New Mexico landlords, they also have several responsibilities. It’s important that landlords understand New Mexico landlord tenant laws, and we can help. So, we at Blue Door Realty have put together this article to help every landlord understand the New Mexico security deposit law. We have an expert team of property managers to help manage your rental.
Are There Security Deposit Limits?
Yes. New Mexico security deposit laws state that for leases less than a year, the maximum security deposit charge a landlord can collect from their tenant would be the equivalent of one month’s rent. But for a rental agreement that is an annual rental agreement or longer, you have the option to collect more than one month’s rent from the tenant. The maximum security deposit depends on the lease agreement. However, you should have only request a reasonable deposit cost to maintain tenant interest.
Where Should You Store the Deposit?
As per the laws for security deposits, the deposits should be kept in an interest-bearing savings account. But this rule only applies to leases that exceed a year. In this case, you will need to pay interest to your tenant on the deposit held in the savings account. If the landlord fails to do this, they may face legal complications and disputes with the tenant.
Can You Charge a Pet Deposit?
Yes, the New Mexico security deposit laws and Landlord-Tenant laws do not cover pet deposits. But while there is a limit on how much you can charge as the deposit. No limit exists for pet deposits. So, a New Mexico landlord has the right to ask for an additional pet deposit from their tenant.
The tenant must pay this deposit on top of the security deposit if they wish to live in the unit with an animal. The pet deposit is used to cover extra cost that might occur with animal damages. This needs to b e signed in the rental agreement.
A landlord will generally ask for a pet deposit ranging between one and two months’ rent.
Please note that people with disabilities have special rental provisions in the law. According to the Fair Housing Act, disabled persons have a right to full and equal access to housing. It would therefore be discriminative to require them to pay a pet deposit for their service animals during their tenancy. If the landlord fails to abide by the Fair Housing Act they risk facing charges or court costs.
How Can You Use the Security Deposit?
New Mexico landlord tenant law and rental laws allow a New Mexico landlord to make deductions to their tenant’s security deposits in certain circumstances such as:
Failure to Pay Rent
Nonpayment of rent is one of the top reasons for deductions from security deposits in New Mexico. If your tenant stops paying rent for whatever reason, or if they quit the premises without notice, you can withhold part or all their deposit to cover your losses.
You may use such deposit as the security deposit to cover more than one month’s rent.
Clearing Unpaid Bills
In a typical rental agreement, utilities will be in the tenant’s name. So, it would be their responsibility to ensure they have cleared those bills, as necessary. But, if the tenants move out at the end of the tenancy without clearing these bills, New Mexico landlord tenant law states that the landlord can use part or all their deposit to clear them.
Cover Lease Violations
Should a tenant fail to report maintenance issues on time, resulting in expensive fixes that could be avoided, the New Mexico landlord tenant law and deposit laws allow the landlord to use the deposit to cover their costs.
Repair Excessive Property Damage
When damage occurs because of abuse or negligence by a tenant such as broken windows, holes in the wall, and broken tiles. New Mexico deposit rules allow the landlord to cover their costs using the deposit.
But a New Mexico landlord cannot hold their tenants security deposits for damage resulting from normal wear and tear.
Can You Perform Walk-Through Inspections?
Walk-through inspections help document the rental property condition prior to a tenant moving out. A landlord can use a move-in inspection checklist as a reference to confirm whether any excessive damage has occurred.
If there is damage, the tenant will need to fix them prior to moving out. If the tenants do not, the landlord may have a right to make appropriate deductions to the tenant’s deposit.
In a few states, walk-through inspections are mandatory. But not the case in New Mexico where they are optional.
When Do You Return the Deposit?
As per New Mexico security deposit policy, a landlord has 30 days to return their tenant’s security deposit upon lease termination if the unit passes inspection and the only damage is normal wear and tear.
If there are any deductions, such as damages (excluding normal wear and tear) or paying a month’s rent, the landlord must include a written statement of which ones were made and the amount for each deduction.
What Can Happen if the Deposit is not returned to the Tenant?
If the landlord wrongfully withholds your tenant’s security deposit during or after the tenancy, there may be the repercussions:
- You may forfeit the entire security deposits amount.
- You may forfeit the right to make any counterclaims regarding recovering the security deposit amount.
- You may be liable for paying your tenant court costs and attorney fees they incurred a resulting lawsuit.
So, per security deposit regulations, it’s in your best interest as a landlord to return such deposit to the tenant on time after the tenancy.
What Happens if you Sell the Property?
If you choose to sell or transfer the ownership of the unit, New Mexico security deposit policies give you two options to consider:
- You can transfer the deposits of your tenant to the incoming owner. In such a case you will then need to notify your tenant of this information.
- The other option would be to return the security deposits back to the tenant (less any allowable deductions). You will then need to notify the incoming owner of this information.
Understanding the security deposit regulations should be critical to any landlord looking to operate in the state. New Mexico landlords need to understand if they should charge one month’s rent for a security deposit, both how and where they need to store their security deposits as well as how and when to return them or make deductions. We offer property management to take away your stress and ensure your property is abiding to the law.
You should also familiarize yourself with New Mexico landlord-tenant laws, rent increase rules, and lease and rental agreement policies. If you have any further questions, it’s always a promising idea to contact an experienced Rio Rancho rental management company such as the team at Blue Door Realty. Contact us today, we would love to be of service!
Disclaimer: This blog post is not a substitute for professional legal advice. Laws change and this article may not be up to date at the time you read it. For expert legal advice please contact a lisenced professional.