New Mexico Security Deposit Law (N.M. Stat. § 47-8-18)

N.M. Stat. § 47-8-18 governs deposits. For short terms it states: "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." Annual agreements have no dollar cap, but if the deposit exceeds one month's rent the owner must pay the resident "annually an interest equal to the passbook interest permitted to savings and loan associations." The owner must provide an itemized written list of deductions and the balance within 30 days of termination of the rental agreement or the resident's departure, whichever is later.

If the owner fails to provide the itemized statement and balance within 30 days, the owner forfeits the right to withhold any part of the deposit, forfeits the right to assert a counterclaim in any action to recover it, and is liable for court costs and reasonable attorneys' fees (N.M. Stat. § 47-8-18). Bad-faith retention adds a $250 civil penalty.