The security deposit process in Albuquerque can sometimes feel overwhelming, especially if you’re not up to date on all the laws and requirements. It’s easy to make a mistake with security deposits, and if you haven’t documented everything properly, you can often find yourself in the middle of a dispute with your tenant about how much they should get back.
One piece of advice we will share is this: always collect the security deposit before a tenant moves into the property. Don’t agree to take half now and half later and don’t allow them to add a fraction of the security deposit to the rent every month. You’ll likely never see that money. Collect the deposit in full when you sign the lease and before the tenant moves in.
Here are some of the other important basics you need to know about security deposits and how to collect, hold, and return them in Albuquerque.
How Much Should a Security Deposit Be?
New Mexico law is not specific when it comes to how much you can collect, but the law does state that the security deposit amount must be “reasonable.” Typically, landlords will collect the equivalent of one month’s rent as the security deposit. While you are entitled to ask for more than that, if you do, you’ll have to pay interest to the tenant on that deposit. Asking for more than one month’s rent as a security deposit is rare. We don’t recommend it.
What Can You Pay for with a Security Deposit?
Security deposits are held throughout the tenancy. While it’s collected to protect the landlord from risk, it’s still considered the tenant’s money. When your tenant has moved out and you’re conducting an inspection and preparing to return the deposit, you can only use that money for:
- Unpaid rent
- Unpaid utilities
- Repairs necessary due to property damage caused by the tenant
- Any damage that’s more than wear and tear
Life expectancy must also be factored into the cost of any replacements that you make. For example, if your tenant only lived in your property for a year and you have to replace the five-year-old carpet during the turnover process, you cannot charge that tenant for the full price of the carpet. They only used it for one year.
Sometimes, it’s difficult to distinguish normal wear and tear from tenant damage. This is why a move-in inspection is critical. You need to be thorough and document every detail of your property’s condition, from floors to walls to appliances and outdoor spaces. You want to accurately compare how the home looked at move-in versus move-out.
Wear and tear is often something small and expected. Tiny nail holes from where pictures were hung on a wall, for example, or scuff marks from where furniture rested. Damage is due to a tenant’s neglect, abuse, or misuse. That might be a large hole in a wall or a door that’s been broken off its hinges.
Timelines for Security Deposit Return
You’ll need to return your tenant’s security deposit within 30 months of their move-out date or the end of the lease agreement – whichever is later. If you’re planning to make deductions from a tenant’s security deposit, you’ll need to provide your tenant with a written itemized list of these deductions. This notice should state what deductions have been taken and the amount of each deduction.
These are the basics to security deposit law in New Mexico. If you’d like some help understanding how to handle your deposit or you need some assistance with Albuquerque property management, we can help. Please contact us at Blue Door Realty.
