47-8-18. Deposits.
A. An owner is permitted to demand from the resident a reasonable deposit to be
applied by the owner to recover damages, if any, caused to the premises by the
resident during his term of residency.
(1) 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.
(2) 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.
B. It is not the intention of this section to include the last month's prepaid rent, which
may be required by the rental agreement as a deposit as defined in Subsection D [E] of
Section 47-8-3 NMSA 1978. Any deposit as defined in Paragraph (1) of Subsection A of
this section shall not be construed as prepaid rent.