Most residential landlords require tenants to pay a security deposit to cover any repairs needed when the tenant moves out, or to cover the tenant’s failure to pay the last month's rent.

Laws vary from state to state, but many states have statutes that provide the maximum amount of security deposit a landlord may require for a residential lease and the costs for which the landlord may use the security deposit (cleaning, repairs, unpaid rent) following termination of the lease.

These laws also provide a specific deadline (often 30-60 days) for the landlord to return the tenant’s security deposit following termination of the lease—after deducting any amount properly withheld, as allowed by law.

In New Mexico, the regulation of security deposits for residential leases is governed by the New Mexico Owner-Resident Relations Act. According to this Act, a landlord may not demand or receive a security deposit in excess of one month's rent for leases less than one year. However, if the lease term is longer than one year, the landlord can require more than one month's rent for a security deposit. The security deposit can be used by the landlord to cover damages to the property beyond normal wear and tear, unpaid rent, and other breaches of the lease agreement. Upon termination of the lease, the landlord is required to return the remaining security deposit, if any, to the tenant within 30 days after the termination of the tenancy and delivery of possession by the tenant. The landlord must provide the tenant with a written itemized list of any deductions made from the security deposit. If the landlord fails to follow these requirements, the tenant may be entitled to damages up to $250 in addition to the amount of the security deposit wrongfully withheld.