New Mexico Late Fee Laws: The Strict 5% Cap (2025 Update)

New Mexico heavily regulates how and when a landlord can charge a late fee. In 2025, the state legislature passed Senate Bill 267, drastically reducing the maximum allowable late fee and adding strict calculation requirements to the Uniform Owner-Resident Relations Act (UORRA).

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Always consult a qualified New Mexico attorney. Information last verified: March 2026.

The 5% Late Fee Cap (Effective 2025)

Prior to 2025, landlords could charge up to 10% of the total rent for a late payment. Under the revised NMSA § 47-8-15(D), the maximum late fee a New Mexico landlord can charge is now 5% of the periodic rent payment.

The Calculation Rule

Late fees must be calculated strictly on the base rent amount. Landlords are prohibited from calculating late fees on top of other charges, such as:

• Security deposits.
• Unpaid utilities.
• Previous unpaid late fees (compounding late fees are illegal).
• Other administrative charges.

Lease Requirements

For a late fee to be legally enforceable, it must meet two criteria:

1. Specified in the Lease: The exact late fee amount or percentage (up to 5%) must be clearly stated in the written rental agreement. If the lease is silent on late fees, none can be charged.
2. No Unfair Practices: Charging undisclosed or unauthorized late fees is now classified as an unfair or deceptive trade practice in New Mexico.

The Notice Requirement

New Mexico imposes a unique procedural hurdle for collecting late fees. Even if the fee is in the lease, a landlord must provide written notice to the tenant that a late fee has been assessed.

• Deadline: This written notice must be provided no later than the last day of the rental period immediately following the period in which the default occurred.
• Consequence: If the landlord fails to provide this written notice by the deadline, the right to collect that specific late fee is permanently waived.

Grace Periods

New Mexico law does not mandate a grace period before rent is considered late. Unless the lease agreement specifically outlines a grace period (e.g., "rent is due on the 1st, late on the 5th"), a landlord can legally charge a late fee immediately after the due date passes.

Interaction with Eviction

In New Mexico, a landlord can serve a 3-Day Notice to Pay or Quit the day after rent is due. The landlord does not have to wait to charge a late fee before beginning the eviction process.

How Landager Helps

The 2025 drop to a 5% late fee cap caught many New Mexico landlords off guard. Landager automatically locks all late fee calculations in the state to a maximum of 5% of the base rent—ignoring utility pass-throughs and preventing compounding. Furthermore, our platform automatically generates and emails the mandatory written "late fee assessment notice" precisely when required, ensuring you never waive your right to collect your fees.

Back to New Mexico Landlord-Tenant Laws Overview.