New Mexico Passes Legislation to Disclose and Limit Certain Rental Fees, Including Tenant Screening Fees
Apr 28, 2025
On April 8, New Mexico Governor Michelle Lujan Grisham signed into law a comprehensive tenant protection bill that limits certain types of rental fees for tenants – bolstering transparency in the private rental market and ensuring that tenants are not cost-burdened by excessive fees that increase the true cost of rent per month. Under “Senate Bill 267,” which was introduced as a partisan housing bill sponsored by Representative Marianna Anaya (HD-018) and Senators Heather Berghmans (SD-015), Carrie Hamblen (SD-038), Leo Jaramillo (SD-005), and Linda Trujillo (SD-024), the new law targets rental application fees for tenants applying for new housing opportunities, including fees associated with screening prospective applicants and running background checks. The law also includes provisions that require landlords and property owners to notify tenants of any impending rental fee increases or changes during tenancy. With the passage of New Mexico’s new law, the state joins 21 additional states and eight localities that have taken measures to protect tenants against excessive rental fees – commonly known as “junk fees.”
Of the rental fees mentioned in “Senate Bill 267,” the law begins with a blanket provision that requires landlords and property owners to disclose to prospective rental housing applicants – in plain language – all of the costs associated with renting a dwelling unit. Under the law, landlords and property owners are also required to provide both an itemized list and descriptions of the fees that will be assessed to a tenant during the duration of their lease, including the base cost of renting the unit. Similarly, the law also includes a provision on notifying tenants about any fees that could change during a lease term.
As mandated by the law, landlords and property owners must provide at least 60-days’ notice to a tenant prior before the new charge. Language embedded in New Mexico’s “Senate Bill 267” is similar to that of the State of Idaho, which passed in 2023 “Senate Bill 1039,” a statewide law that requires landlords and property owners be transparent about any fees that are to be charged to tenants prior to the commencement of a lease term or if a fee changes, requiring an at least 30-day’s notice that must be provided to a tenant.
New Mexico’s “Senate Bill 267” then includes several mandates regarding tenant screening and background check fees for prospective housing applicants. Related to tenant screening fees, New Mexico’s law places limits on how much can be charged to a tenant to process a tenant screening report. According to the Consumer Financial Protection Bureau, a tenant screening report can include a variety of information about a tenant, which is compiled together to determine whether a tenant is fit to lease a rental unit. Typically, tenant screening reports can include information on a tenant’s credit history, rental and eviction history, and can offer information on a tenant’s employment. “Senate Bill 267” mandates that a landlord or property owner can only charge $50 to process a tenant screening report on a tenant and that no other fee can be charged to a tenant to process a rental application. Moreover, the law also stipulates that any prospective tenant that is not selected for a rental unit is eligible to have their tenant screening fee returned to them within 30 calendar days.
Also related to tenant and background screening checks, New Mexico’s new law also allows tenants to reuse the same background check for a single landlord if the screening was completed within 90 days of submitting a rental application. Though New Mexico’s new provision for reusable background check only applies to properties under the same ownership, portable background checks are one type of law gaining traction across the country. In Colorado, lawmakers passed in 2023 “House Bill 23-1099” to allow tenants to reuse their rental background and credit checks for up to 30 days without incurring any additional costs, while in Illinois, a similar law passed in 2024 through “House Bill 4926” also allows tenants reuse their tenant screening reports as long as the report was prepared by a consumer credit reporting agency within 30 days of submitting a rental application.
Reusable tenant screening reports help prospective renters offset some of the costs of securing new housing opportunities. By allowing tenants to reuse the same tenant screening report multiple times throughout the process of applying for housing, a renter does not incur debt just to secure housing. According to Zillow’s Consumer Housing Trends Report for 2023, the typical renter submits two applications during their housing search, paying at least $40 per application. For renter households of color, notably, the survey found that non-white renters, which includes Black and Latinx households, are reported as submitting five or more rental applications during their housing search. In a report released by the National Consumer Law Center in 2023, it was found that 89% of tenants were charged rental application fees, ranging from $25 to as much as $350. Despite a tenant paying such amount in fees, moreover, there is no guarantee that a tenant will even be approved for a unit.
Overall, laws that limit excessive rental fees for tenants – or include mandates that require disclosure of fees – are important policies that promote housing stability and affordability for renters. When tenants are charged a multitude of fees, typically in excess of what is advertised on a rental listing, the resulting costs can be burdensome to tenants and can lead to housing that is unaffordable.
According to the US Department of Housing and Urban Development, housing is considered affordable if a tenant is not paying more than 30% of their monthly income towards rent and utility costs. When fees are hidden, unpredictable, or charged as a surprise to renters, it can lead to greater shares of a tenant’s monthly income to go towards rent and utilities alone – leaving little money left over each month for other necessities such as food, transportation, or healthcare. According to the National Consumer Law Center, a survey of rental fees in 2023 found that tenants are typically charged dozens of fees during tenancy, including rental application fees, excessive late fees, utility-related fees, processing or administrative fees, and even parking fees – bringing the total cost to rent per month hundreds of dollars more than the advertised price on a rental listing in some cases.
More information about New Mexico’s new rental fee law can be found here.