Generally there are two cases for security deposits. Most of the time, the property manager holds the security deposit in their trust account. Occasionally, owners insist on hold the deposits themselves. Rentables can handle both cases.
- Held in Trust by the Property Manager
- Held by the Property Owner
In either case, the first step is to charge the tenant for the security deposit.
Charge the Security Deposit
Similar to any other charges, you'll start by charging the tenant for the security deposit. Be sure to select Security Deposit as the charge type.
This allows Rentables to create special accounting entries to track the fact that security deposits are refundable.
What about the Payee?
A common point of confusion has to do with the payee because the tenant's check is made payable to the property manager. In Rentables, the payee is the beneficiary of the funds. In the case of a security deposit (or rent), the owner is the beneficiary.
Next you will want to record payment of the security deposit. Once the payment is recorded, Rentables will allocate those funds to a special ledger account called "Held Deposits".
Held Deposits are funds held in your trust account that are intended to cover the tenant's refundable deposit.
What Happens if the Owner Holds the Security Deposit?
After charging the security deposit and recording payment, those funds will be in the Held Deposits ledger account. You can transfer those funds from Held Deposits to Cash and pay those funds to the property owner.
Any shortage in the Held Deposits account is assumed to be held by the owner and will be represented as such in Rentables.