How to Transfer a Management-Held Security Deposit to an Owner-Held Security Deposit

Are you already holding the tenant's security deposit and need to transfer it to the owner to hold for the life of the lease? This article will show you how to transfer it.

This article will show you how to initially collect the security deposit as a management-held security deposit.  Then, using the "Transfer Deposit to Owner Held" process to easily transfer it as an owner-held security deposit, and sending it out to the owner.

Step 1 - Be sure to have a Chart of Account that is specific for Owner-Held Security Deposits.

• Before following the rest of this article,  you will need to create or check that you have a liability chart of account called "Owner Held Security Deposit" (ensure that the option "is Tracked as Held" is toggled OFF and "is Tracked as Security Deposit" is toggled ON).  If you need to create this account, follow this article on How to Create a Chart of Account
  

Step 2 - Create a charge on the lease for the Security Deposit 

• On the lease, use the green actions button "Add Charge". Use your normal security deposit chart of account.

• • Click on the Green Actions button and select Add Charge from the dropdown menu.
  • Fill out the New Lease Charge form:
    • Account - Choose the appropriate security deposit account, which is typically the management-held security deposit account
    • Amount - Type in the dollar amount that is being charged
    • Date Posted - Choose a date
    • Description - Type in a comment, ie, Security Deposit
    • Click Save.

• Once the tenant pays the security deposit charge that was just created, you can move on to the next steps.  The tenant can pay this via the portal, or the property manager can record the manual payment (check, cash, money order)

Step 3- Transfer the Security Deposit to the Owner

• From the lease, use the green actions button and select "Transfer Deposit To Owner".

• Choose the Owner Held Security Deposit liability chart of account.
• Enter the amount you are transferring to the owner.
• Choose the bank account you will send the funds from.
• Choose the owner you are paying the Security Deposit to and hit "Post."
• Once you hit "Post," a menu will display with three options.
  
  
  
  • Pay Bill - Selecting this option will bring you to the bill being paid to the owner for the Security Deposit. Paying this bill will send the funds to the owner (Select this option to go ahead and send the funds to the owner)
  • Go to Bill - Selecting this option will allow you to review the bill details (*note: you can pay this bill from the green actions button as well when viewing the bill)
  • Go to Lease - Selecting this option will bring you to the lease page 
• Once the bill has been paid, the funds are sent to the owner for them to hold the deposit. You will notice on the lease that the deposit is displayed, and on the owner's ledger, you will see the "owner held security deposit" amount listed. 
  

• When it comes time for the tenant to move out and the owner to send the funds back, the owner can return the deposit by performing an owner contribution. *This can be done right from the portal.