How to Send a Security Deposit to a New Property Management Company from the Owners Operating Balance

Has one of your owners recently ended their management agreement and now you need to send the security deposits to the new property management company? This article will walk you through this process by releasing the funds to the owner first.

 

This article will show you how to send the security deposit to a new company and have it show on the owners ledger. If you do not need this to show on the owner's ledger then you can follow this article using a quicker process.

 

  • First, in your Settings, Chart of Accounts create an income account  for "Security Deposit Transfer Owner" if necessary. All of the toggles for the account settings can be turned off, unless you want this used for 1099 tax tracking then you can have the tax tracking toggle turned on.
  • You also can create an expense account to be used later when creating the bill to the new company. This is not necessary if you would like to use another expense account. This will need to have the type set as expense and no toggles need to be turned on for this. For this example we created the expense account call "Security Deposit Transfer Owner".

  • Then, go into that specific lease
    • Click on Leases on the left side
    • In the lease search box, search for the address or tenant(s)
    • Click on the lease when you have found the correct lease

  • Create a charge on that lease for the income account you just created in the amount of the
    security deposit (or the amount of the security deposit you are sending to the owner)
    • In the lease, click the green Actions button on the right
    • Click Add Charge from the dropdown
    • Select the new Account you just created
    • Enter in the Amount of the security deposit that you are giving to the owner
    • Click Save


 

You can then complete the move out flow and have the security deposit apply to the charge or you can follow the below on manually applying the security deposit. For additional assistance with the move out you can follow this article.

OR

  • Go back into the lease, click the green Actions button, and click on Release Deposit from the drop down menu
  • In Release Deposit, enter in the amount of the security deposit. Then, enter that amount in the Security Deposit spot below, and in that charge you just created below that 
  • Edit the Date Posted if needed
  • Enter in the Amount of the security deposit that you are returning to the owner
  • Enter in a Description of "Returning security deposit to owner" or something similar
  • In the Deposit Balances section, enter in the Release Amount, which will be the same amount that you entered above
  • In the Pay Charges section, enter in the Amount to Pay into the charge that you created in step 3, which will be the same amount that you entered above
  • Click Post at the bottom right

  • The next step will only apply to you if you return security deposit money from a bank account that is separate from the bank account that you hold that money for the duration of the lease (i.e. you hold security deposits in a separate escrow security deposit bank account, but you refund the money to the tenant from your operating trust rental account). If this step does apply to you, then you will want to transfer the money at your bank, and you will also want to record a new bank transfer in Rentvine as well to account for the transfer at your bank.

 

If you only have one bank account, or if you refund security deposits from the same bank account that you hold that money in, then the final step will not apply to you. 

 

  • With this complete you can now go to the contacts tab. From here you can click vendors. You will need to click the green actions button in the top right and click "New Vendor". Here you will need to fill out all of the information for the new property management company you are going to send the security deposits to. 

  • You can now create the bill to the owner by going to the accounting tab and clicking money out. In the green actions button you can click "Add Bill".

  • Please follow the following for entering in the correct fields of this bill:
    • Payee- here you will select the new vendor contact that we just created in the previous step.
    • Bill Date- this will be the date you send the payment over to the new property management company
    • Date Due- this will be the date you send the payment over to the new property management company
    • Invoice #/ Reference #- any reference or invoice you would like to add to the bill 
    • Payment Memo- any payment memo you would like to be attached
    • Work Order- you will ignore this toggle as this will not be attached to any work order
    • Paid By- you will select the portfolio or the property for this owner to pay this bill
    • Account- you can select the expense account that was created earlier in this article or you can use your preferred expense account.
    • Amount- this will be the amount of the security deposit that was released to the owner
    • Description- any description that you would like to show to the owner
  • When you are done make sure to click the green "Save" button at the bottom of the page. 

 

 

  • This will take you to the bill details page for the bill that was just created. From this page you can click the green actions button and click "Pay Bill".

 

  • You can then check this bill and click the green "Post" button. This will default the payment method set at the vendor contact level. You can change the payout method to whatever you would like. For this example we are sending a check. When you are ready click the post payments button and approve the pay out. 

 

  • To print this check you can go to the accounting tab and click money out. You can then click the payments tab and click the payment that was just created. From this page you can click the green actions button and "Print Check". You will then be able to send this off to the new property management company.