Instructions

A universal topic that virtually all property managers must deal with is tenant security deposits. This document discusses the many possible scenarios associated with security deposit refunds including; full refunds, partial refunds, security deposit forfeiture, and giving the tenant any interest that the security deposit accrued during the lease. For purposes of demonstration account 2010 will be used for security deposit liability, however you can create your liability (2000-2999) account if desired.

Prior to writing the tenant check or entering credit payments, confirm the tenant’s security deposit held. To confirm the amount of security deposit go to Manager>Tenants, pull up the tenant in question, click on the “Lease Info” tab and view the Deposit Amount field. If this is the incorrect amount, it will need to be corrected before continuing.

Full Refund:
1. Go to Accounting>Checkbook
2. Click Add
3. Select the Bank Account, then click the Tenant radio button
4. Select the tenant receiving the refund and click Use (After the tenant is selected, the Property, Account and Description/Memo will fill in for you)
5. Enter the check number (or leave the “To Be Printed” box checked), the date of the check, and a memo
6. Fill in the Amount column
7. Click OK or Add Next.

Partial Refund:
If the tenant owes you for rent or other charges such as carpet cleaning, you will need to create those charges first. To create a charge:

1. Go to Accounting>Tenant Charges>Tenant Charges
2. Click Add,
3. Select the tenant and enter the date, rent income account (usually 4000-4999) and a memo (optional)
4. Click OK.

Once the appropriate charges have been created, you will then enter a transaction called a “Credit Payment”. The credit payment uses the tenant’s security deposit to pay open charges. To create a credit payment:

1. Go to Accounting>Tenant Payments
2. Click Credit (Do not click Add)
3. Select the tenant and enter the date, amount, a reference number, receipt number, and memo (optional).
4. In the Acct to Apply Credit field, enter account 2010 (or the account you created).
5. Check the payment distribution for accuracy to determine that the credit is going to the correct charge(s), then click OK.

Now that the charges are paid with the credit payment, you can write the “Tenant” check for the remainder of the deposit. See steps under “Full Refund” above, to create the tenant check.

No Refund:
If the tenant’s charges are greater than the deposit held, the tenant will not receive a refund. The steps for this are very similar to partial refund, however you will only enter the amount of the credit payment up to the amount of the deposit held. For example: A tenant has a security deposit of $250. He/she owes you $500 in outstanding charges. When entering the “Credit” payment make sure to enter no more than $250 in the “Amount” field.

Deposit Forfeited:
If the tenant does not have any outstanding charges, but they have forfeited their security deposit for some reason, you will need to create an income account in your chart of account for “Deposit Forfeiture Income”. This account can be any number between 4000 and 4999. To create an account:

1. Go to Setup>Chart of Accounts
2. Click Add
3. Enter the desired account number (4000-4999) and the name of the account (Suggested name is “Deposit Forfeiture Income” or “Security Deposit Income”)
4. Select Commissionable if the Management Company receives a commission on the forfeited security deposit, or Non-Commissionable if the Management Company does not receive a commission
5. Click OK or Add Next

After the new income account is created, you then enter a tenant charge and use this new account number. To create a charge:

1. Go to Accounting>Tenant Charges>Tenant Charges
2. Click Add
3. Select a tenant and enter the date, rent income account (usually 4000-4999) and a memo (optional)
4. Click OK

Once the charge is created, you will then enter a credit payment. This uses the tenant security deposit to pay the charge. To create a credit payment:

1. Go to Accounting>Tenant Payments
2. Click Credit (Do not click Add)
3. Select the tenant and enter the date, an amount, a reference number, a receipt number, and a memo (optional).
4. In the Acct to Apply Credit field, enter account 2010 (or the account you created)
5. Check the payment distribution for accuracy to determine that the credit is going to the correct charge(s), then click OK.

Confirmation:
Once you have completed the steps that apply to a particular tenant, return to the “Tenants” window and view the “Lease Info” tab to confirm that the Deposit Amount field is now blank. You can now print a Closing statement for this tenant and confirm the appropriate account balances.