This topic covers how to move a security deposit or other deposit when you’ll no longer be managing a property. This topic will cover the following scenario:
You’ve worked with the rental owner, Bailey Jill, for years managing her property, 100 Main Street. Times are changing, though, and Bailey has decided to use a different property management company, Boston Proper Management. You need to transfer the $1000 security deposit that belongs to 100 Main Street’s tenants, Tim and Tara Tenant, to Boston Proper Management.
On the lease at 100 Main Street
- Issue a $1000 refund to Tim and Tara using security deposit liability. In the refund, write a memo that says “transfer to Boston Proper Management.” see “Tenant refunds”
- Make a mental note of the bank account that was used in the refund. (There’s no formal step in Buildium for this. A scrap bit of paper is perfect.
- In that bank account from the previous step, add an “other transaction” that increases the bank account balance by $1000. Use security deposit liability as the offsetting account. Enter a memo of “transfer to Boston Proper Management.” see “Other Bank Transactions”
The refund from 100 Main Street and the transaction from this step will balance out in the bank account. That is, the total amount of money in the bank account before you began this exercise will be unchanged. If you have $1000 in the bank before, you should have $1000 in the bank after.
- Add a vendor called Boston Proper Management. see “Vendors”
- Write a check to Boston Proper Management for $1000. Use security deposit liability as the offsetting account. Enter a memo of “transfer to Boston Proper Management.”
When you’re done, the total liability on 100 Main Street should be at $0. To confirm, check a balance sheet. see “Balance sheet report”
When you reconcile your bank account, you’ll need to include both the refund and other transaction in your bank reconciliation. When the reconciliation is complete, leave a note in case of any future audits. see “Bank reconciliation”
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