See Also
Tenant Move Out
Release Tenant Deposits
SD Interest
SD Held by Owner
The instructions below may seem long and complicated. But they aren't as bad as they seem at first glance. Read the Overview, then determine which of the Situations applies to your company. From that point on, you only need to follow the instructions for your situation. They lead you step-by-step through the refund process, regardless of whether the owner, the tenant, or both are getting money back from the security deposit.
Click to get our PDF How to document #205 on security deposit refund. Also How to document #207 on partial release of deposit.
Overview
Disbursing Security Deposit Money
If you maintain a separate bank account for security deposits there are two steps involved in returning security deposits.
The first step involves doing the refund.
The second involves moving the money from the security deposit bank account to the checking bank account.
Money will need to be moved from the security deposit bank to the owner bank when
the refund checks are written from the owner bank account
part of the refund is used to pay off outstanding charges
There are two ways to transfer money from one bank account to another.
Write a check from one bank account and deposit that check in the other bank account - the situations below explain the Transfer Check function to do this.
Call the bank and have them transfer the money (see Procedure 1 below to post this).
In both cases the end result is the same - you decrease the funds one bank account and increase the funds in the other. Record the transactions in PROMAS the way you physically move the money.
The system keeps track of the ledger that the security deposit money belongs to. This information is available in General Ledger History for each owner and on the Bank Balance Breakdown report. When you post the bank to bank transfer you must enter a ledger for each security deposit you are moving. If you are moving several deposits, each must have its own line item.
NOTE
In any of the following situations, if you do not know at the time of processing the refund, what the specific charges will be, use the [Withold] field in <<AR, Tenant Moveout>> to hold back money from the tenant’s refund check and keep it from going to the owner. The money will be in tenant Open Credits. When the bills come in, you can charge the tenant and have the money go to the owner at that time, or use the <<AP, Refund Check>> function to write the checks to the vendors directly from the tenant’s Open Credits.
If the money is going to the owner but not for any designated purpose, create an [Account Code] for SD Released to Owner or SD Forfeit and make the [Account Type] Taxable Income. Then create a [Charge Code] that points to that account code. Use that [Charge Code] when charging the tenant.
Situations
Situation A.
Security deposit money is in a separate bank account
All of the security deposit is being returned to the tenant
The refund check is written from the security deposit bank account
The refund and transfer transactions will not be reflected on the owner statement
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit should come up and show as released. Verify the charges and other information on the screen.
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4.
|
You will be transferred to the <<AP, Refund Check>> function
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5.
|
<Post> the refund check
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Security Deposit Refund
Situation B.
•
|
Security deposit money is in a separate bank account
|
•
|
Some of the security deposit may be returned to the tenant, some (or all) is going to the owner - see NOTE above Situation A
|
•
|
The refund check is written from the security deposit bank account
|
•
|
The refund and transfer transactions will not be reflected on the owner statement
|
Release Security Deposit and use to pay off charges
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit will come up and show as released. Verify the charges and other information on the screen. The tenant must be charged for any money going to the owner or to the management group owner - see NOTE above Situation A
|
3.
|
If those charges have been posted previously they will display on the screen. If they have not been posted, use the speedbutton at the bottom of the screen to activate the <<AR, Charge Tenant>> function and post the charges. After posting you will be returned to the <<Tenant Move Out>> function.
|
4.
|
Verify the charges and other information on the screen.
|
Write the refund check to tenant (if appropriate)
1.
|
The charges will be paid off and you will be transferred to the <<AP, Refund Check>> function
|
2.
|
Post the refund check from the escrow bank account
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Move the money from security deposit bank to owner bank
1.
|
The money that goes to the owner must be moved from the security deposit bank account to the checking bank account.
|
2.
|
Go to <<AP, Transfer Check>>.
|
3.
|
The bank account is the security deposit bank account.
|
4.
|
Mark [Handwritten] if you don’t want PROMAS to print the check and enter a [Check Number].
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5.
|
Double click in the [Reference] field to enter today’s date or type in a Reference memo.
|
6.
|
[Write Check From Bank] - choose the security deposit bank
|
7.
|
[Deposit into Bank] - choose the checking bank account
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8.
|
The [Payee] is the management group
|
9.
|
The [Ledger] is the owner of the unit (owner or property)
|
10.
|
The [Bill code] is Security Deposit Transfer (see Procedure 3 below to create the Bill Code and Account Code).
|
11.
|
The [Amount] is the amount of money being moved from the security deposit bank account to the owner bank account.
|
12.
|
<Post> the transaction.
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14.
|
The money will be taken from the escrow bank account and put in Deposit Receipts for the checking bank account. All you have to do is put it on a deposit slip and post, then take it to the bank.
|
Security Deposit Refund
Situation C.
•
|
Security deposit money is in a separate bank account
|
•
|
Some of the security deposit may be returned to the tenant, some (or all) is going to the owner owner - see NOTE above Situation A
|
•
|
The refund check is written from the owner bank account
|
•
|
The refund and transfer transactions will not be reflected on the owner statement
|
Release deposit and use to pay off charges
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit should come up and show as released. Verify the charges and other information on the screen. The tenant must be charged for any money going to the owner or management group owner - see NOTE above Situation A.
|
3.
|
If those charges have been posted they will display on the screen. If they have not been posted previously, use the speedbutton at the bottom of the screen to activate the <<AR, Charge Tenant>> function and post the charges. After posting you will be returned to the <<Tenant Move Out>> function.
|
4.
|
Verify the charges and other information on the screen.
|
Print the refund check (if appropriate)
1.
|
The charges will be paid off and you will be transferred to the <<AP, Refund Check>> function
|
2.
|
Post the refund check from the owner bank account
|
Move deposit money from security deposit bank to checking bank
1.
|
The money that goes to the owner must be moved from the security deposit bank account to the checking bank account.
|
2.
|
Go to <<AP, Transfer Check>>.
|
3.
|
The bank account is the security deposit bank account.
|
4.
|
Mark [Handwritten] if you don’t want PROMAS to print the check and enter a [Check Number].
|
5.
|
Double click in the [Reference] field to enter today’s date or type in a Reference memo.
|
6.
|
[Write Check From Bank] - choose the security deposit bank
|
7.
|
[Deposit into Bank] - choose the checking bank account
|
8.
|
The [Payee] is the management group
|
9.
|
The [Ledger] is the owner of the unit (owner or property)
|
10.
|
The [Bill code] is Security Deposit Transfer (see Procedure 3 below to create the Bill Code and Account Code).
|
11.
|
The [Amount] is the amount of money being moved from the security deposit bank account to the owner bank account.
|
12.
|
<Post> the transaction.
|
14.
|
The money will be taken from the escrow bank account and put in Deposit Receipts for the checking bank account. All you have to do is put it on a deposit slip and post, then take it to the bank.
|
Security Deposit Refund
Situation D.
•
|
Security deposit money is in the same bank account as the owner money
|
•
|
Some of the security deposit may be returned to the tenant, some (or all) is going to the owner - see NOTE above Situation A
|
•
|
The refund check is written from the owner bank account
|
•
|
The refund transactions will be reflected on the owner statement
|
Release deposit and use to pay off charges
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit will come up and show as released. Verify the charges and other information on the screen. The tenant must be charged for any money going to the owner or management group owner - see NOTE above Situation A
|
3.
|
If those charges have been posted they will display on the screen. If they have not been posted previously, use the speedbutton at the bottom of the screen to activate the <<AR, Charge Tenant>> function and post the charges.
|
4.
|
The money going to the tenant must be charged as Security Deposit Refund. (See Procedure 4 below to create the charge code). After posting you will be returned to the Tenant Move Out function.
|
5.
|
Click in the checkbox labeled Write Refund Check so that it is not checked.
|
6.
|
Verify the charges and other information on the screen.
|
7.
|
<Post> the transaction.
|
Write refund check to tenant (if appropriate)
1.
|
Use the <<AP, Single Check>> function to write the check to the tenant and any checks to vendors.
|
2.
|
[Bill To] is the owner or unit
|
3.
|
[Bill Code] is Security Deposit Refund for check to tenant. For checks to vendors, use an appropriate bill code.
|
Security Deposit Refund
Situation E.
•
|
Security deposit money is in a separate bank account
|
•
|
Some of the security deposit may be returned to the tenant, some (or all) is going to the owner - see NOTE above Situation A
|
•
|
The refund check is written from the owner bank account
|
•
|
The refund and transfer transactions will be reflected on the owner statement
|
Release deposit and use to pay off charges
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit should come up and show as released. Verify the charges and other information on the screen.
|
3.
|
The tenant must be charged for any money going to the owner or management group - see NOTE above Situation A. If those charges have been posted they will display on the screen. If they have not been posted previously, use the speedbutton at the bottom of the screen to activate the <<AR, Charge Tenant>> function and post the charges.
|
4.
|
The money going to the tenant must be charged as Security Deposit Refund. (See Procedure 4 below to create the charge code). After posting you will be returned to the Tenant Move Out function.
|
5.
|
Click in the checkbox labeled [Write Refund Check] so that it is not checked.
|
6.
|
Verify the charges and other information on the screen.
|
Write refund check to tenant
1.
|
Use the <<AP, Single Check>> function to write the check to the tenant and any checks to vendors.
|
2.
|
[Bill To] is the owner or unit
|
3.
|
[Bill Code] is Security Deposit Refund for check to tenant. For checks to vendors, use an appropriate bill code.
|
4.
|
<Post> the refund check.
|
Move money from security deposit bank to checking bank
1.
|
The money that goes to the owner must be moved from the security deposit bank account to the checking bank account.
|
2.
|
Go to <<AP, Transfer Check>>.
|
3.
|
The bank account is the security deposit bank account.
|
4.
|
Mark [Handwritten] if you don’t want PROMAS to print the check and enter a [Check Number].
|
5.
|
Double click in the [Reference] field to enter today’s date or type in a Reference memo.
|
6.
|
[Write Check From Bank] - choose the security deposit bank
|
7.
|
[Deposit into Bank] - choose the checking bank account
|
8.
|
The [Payee] is the management group
|
9.
|
The [Ledger] is the owner of the unit (owner or property)
|
10.
|
The [Bill code] is Security Deposit Transfer (see Procedure 2 below to create the Bill Code and Account Code).
|
11.
|
The [Amount] is the amount of money being moved from the security deposit bank account to the owner bank account.
|
12.
|
<Post> the transaction.
|
14.
|
The money will be taken from the escrow bank account and put in Deposit Receipts for the checking bank account. All you have to do is put it on a deposit slip and post, then take it to the bank.
|
Security Deposit Refund
Situation F.
•
|
Security deposit money is the same bank as the owner’s money
|
•
|
All of the security deposit is being returned to the tenant
|
•
|
The refund check is written from the owner bank account
|
•
|
The refund transactions will not be reflected on the owner statement
|
Release deposit
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit will come up and show as released. Verify the charges and other information on the screen.
|
3.
|
<Post> the transaction
|
Write the refund check to tenant
1.
|
You will be transferred to the <<AP, Refund Check>> function
|
2.
|
<Post> the refund check
|
Security Deposit Refund
Situation G.
•
|
Security deposit money is in the same bank account as the owner money
|
•
|
Some of the security deposit may be returned to the tenant, some (or all) is going to the owner - see NOTE above Situation A
|
•
|
The refund check is written from the owner bank account
|
•
|
The refund transactions will not be reflected on the owner statement
|
Release security deposit and use to pay off charges
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit will come up and show as released. Verify the charges and other information on the screen.
|
3.
|
The tenant must be charged for any money going to the owner or management group - see NOTE above Situation A. If those charges have been posted they will display on the screen. If they have not been posted previously, use the speedbutton at the bottom of the screen to activate the <<AR, Charge Tenant>> function and post the charges. After posting you will be returned to the Tenant Move Out function.
|
4.
|
Verify the charges and other information on the screen.
|
5.
|
<Post> the transaction.
|
Write refund check to tenant (if appropriate)
1.
|
The charges will be paid off and you will be transferred to the <<AP, Refund Check>> function to post the refund check.
|
2.
|
<Post> the refund check.
|
Security Deposit Refund
Situation I.
•
|
Security deposit money is in a separate bank account
|
•
|
Some of the deposit may be returned to the tenant, some (or all) is going to the owner or management
|
•
|
The refund check is written from the owner bank account
|
•
|
The refund transactions will show on the owner statement, the transfer transactions will not be reflected on the owner statement
|
Release deposit and use to pay off charges
1.
|
Go to <<AR, Tenant Move Out>>
|
2.
|
Select the [Tenant]. The security deposit should come up and show as released
|
3.
|
Verify the charges and other information on the screen
|
4.
|
The tenant must be charged for any money going to the owner or management group. If those charges have been posted they will display on the screen. If they have not been posted previously, use the speedbutton at the bottom of the screen to activate the <<AR, Charge Tenant>> function and post the charges. After posting you will be returned to the <<Tenant Move Out>> function.
|
5.
|
The money going to the tenant must be charged as Security Deposit Refund. (See Procedure 4 below to create the charge code). After posting you will be returned to the Tenant Move Out function.
|
6.
|
Click in the checkbox labeled Write Refund Check so that it is not checked.
|
7.
|
Post the transaction. The charges will be paid off
|
Write refund check to tenant (if appropriate)
1.
|
Use the <<AP, Single Check>> function to write the check to the tenant and any checks to vendors.
|
2.
|
[Bill To] is the owner or unit
|
3.
|
[Bill Code] is Security Deposit Refund for check to the tenant.
|
Move security deposit from escrow bank to checking bank
1.
|
The money that goes to the owner must be moved from the security deposit bank account to the checking bank account.
|
2.
|
Go to <<AP, Transfer Check>>.
|
3.
|
The bank account is the security deposit bank account.
|
4.
|
Mark [Handwritten] if you don’t want PROMAS to print the check and enter a [Check Number].
|
5.
|
Double click in the [Reference] field to enter today’s date or type in a Reference memo.
|
6.
|
[Write Check From Bank] - choose the security deposit bank
|
7.
|
[Deposit into Bank] - choose the checking bank account
|
8.
|
The [Payee] is the management group
|
9.
|
The [Ledger] is the owner of the unit (owner or property)
|
10.
|
The [Bill code] is Security Deposit Transfer (see Procedure 3 below to create the Bill Code and Account Code).
|
11.
|
The [Amount] is the amount of money being moved from the security deposit bank account to the owner bank account.
|
12.
|
<Post> the transaction.
|
14.
|
The money will be taken from the escrow bank account and put in Deposit Receipts for the checking bank account. All you have to do is put it on a deposit slip and post, then take it to the bank.
|
Procedures
Procedure 1. Bank to Bank Transfer
Use this procedure to transfer security deposit money without writing a check.
1.
|
Call the bank and have the money transferred between the two accounts.
|
2.
|
Go to <<GL, Bank to Bank Transfer>>
|
3.
|
Select the [Bank] account the money is coming from
|
4.
|
Select the [Bank] account the money is going to
|
5.
|
[Ledger] is the owner or unit
|
6.
|
Enter the amount of the transfer
|
Procedure 2. Bill Code and Account Code - Equity
Use this procedure to create a bill code and account code that will show on the owner’s statement.
1.
|
Go to <<Setup, Bill Code>>.
|
3.
|
Enter an ID of SD Trans SD Xfer and a long description of Security Deposit Transfer.
|
4.
|
Click on the folder next to Account to create a new account code.
|
5.
|
Enter an ID of SD Trans or SD Xfer and a long description of Security Deposit Transfer.
|
6.
|
Enter a [Ledger code] (9999 if you do not use ledger codes).
|
7.
|
For the [Account Type] choose Equity.
|
8.
|
<Save> the account code.
|
Procedure 3. Bill Code and Account Code - Current Liabilities
Use this procedure to create a bill code and account code that will not show on the owner’s statement.
1.
|
Go to <<Setup, Bill Code>>.
|
3.
|
Enter an ID of SD Trans or SD Xfer and a long description of Security Deposit Transfer.
|
4.
|
Click on the folder next to Account to create a new account code.
|
5.
|
Enter an ID of SD Trans or SD Xfer and a long description of Security Deposit Transfer.
|
6.
|
Enter a [Ledger code] (9999 if you do not use ledger codes).
|
7.
|
For the [Account Type] choose Current Liabilities.
|
8.
|
<Save> the account code.
|
Procedure 4. Bill Code, Charge Code and Account Code - Equity
Use this procedure to create a bill code, a charge code and account code for the refund check to the tenant that will show on the owner’s statement.
1.
|
Go to <<Setup, Bill Code>>.
|
3.
|
Enter an ID of SD Refund and a long description of Security Deposit Refund.
|
4.
|
Click on the folder next to Account to create a new account code.
|
5.
|
Enter an ID of SD Refund and a long description of Security Deposit Refund.
|
6.
|
Enter a [Ledger code] (9999 if you do not use ledger codes).
|
7.
|
For the [Account Type] choose Equity.
|
8.
|
<Save> the account code.
|
9.
|
Click on the folder next to [Charge Code] to create a new charge code.
|
10.
|
Enter an ID of SD Refund and a long description of Security Deposit Refund.
|
11.
|
<Save> the charge code.
|
12.
|
<Save> the bill code.
|
Security Deposit Refund - Interest
Situation Z.
•
|
Security deposit money is in a separate bank account
|
•
|
Money must be moved from a security deposit bank account
|
When a security deposit is refunded that includes interest, the interest that is credited to the tenant comes from the cash bank account. So only the security deposit amount needs to be moved from escrow.
Calculate Interest
1.
|
Create a Rate Table through <<Setup, Rate Tables>>. Be sure to mark the checkbox for "Management Group Pays the Interest".
|
2.
|
Assign that Rate Table to the Tenant in his profile.
|
3.
|
In <<Setup, Charge Codes>>, edit the security deposit charge code and mark the checkbox for Pay Interest on Deposits.
|
4.
|
When you release the deposit or use the Move Out function, the system will calculate the interest.
|
Move money from security deposit bank to checking bank
1.
|
Go to <<AP, Transfer Check>>.
|
2.
|
Mark [Handwritten] if you don't want PROMAS to print the check. Enter a [Check Number].
|
3.
|
Double click in the [Reference] field to enter today's date or type in a Reference memo.
|
4.
|
[Write Check From Bank] - choose the security deposit bank
|
5.
|
[Deposit into Bank] - choose the checking bank account
|
6.
|
The [Ledger] is the owner
|
7.
|
The [Bill Code] is Security Deposit Transfer (see Procedure 2 or 3 to create the Bill Code and Account Code).
|
8.
|
The [Amount] is the amount of the security deposit only – not the interest.
|
9.
|
<Post> the transaction.
|
11.
|
The money will be taken from the escrow bank account and put in Deposit Receipts for the checking bank account. All you have to do is put it on a deposit slip and post, then take it to the bank.
|
Security Deposit Refund - Interest
Situation Y.
• Security deposit money is in a separate bank account
• Refund check is written from security deposit bank
This situation only comes into play if the refund check is written from the escrow bank account. The first steps of any of the preceeding situations can be followed through the point where the refund check is written. The interest money that is part of the refund check is considered to be in the checking bank account and must be moved to escrow.
Calculate Interest
1.
|
Create a Rate Table through <<Setup, Rate Tables>>. Be sure to mark the checkbox for "Management Group Pays the Interest".
|
2.
|
Assign that Rate Table to the Tenant in his profile.
|
3.
|
In <<Setup, Charge Codes>>, edit the security deposit charge code and mark the checkbox for Pay Interest on Deposits.
|
4.
|
When you release the deposit or use the Move Out function, the system will calculate the interest.
|
After writing the refund check
1.
|
Go to <<GL, Bank to Bank Transfer>>.
|
2.
|
From Bank is Checking. To Bank is Escrow. Ledger is the Owner or Unit. Amount is the amount of the interest.
|
|