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Transferring Security Deposits Between Tenants (Accrual Accounting)

Andy Goh avatar
Written by Andy Goh
Updated this week

Transferring a security deposit between tenants can be necessary for various reasons, such as when the primary tenant moves out, but the security deposit remains with the lease.

Changing Primary Tenant:

  1. Navigate to the specific Unit under Properties page

  2. Switch to the Lease tab, and then the Details sub-tab

  3. Expand the Lease Information, and select the Primary Tenant field to edit

Steps to Transfer Security Deposit:

Original Tenant (who initially paid the deposit):

  1. Create a Security Deposit Application:

    1. Navigate to the Transactions tab for the tenant.

    2. Click on the New button, and select Security Deposit Application

  2. Generate an Invoice:

    1. Go back to the Lease page to create a New Invoice

    2. Choose an appropriate account, and set the item type to any item type.

  3. Apply the Security Deposit Application to this Invoice:

    1. Go back to the Transactions tab, and edit the Security Deposit Application to the newly created Invoice

      • This removes the security deposit liability from the original tenant's account.

      • The security deposit amount moves into the selected pass-thru account.

New Tenant (receiving the deposit):

  1. Create an Invoice with the Security Deposit item type.

  2. Create a Credit Note:

    1. Navigate to the Transactions tab, click New, and select Credit Note

    2. Note: Use the same account item as the original tenant's invoice.

  3. Apply the Credit Note to the Invoice:

    • This will create a security deposit balance for the new tenant.

    • The pass-thru account will return to zero.

Important Note:

  • The bank account will still reflect the original security deposit payment from the initial tenant.

  • Transferring the security deposit between tenants does not affect the bank account balance.

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