How to set up owner-held security deposits

If you allow owner-held security deposits, you’ll need to track them for record-keeping purposes. In this article, you’ll learn how to set up owner-held security deposit accounts. 

• Set up owner-held security deposit accounts
• Add a new bank account
• Add an asset account
• Record beginning cash balance

• Track owner-held security deposits for each lease

Set up owner-held security deposit accounts

The first step in recording a deposit held by a rental owner is to create a bank account called Owner-Held Security Deposits and an asset account called Deposit Transfer on your chart of accounts. These are placeholder accounts to help you track where the deposit is in the real world. 

1. The bank account represents the money the owner is holding. 
2. The asset account is a simple short-term holding account to complete the transfer.

Add a new bank account

This is a placeholder bank account that shows the tenant security deposit money is held somewhere, typically by the owner in their own bank account.

1. Select Accounting. 
2. From the drop-down, choose Banking.
3. Select Add bank account.
4. Name the account “Owner-Held Security Deposits”.

Note: This isn’t a real account. This is a placeholder, so don’t worry about adding the routing number, or account number. 

1. Add “to track security deposits held by rental owners” in the Account Notes section. 
2. Select Create Account.  

Add an asset account

This is a short-term holding account that’s necessary to complete a transfer. 

1. Select Accounting. 
2. From the drop-down, choose Chart of accounts.
3. Select Add account.
4. Name the account “Deposit Transfer”. 
5. Choose Current asset as the Type.
6. Select Save account. 

Record beginning cash balance 

You need to record deposits already held by rental owners. When you add new properties in the future, you’ll have to record their owner-held security deposit balance too.

• Select Accounting.
• From the drop-down, choose Banking. 
• Select the “...” menu next to your Owner-Held Security Deposits bank account. 
• Choose Record deposit.
• Select Add another under “Other deposit items”.

• In the Property or Company column, choose the property associated with the owner-held security deposit. 
• Select “Opening Balance Equity” under the Account column.

Note: This “Opening Balance Equity” is the offsetting account. This lets Buildium know that part of this opening cash balance is the tenant deposit you’re about to make. (You’ll learn about tracking owner-held security deposits in the next section.)

• Enter the total amount that the rental owner is currently holding for each property.

Note: Save time by including all the security deposits your property owners hold on this screen.

• Select Save.

Track owner-held security deposits for each lease

This step is necessary to keep track of which funds belong to which tenants. You’re giving “credit” to the tenant for the security deposit money they already paid to you and/or the rental owner.

1. Select Rentals. 
2. From the drop-down, choose Rent roll. 
3. Select a lease that has an owner-held security deposit. 
4. Select the Financials tab, then the “...” menu.
5. Select “Issue credit.”
6. Enter the amount of the security deposit.
7. Select “Issue credits for payments previously deposited” under Credit Action.
8. From the drop-down, choose Opening Balance Equity. 
9. Make sure you’re applying the security deposit amount to the Security Deposit Liability account.
10. Select Save credit.
11. Repeat steps 1-10 for each security deposit already held by a rental owner. 

Looking for more information? 

• Check out Move-ins and Move-outs for Rentals in Buildium Academy.
• Learn how to receive security deposits.
• Learn how to refund security deposits.