Overview
At the end of a lease, you might need to withhold a lease deposit to pay off outstanding lease charges. These could be unpaid charges or new ones from damages or cleaning. Perhaps you collected a last month’s rent deposit and now need to use this to pay off the final rent charge.
When you withhold a lease deposit, this money applies as a credit to the tenant’s lease balance. If there are outstanding charges on the lease, the credit pays off those charges and the deposit becomes revenue. If there is no outstanding charge on the lease, the withheld deposit exists as an unapplied credit until you add a lease charge. It is recommended to first create a lease charge before withholding a deposit.
Note that you can also withhold deposits as part of the Ending a Lease wizard!
The Steps
To withhold a lease deposit from an active lease, click Leases on the main menu, and then click Active Leases.
Find the lease you want to withhold a deposit for and click on it.
The next step is to click the Transactions tab. Before you can withhold a deposit, you'll need to create a lease charge so the deposit can be applied to it. If there are already charges on the lease with a past-due balance, you can skip this step. Otherwise, click the Post Charge button and create a charge for a revenue category, such as Cleaning, Maintenance, or even Lease Termination. You just need to show a reason why you are withholding the deposit.
Next, click on the Deposits tab and then the Withhold Deposit button.
Enter the following information:
Description: enter an optional explanation for the withholding.
Amount to Withhold: enter the amount of the deposit to withhold. If there is more than one lease deposit, you can withhold from multiple deposits, or put $0.00 in the deposits you don't want to withhold.
Due Date: change the date for the withholding if needed.
Add memo: add an optional memo for your reference when reviewing the withholding later.
Add any relevant files and click Save.
Good work! You withheld a lease deposit to pay off outstanding charges, converting the deposit money from a liability on your balance sheet to income shown on your profit and loss report.
Things to Consider
If you were holding the deposit in a separate bank account, such as an Escrow account, you'll need to record what happens to the deposit in real life. So if you withheld the deposit and applied it to a revenue account, such as rent, then you'll need to do a bank transfer from the escrow to your operating account. You need to mimic exactly what happens in real life with what happens in DoorLoop.