Overview
If you are ending a lease and plan on keeping the security deposit or any other deposit on a lease, then what you want to do is 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
Step 1 - Post a Charge on the Lease (If there isn't one)
The first step if you are looking to withhold a deposit (keeping the deposit instead of refunding it back to the tenant) is to make sure that there is an open charge on the lease to which the deposit can be applied. This needs to be a revenue charge, such as unpaid rent, maintenance, early termination fee, etc. If there is no open charge, you'll must post a charge to the lease.
For a refresher on posting a charge, read: Post a One-Time Charge on a Lease.
Step 2 - Withhold the Lease Deposit
To withhold a lease deposit from an active lease, click Leasing on the main menu and then click Active Leases.
Find and click on the lease you want to withhold a deposit for.
On the lease, 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, that you want to collect from the lease deposits. 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. What this means is that it will not show up as a deposit held anymore and will instead appear as revenue, so you can then distribute it to your owner.
Now that you've withheld a lease deposit, you can refund what's left of the deposits back to the tenant. Then, you can end the lease when all the financials on the lease have been sorted.
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.
If you are holding some kind of "rent credit" in the deposits as a liability, you can use this to pay any open charges if needed by using the Withhold Deposit option.