Overview
For a property manager, properties can come and go. Whether it’s because the property you managed was sold or if the owners decide to go with someone else, you need a way of accounting for the deposits you are holding that is going to be transferred to the new property management company or owner.
The Steps
In the main menu, click on Rentals and then click on Properties.
Find the Property you will no longer be managing. You can either use the various filters or use the Search units search bar.
Click the property and you’ll now be on the overview page for it.
On the overview page, click the Leases tab to view all the active leases currently on the property.
Click the first Lease and then click the Deposits tab.
Press the Refund Deposit button and issue a refund to your tenant using the account where the deposits are being held. You can set the Payment Method to Other since you aren't actually giving the refund to the tenant. In the Description and Memo field, you can label this Transfer to New PM Company.
Click Save to finish.
Now we need to create a new bank deposit to offset the refund we issued to the tenant since the tenant isn't actually getting that deposit back. It's being transferred to the new property management company.
Click the green + Create New button at the top left-hand corner.
Click Bank Deposit under the Other Transaction category.
On the new Bank Deposit popup, for Deposit Account, select where you are currently holding deposits, either your Escrow account or your Operating account for example.
You’ll now see an Other Deposits section appear. You want to fill in these fields:
Property: Select the property that originally had the deposit.
Account: Select Security Deposit Liability here.
Description: You can label this Transfer to New PM Company.
Amount: Enter the amount of the original deposit
You can disregard the other fields as they won’t be needed.
Memo: You can label this Transfer to New PM Company.
Click Save to complete this step.
Next, create a new Vendor. You can do this easily by clicking the green + Create New button at the top left-hand corner and then selecting Vendors under the People category. For the Vendor Name, use the name of the new property management company.
The next step is to create a new check for the new property management company. You can do this easily by clicking the green + Create New button at the top left-hand corner and then select Check under Other Transactions.
A New Expense popup will appear. You will need to fill out these fields:
Select Payee: Select the new property management company.
Pay From Account: Select the bank account the deposit is being held in.
Payment Method: Select the means you are using to pay the funds.
Category: Use security deposit > liability.
Property: Choose the property associated with that deposit.
Memo: You can enter this as Transfer to New PM Company.
Amount: Enter the amount of the transfer.
Click Save to complete the process.
When you’re done, the total liability for the property should now be reduced by the amount transferred to the new property management company. You would repeat the process several times if there are multiple leases on this property with deposits that you need to transfer. Eventually, the balance should become $0. You can confirm this by checking your Balance Sheet.
When you reconcile your bank account, you’ll need to include both the refund and other transactions in your bank reconciliation. When the reconciliation is complete, leave a note in case of any future audits.