🔍 What’s a Security Deposit
A security deposit is collected at the start of a tenancy to cover unpaid rent or damages.
Rules vary by province — including maximum amounts, whether interest must be paid, and how funds must be held.
👉 See: Security Deposits and Last Month’s Rent Rules by Province in Canada
Creating Refundable Deposits
When a new lease is added there is the option to add the deposit required for the lease. A default amount will display based on local regulation, this can be adjusted as required.
This will automatically create a Security Deposit invoice for the tenant(s) in the Receivables page.
You can then complete the following tasks once the tenant(s) have made payment:
*if you are using Autopay and the deposit has already been paid by the tenant before the 1st of the month be sure to post the security deposit/LMR as paid or toggle off the Collect with Autopay as Autopay will collect all outstanding invoices.
You can also add Other Refundable Deposits for Key and Pet deposits if allowed in your province. If these are added separate invoices will be created to track each one independently.
🏠 Who Holds the Funds
Option 1 — Owner Held
Choose Held by Owner when the owner will receive and hold the security deposit. This could be if the tenant directly pays the owner the deposit or if after collecting the deposit it is paid out to the owner.
If the tenant directly pays the deposit to the owner:
Use a general ledger account to record owner held deposit for the deposit
Do not deposit the funds into your operating or trust account.
This selection ensures your records reflect that the PM never took custody.
If the tenant pays the security deposit to your company then it is sent to the owner during an owner payout:
Use the operating bank account for the deposit. All funds deposited to this account are included in the income payout
Option 2 — Property Manager Held
If the property manager collects and holds the deposit:
Do not select Held by Owner
Use the trust bank general ledger account for your security deposits
💰 Collecting Deposits
When collecting a deposit:
Go to Accounting>Receivables and locate the invoice for the deposit.
Select the security deposit invoice that is being paid and select either Post if recording the payment or Process Deposit if using Autopay to collect.
Ensure to change the bank account, date and payment method based on the actual payment received.
Trust account if required by your province.
Operating account if you’re holding and paying out to the owner.
The funds should be recorded as going to the account that it was first deposited to. For example if the deposit was made to the operating account you would post it as such. Then you can create a journal entry if needed after physically moving the funds from the Operating account to the Security Trust account.
🔄 Editing or Adding Deposits
Add an additional deposit:
You can add another deposit if your lease or provincial rules allow it.Go to the lease page
Select the Financials tab
Select Manage Deposits
Select the Add Refundable Deposit button and then select the deposit type
🧾 Returning Security Deposits at Move-Out
When the tenancy ends the security deposit will need to be issued to either refund the tenant, retain funds to pay for damages or for rent not collected. To issue the deposit
Navigate to the unit where the lease is or has ended. If the lease is still active it will display just below the unit card. If the lease has already ended, click on Lease History and then click on the lease
Click on Issue Deposit
Enter the date you need to return or deposit for. The interest will calculate up to the date entered based on provincial minimum requirements
Select retained for damages and enter an amount for any funds that are going to be kept to repair damages to the unit
Select retained for rent collection and enter an amount for any funds that are going to be kept to repay funds owed on the unit.
Click Next: Confirm Settlement to review. Any balance that has not been retained will be refunded to the tenant
Enter comments to record the details for the retained amounts. These comments will also be displayed on the Security Deposit Statement PDF. The statement is save under the lease's documents tab and available to share with the tenant(s)
Click Issue Deposit and the necessary accounting entries will be created and the deposit on the lease record will be updated with its new state
View and send the Security Deposit statement to the tenant from the lease's document tab
Refunded deposits will create a payable entry to refund the tenant
Retained for damages will create a damages revenue entry and move funds from the security deposit trust account to the operating bank account
Retained for rent collection will create a credit receivable entry and move funds from the security deposit trust account to the operating bank account.
🔄 If You Accidentally Issued a Deposit
If you’ve accidentally clicked Issue Deposit, don’t worry — you can undo it.
Once a deposit is issued, the Issue Deposit button will disappear, but you can restore it by following these steps:
Go to the Lease and open the Financial page.
Click Manage Deposits — this will take you to the main deposit page.
You’ll see that the Returned box is selected. Unselect that box.
Click Next to move to the next page.
Delete the interest accrued by clicking the trash can (🗑️) icon.
Click Update Refundable Deposits to save your changes.
Go to your Payables page and delete the bill that was created when the deposit was originally issued.
After these steps, the Issue Deposit button will reappear on the lease, and your deposit records will return to their previous state.
🗓️Editing a Security Deposit Collection Date
If you need to update the collection date of a security deposit, you can do this directly from the lease page. To edit the deposit collection date:
Go to the Lease page for the tenant.
Select the Financial tab.
Click Manage Deposits.
The first page will show you if the deposit has been collected. On the second page, you can edit or add the collection date.
Select the pencil icon beside the collection date.
Choose the correct date from the calendar picker.
Click the floppy disc icon to save the new date.
Once saved, select Update Refundable Deposit to apply the change.
Your updated collection date will now appear in the lease’s financial details.