🔍 What’s a Security Deposit / Last Month’s Rent
A security deposit (and, in some provinces, last month’s rent) 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
💰 Collecting Deposits
When collecting a deposit or last month’s rent:
Record the deposit amount on the lease.
This ensures it’s tracked correctly in Propra and tied to the tenant’s account.
→ Recording the collection of a security deposit
Deposit the funds into the correct bank account:
Trust account if required by your province.
Operating account if you’re holding and paying out to the owner.
🏠 Who Holds the Funds
Option 1 — Owner Held
Choose Held by Owner when the owner received and holds the funds directly from the tenant.
Example: The tenant pays the owner directly.
Do not deposit the funds into your operating or trust account.
This selection ensures your records reflect that the PM never took custody.
If an invoice or payment entry was created automatically during lease setup:
You can delete the entry, or
Create a “fake bank account” in Propra, record the payment there, and deposit to that fake account. (this would be in your chart of accounts)
This keeps your reporting clean without impacting real bank balances.
Option 2 — Property Manager Held
If the PM collects the deposit or last month’s rent, record it as usual and deposit into your designated bank.
If the PM later pays out the funds to the owner:
Deposit the collected funds into the operating (or trust) account from the security deposit account.
Include the amount in the owner payout so it’s reflected in accounting and reporting.
💵 Tenant → Owner vs Tenant → PM → Owner
Scenario | What to do in Propra |
Tenant pays Owner directly | Select Held by Owner. Do not deposit funds. Delete or move any auto-created entries to a fake bank if needed. |
Tenant pays PM, then PM sends to Owner | Record collection, deposit to the correct bank, and include in the next owner payout. |
🔄 Editing or Adding Deposits
Add an additional deposit:
You can add another deposit if your lease or provincial rules allow it.
→ Can I add an additional security deposit?Edit a past or terminated lease:
Use the dedicated workflow to update the deposit record.
→ How to edit a security deposit on a past or terminated lease
🧾 Returning Deposits at Move-Out
When the tenancy ends:
Open the lease and select Issue Deposit or Return Deposit.
Enter:
Return amount
Any funds retained for damages or unpaid rent
Return date (for interest calculation)
Propra generates the accounting entries and a Security Deposit Statement PDF.
→ Returning security deposits
🗓 Handling Last Month’s Rent
When the tenant’s payment represents last month’s rent, you’ll still use the Issue Deposit workflow in Propra to process it correctly.
Here’s how:
Go to the tenant’s lease and select Issue Deposit.
Enter the total amount of the last month’s rent as the deposit amount to be issued.
In the “Retained for Rent Collection” field, enter the same amount that will be applied toward the tenant’s final month of rent.
This records that the funds were not returned to the tenant but used to cover rent as agreed.
Propra automatically updates the accounting entries — moving the funds from the deposit or trust account to the rent income category.
This ensures your records clearly show that:
The tenant’s deposit was used for rent, not damages.
The owner’s payout and accounting balances remain accurate.
💡 Tip: In Ontario and other provinces that allow last month’s rent, interest may still need to be calculated up to the date it’s applied. Use the same return date field to ensure interest is captured before it’s applied to rent.
✅ Quick Checklist for PMs
Confirm provincial deposit rules.
Identify who actually holds the money.
Record collection correctly in Propra.
Deposit into the right account (if PM-held).
Adjust or delete entries if owner-held.
Follow the Return Deposit workflow at lease end.
🔄 If You Accidentally Issued a DepositIf 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.
Once this correction is complete:
7. 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.