Security deposits in Buildium need to be handled through a specific workflow from move-in to move-out. Shortcuts outside that workflow create accounting errors that show up in the Security Deposit Liability report as mismatches and are difficult to untangle after the fact.

At move-in, the deposit is recorded through the lease creation flow: create lease, then rent, then security deposit, then recurring charges. The deposit records to the escrow account automatically as part of this sequence. If someone records the deposit as a receipt outside the move-in workflow, it may land in the operating account instead of escrow, which creates a liability that isn't being tracked correctly.

Buildium keeps the escrow account separate from the operating trust account. The Security Deposit Liability report is the reconciliation tool for the escrow account. It lists every active tenant with a deposit on file and the amount held. The total of that report should match the escrow bank account balance. Check this monthly. If they don't match, something was either recorded to the wrong account or a deposit was processed outside the system.

At move-out, Buildium supports three deposit outcomes: full refund, itemized deductions with a partial refund, or full withhold. Each requires documented reasons in Buildium. The documentation matters because most states require written itemization to the tenant within a specific window after move-out. If you process it in Buildium correctly the documentation is built into the workflow. If the deposit is handled outside the system, you lose that trail.

Transfers of deposits between ownership groups or during property sales require a specific sequence. The deposit liability needs to follow the tenant, not stay with the old owner. If you're handling a portfolio acquisition or a property transfer in Buildium, verify that all security deposit records transferred correctly and that the escrow account reconciliation still closes after the transfer.

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