Buildium Training - Ep. 10 Handling Security Deposits

Hello everybody, welcome back to APM Help Academy. Today we’re going to cover handling security deposits in Buildium — a critical part of property management and trust compliance. Even though it seems simple, mistakes here are common, so it’s important to get it right.

Security Deposit Overview

Buildium makes tracking deposits easy:

• Ensures the correct amount of cash is held.
• Helps refund tenants accurately.
• Provides clear trust accounting compliance.

Security deposits can be recorded in:

1. Tenant ledger – standard for most properties.
2. Applicant ledger – if you collect deposits before move-in, the history transfers once the tenant is activated.

Recording Security Deposits

Electronic Payments (EFT):

• Payments go directly into the security deposit bank account if EFT is enabled.
• No manual transfers are needed.

Certified Funds (Cashier’s Check or Money Order):

1. Click Receive Payment on tenant’s ledger.
2. Enter payment amount, check number, and memo.
3. Apply to Security Deposit Liability.
4. Print or email a receipt.
5. Deposit in the correct bank account using Record Deposit.

Tips:

• Always hold security deposits in a separate trust account for clarity and compliance.
• Use the Balance Sheet report to confirm deposits match cash on hand.
• Avoid manually creating bank ledger transactions for security deposits — it can double-count deposits and impact owner distributions.

Transferring Security Deposits

If deposits are recorded in the wrong account:

1. Use Record Other Transaction → Transfer.
2. Select the source account, destination account, and amount.
3. Add a memo with tenant name and date.
4. Save to update your ledger (real-world bank transfer still required for reconciliation).

Tip: Move deposits to the operating account before refunding or paying vendors — keeps things simpler and avoids errors.

Refunding Security Deposits

• Click Issue Refund on tenant’s ledger.
• Select bank account (usually security deposit or rent trust).
• Enter amount and date, add memo, attach invoice if needed.
• EFT refunds are now supported; check printing is also available.
• Refunds are tracked under the Deposits & Prepayments tab.

Withholding Security Deposits

If there are damages or unpaid charges:

1. Enter a Charge for the tenant (e.g., cleaning, repairs).
   • Use appropriate GL account (Cleaning & Maintenance, Repairs, etc.)
   • These charges count as income for the owner, while vendor payments are expenses.
2. Click Withhold Deposit.
3. Select Security Deposit Liability and amount to withhold.
4. Remaining deposit balance is updated automatically.

Reports to Use:

• Balance Sheet – verifies security deposit cash and liability.
• Rent Roll – confirms tenant ledger deposit amounts.
• Security Deposit and Liabilities Report – tracks all activity (new, withheld, refunded).
• APM Daily Audits Report – helps detect discrepancies between liabilities and bank balances.

Best Practices

• Record deposits and refunds from the tenant ledger, not manually in the bank ledger.
• Use separate trust accounts for deposits for clarity.
• Reconcile deposits regularly using Balance Sheet and Rent Roll reports.
• Leverage Buildium’s Security Deposit and Liabilities report for tracking.

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