Managing Tenant Bonds/Deposits Held in a Separate Trust/Client Account

For our users in different regions, the terminology used for bonds or deposits may vary. In North America, these are commonly referred to as "Security Deposits". To ensure clarity, we will use "Bond" throughout this article. For more information on regional terminology, please visit our Glossary of Regional Terminology.

This article aims to guide you through the process of handling tenant bonds that are kept in a separate Trust Account. We will cover the setup within Re-Leased, the lodgement of bonds, fund disbursement, and the eventual refund process. By adhering to these steps, you can manage these funds with precision and maintain compliance with relevant regulations.

Setting Up and Lodging Bonds in the Trust Account

Initial Setup within Re-Leased:

1. Ensure the dedicated Trust Account is configured in Re-Leased for bond management. See Setting Up a New Client/Trust Account
2. Create an owners ledger under the designated Trust Account for bonds. See Adding an Owner Ledger
3. Create a bond authority contact, representing your separate Trust Account for bonds. See Setting Up a Rental Bond Authority or Interest-Bearing Account Contact

Lodgement Procedure:

1. Navigate to the tenancy, access the Bonds tab, and select +New Bond Invoice.
2. For deposit holding, choose Bond authority; select your Trust Account (set up previously) as the tenancy bond scheme.
3. Fill in the remaining invoice details, save and approve.

Handling Tenant Bond Payments and Disbursements

1. Reconcile the tenant's bond payment against the bond income invoice generated.
2. Process a Bonds Disbursement to payout the funds from your main trust account.
3. Physically transfer bond funds into the dedicated Trust Account for bonds.
4. Match the transfer transaction to the disbursement activity in your main Trust Account.
5. Raise a new income invoice to the bond authority detailing the bond specifics and assign it to the owner ledger for the bond Trust Account.

Refunding Tenant Bonds

Directly from the Bonds Trust Account:

1. From the Bonds tab, Click the Contextual Menu [...] and choose Prepare to Refund.
2. Input the refund amount in the Amount to be Refunded to Tenant box. Tick the Bond Authority has sent funds directly to tenant box.
3. Create an expense invoice on behalf of the tenant, add a description and select the Bonds Chart of Account. Select the Bond ledger initially created.
4. Use a disbursement profile designed for creditor payments to release funds from the Bonds Trust Account.
5. Physically refund the tenant from your bond bank account.

Through the Main Trust Account:

1. From the Bonds tab, Click the Contextual Menu [...] and choose Prepare to Refund.
2. Input the refund amount in the Amount to be Refunded to Tenant box.
3. Create an expense invoice on behalf of the tenant, add a description and select the Bonds Chart of Account. Select the Bond ledger initially created.
4. Use a disbursement profile designed for creditor payments to release funds
5. Physically transfer the funds to the main Trust Account and reconcile the transactions between both trust accounts. 
6. In the main trust account, when funds are reconciled, and Expense Invoice will be automatically created to refund to the tenant. 
7. Disburse funds from the main Trust Account using a Bonds Disbursement Profile.
8. Physically refund the funds back to the tenant from the main Trust Account. 

By following the structured processes and meticulous record-keeping outlined, you can manage tenant bonds with efficiency and assurance. Not only does this fortify your financial records, but it also enhances the trust between all parties involved.