Landlord Developer Security Deposit Accounting

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Landlord Developer Security Deposit Accounting
 

As you may know, in many cases there are distinct differences between residential and commercial security deposits. Much of this has to do with the lease, but commercial security deposits generally do not accrue interest, while residential deposits generally do.

Balance sheet treatment of this money is difficult because it does not belong to you until it is potentially earned. This would happen at the end of lease after the tenant vacates. Whatever needs to be repaired or replaced in order to get the unit back into the shape it was in at the beginning of the lease, is the purpose of a security deposit. Many in our industry make the mistake of thinking that this money is to secure the payment and performance of rent.

Another common mistake made is that the security deposit is not held in a separate account.

 
If you are having problems with your Landlord Developer Security Deposit Accounting or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
 
Chris@AccountingSolutionsltd.com
 
Additional Accounting Articles and information on my firm can be found at
 
www.AccountingSolutionsLtd.com