- Landlord
- Tenant
Innago Releases Return Security Deposit Online Feature
September 18, 2023
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Renting your property to a stranger is risky. Even with the best tenant screening methods, you could end up with a renter who damages or even destroys something you worked so hard to buy, as could their pet or guests. That’s why a security deposit is a move-in priority. But landlords often forget, it’s a move-out priority as well. Remember, all 50 U.S. states have laws dictating how quickly and in what manner you must return any collected security deposit back to your tenants. If complications delay this process, you could lose the right to use the security deposit all together.
We at Innago want to make handling security deposits more organized and efficient. We’ve previously allowed our users to mark deposit invoices as paid from their Innago accounts. Now, you can return tenants’ security deposits online through Innago by depositing the amount directly into your tenants’ bank accounts. Or, if your tenant hasn’t linked their bank account to Innago, we’ll send a physical check through the mail on your behalf equal to the amount you choose to return. You can decide to return the full amount, make deductions, or even return more than the amount collected if your state requires you to pay interest on the deposit.
Make security deposit returns foolproof. Innago also has a backup address feature that allows landlords to enter in their tenant’s new residence. If a tenant does not choose their preferred bank account before 30 days is up, Innago will mail a physical check to the backup address.
Returning your tenant’s security deposit no longer has to be stressful. These features will make this process easier for both you and your renters.
How To Return Security Deposits Online Through Innago
When a lease has expired, it’s time to either return the Security Deposit to the tenants moving out, or apply the Security Deposit to any outstanding invoices. Security Deposits can be either returned electronically, or marked as returned offline for accounting purposes.
In order to Return a Security Deposit Online:
1. Locate the Security Deposit invoice on either on the Income Page or the Deposits Held report.
2. Click “Refund Deposit – Return It” on the Invoice from the Income page or “Return” on the Deposits Held report.
3. Choose “Return Online”.
When choosing Return Online, you’ll select the tenant, the bank account you’d like funds to be debited from, and then the amount to return. You can return less than, equal to, or more than the amount collected. Any excess amount will be recorded as Deposit Interest on the invoice.
Funds will be issued to the tenant’s chosen receiving account. Tenant’s will also have the option to receive a mailed check for their Security Deposit return.
Add Backup Address – You have the option to enter in a backup address for the tenant in case they don’t make a selection of which bank account they’d like to receive their funds. After 5 business days if the tenant has not made a selection, we will mail a check to the address you’ve provided.
If the tenant has not selected a bank or a mailing address after 5 business days, and you have not entered in a backup address, the funds will be returned to you.
Please note: The Return Online selection is only available on the web version of Innago. This selection is not available via the mobile app at this time.
After choosing your return method and entering in the necessary data, clicking “Return” will update the Security Deposit to show as “Refunded“. You’ll be able to see details of the return on the invoice as shown below:
Conclusion
Security deposits are a key component of any lease agreement. Although they belong firstly to your tenants, it’s your responsibility to hold and return them safety until you have a valid reason to make deductions. We hope this feature makes managing and safekeeping these vital funds a little easier.
Not all of my tenants pay their rent online through the Innago portal. Can a tenant’s security deposit be returned online if the tenant was not paying their rent online?
Yes! We’ll reach out to them and prompt them to add a bank account to receive the return electronically. If they do not, we will mail them a paper check! It’s simple and electronic for you either way.
Is there a fee involved during any step of this process?
Hey James! We charge a $2 fee to return the deposit. This covers the cost if we send the funds electronically or if we have to cut and mail a paper check.
When the tenant first pays their deposit, is the money held by Innago, or passed through to the landlord to hold in their own account? Chicago landlord-tenant laws place requirements on what type of account the deposit is held in , namely an interest-bearing account with a branch located within Illinois. This will dictate whether or not I will be able to take advantage of this new feature.
Hey Jack, we do not hold the money! The funds are sent to a bank account of your choosing. When you refund the deposit, we’ll take the money out of a bank of your choosing and return them to whichever bank account or physical address the tenant chooses.
Will we be able to itemize deductions on the refund invoice?
Hey EJ Prop, you can apply portions of the funds to other charges in Innago, and you can create them on the fly at the time of refund making it really easy to appropriately account for all the dollars. Those charges will appear in their Innago account as separate invoices. They will also show on the invoice itself to you, but at this time, they won’t appear on the invoice itself for the tenant. In other words, they’ll be able to see it but there won’t be a singular document that complains all of that info for them. It will be spread out in their account.