Trust accounting

If you manage properties for other people, most of the money passing through your hands is not yours. Rent belongs to the owner until your fee is earned; a security deposit belongs to the tenant until move-out. Trust accounting is the discipline of keeping that client money in its own bank account and being able to show, on any day, that the account holds exactly what it should.

Many jurisdictions require licensed managers to do this. Habitia never decides that for you — it is an opt-in switch, and the layout is your choice. Turn it on when you have (or open) a trust account, and Habitia routes the right cash to it in the books, tracks what the account must hold, and stops you from paying one owner with another owner’s money.

Trust accounting needs double-entry accounting to be on first — it decides which bank account each entry posts to.

What “trust” means in your books

Habitia’s chart of accounts has three bank accounts:

1100 Bank — Operating — your money: fees you earned, rent on properties you own yourself.
1110 Bank — Trust — client money: rent collected for owners, and (in the single layout) tenant deposits.
1300 Security Deposits Held — Asset — tenant deposits only, if you use the split layout.

The rule is simple and is what makes your bank statement reconcile: the books follow where the money physically landed, not who owns it. Who it belongs to is tracked on the other side — 2500 Due to Owners for owner balances, 2200 / 2210 for deposits held and refunds owed.

Turning it on

Open Settings → Accounting. Under the double-entry card you will see Trust accounting. (If you have no managed properties yet the card just explains itself; click I hold tenant deposits in a separate account if you want deposit-only trust.)

Account layout. Single trust account keeps rent and deposits together — the simplest setup and what most small managers run. Separate deposit escrow puts tenant deposits in their own account, which some states require. You can switch later; Habitia moves the deposits between the two accounts with a transfer entry.
Where Stripe and ATH Móvil land. Each of those pays out to one bank account. Tell Habitia which one (trust, normally) so the books match the bank.
Start date and bank balance. Enter the date routing begins and what the trust bank account actually holds that day.
Preview opening transfer. Habitia adds up what the trust account must hold right now — every owner’s balance, the deposits held, refunds not yet paid — and shows the opening transfer it will book from operating to trust on the start date. If your bank balance is higher than that, the difference is your own money sitting in trust (earned fees you never moved out — sweep it after enabling). If it is lower, you have a shortfall to cover.
Enable. The opening entry posts once. Nothing before the start date is rewritten; history stays exactly as it was.

What changes day to day

Once trust is on, you mostly do what you did before. The routing happens underneath:

Rent and fees by Stripe or ATH Móvil post to whichever account you said that rail lands in. With processor clearing on, they wait in a clearing account until the payout actually reaches that bank account.
Off-network rent (Zelle, check, cash) posts to trust when the property is managed for an owner, to operating when it is your own property. On the payment form, Deposited to lets you override that for one payment when the money went somewhere else.
Tenant deposits received off-network post to the deposit account (trust, or escrow in the split layout).
Expenses get a Paid from field: trust for bills on managed properties (you are paying the owner’s bill with the owner’s money), operating for your own. Change it when that is not what happened.
Owner payouts and deposit refunds come out of the trust account.

The trust card

Back on Settings → Accounting, the card now shows three numbers, each with a note under it saying where it comes from:

Box	Meaning	Where it comes from
Trust account balance	What the books say is in the trust bank account.	Every posted journal line on account 1110, debits minus credits. Changes the moment a payment, payout, or transfer is recorded.
Owed to owners and tenants (single layout) / Owed to owners (split)	The part that is not yours.	Every owner’s balance added up (only positive balances — an owner who owes you is not netted against the others), plus in the single layout the deposits held and refunds not yet paid (accounts 2200 and 2210). Owner balances refresh nightly or with Refresh balances on the Owners page.
Yours to move to operating	Balance minus what is owed: earned fees still sitting in trust. If the account holds less than it owes, this box turns red and reads Short of what is owed.	Derived from the two above.

In the split layout a second row does the same for the escrow account: Deposit escrow balance (account 1300), Owed to tenants (2200 + 2210), and Over / under funded, which should always be zero.

Right after enabling, the third box reads $0.00 because the wizard moved exactly what is owed. The next time a $1,000 rent settles in trust on a 10 % property, the balance rises by $1,000, the owner’s balance rises by $900 after the refresh, and $100 appears as yours to move.

Below the numbers you can change the landing accounts, switch layouts, and see every transfer between accounts — starting with the opening transfer the wizard posted.

Sweeping your fees out

Fees you earn accumulate inside the trust account as rent settles. Client money and your money should not mix longer than necessary, so the Owners page shows Your funds in trust with a Transfer earned fees button. It suggests the sweepable amount; record the transfer you made at the bank and the books move it to operating.

Habitia refuses a sweep that would leave the trust account below what it must hold — you can only take what is yours. If your funds sit in trust past a threshold or age (30 days by default, adjustable), a smart alert reminds you.

Owner balances, contributions, and advances

The Balance & payouts section of each owner gains two actions:

Contribution — the owner sent you money (topping up a reserve, funding a repair bigger than rent). It raises their balance and books into the trust account.
Record PM advance — appears when an owner’s balance is negative, usually because a repair cost more than the rent collected. That negative balance means the trust account paid with other owners’ money. Recording the advance says you covered it from operating: the balance rises toward zero, the books move the cash into trust, and you recover the advance as the owner’s next rent comes in. A smart alert (“PM advance required”) flags every negative balance until it is cured.

Adjustments now post to the books too. With double-entry on, pick what the adjustment is — a waived management fee, an error correction, or another account of your choosing — and the journal entry posts automatically. No more mirroring by hand.

Payout guard

Recording a payout already refused amounts above the owner’s balance. With trust on there is a second guard: if the trust account’s book balance is below what it must hold for everyone, payouts and refunds are refused with the exact shortfall. Record the missing receipt or a PM advance first. (Balances materialize on the nightly sweep; Habitia refreshes them before refusing, so a payment recorded a minute ago never blocks you by mistake.)

Deposit register

Reports → Accounting → Deposits lists every tenancy that has deposit activity: what the lease says the deposit is, what was charged and collected, what a finalized disposition applied, what was refunded, and what is still held or owed back. Renewals that carried a deposit forward show it moving from the old lease to the new one.

The total held plus refunds owed must equal the deposit liabilities in your books (2200 + 2210). The variance is shown, not hidden. Rows are flagged when something needs a look:

Lease ≠ on hand — the lease says one amount, the ledger collected another.
Not collected — a deposit was charged but never paid.
Applied > collected — a disposition applied more deposit than the ledger shows on hand.
Refund pending — finalized, refund owed, not yet recorded as paid.
Tenant owes — deductions exceeded the deposit.

Recording a deposit refund

On a turnover’s Deposit tab, once the disposition is finalized and shows a refund due, click Record refund: date, amount (defaults to the full refund; partial refunds are allowed), method, reference. The books clear the refund payable against the trust or escrow account, the disposition shows Refunded on …, and the register updates. A recorded refund can be voided; a disposition with a refund recorded cannot be reopened until you void it.

Reconciling the trust account

Every month, reconcile the trust account (and the escrow account in the split layout) against its bank statement under Reports → Accounting → Bank Rec: upload the CSV, match, tick, finalize at zero. Each reconciliation is saved with the statement file. See Bank reconciliation for the walkthrough. Two trust-specific rules:

Voiding a cleared entry dates the reversal today, so a reconciled month is never rewritten.
Closing a period warns when the trust account has no finalized reconciliation covering the close date. It never blocks — but a closed month that was never reconciled is exactly what an auditor flags.
A smart alert fires when a trust account goes 45 days without a finalized reconciliation, and clears itself once you finalize one.

Jaime, the in-app assistant, can read all of this: ask “is my trust account reconciled?”, “how much do I owe owners and tenants?”, or “how much of the trust balance is mine to sweep?”.

The three-way summary

Reports → Accounting → Trust Summary is the monthly document a regulator asks for: three numbers per trust account that must agree, with every difference itemized.

Leg	Where it comes from
A. Bank	The ending balance of your latest finalized reconciliation, plus every book line since that statement that has not cleared yet (in transit) and anything that was still outstanding on the statement date. The note under it shows the statement date and how many items are waiting.
B. Books	The general ledger balance of the account.
C. Owed	What the account must hold: owner balances (plus deposits and refunds in the single layout; the escrow account carries those in the split layout).

Two variances sit under each account:

A − B should be $0.00. Anything else means something moved at the bank that is not in the books, or the reverse — open the reconciliation and look at the unmatched rows.
B − C is your own money in the account (positive: fees to sweep) or a shortfall (negative: the account holds less than it owes).

Payments still processing (an ACH that has not settled) are excluded from every leg and listed at the bottom — they are not cash yet. So is money the processors hold when processor clearing is on: the summary says how much Stripe and ATH Móvil still owe you and how much of it is headed for the trust account. Pick any date to see the position as of that day, and download the PDF to file with the month.

Turning it off

Turn off on the trust card stops routing: new cash posts to operating again, existing entries are untouched, and the start date is kept so history stays explainable. Turning it back on does not post a second opening transfer.

What’s next

Owner balances & payouts — how balances build and the monthly payout run.
Bank reconciliation — match the trust account’s statement against the books.
Double-entry accounting — the ledger underneath all of this.