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Security Deposits - Refundable Damage Deposits (RDD)

We recommend using our Security Deposit Hold system whenever possible, to provide a guaranteed method of charging the guest's credit card for any damage.  This is the easiest, most reliable, and most automated way to protect yourself.  We also recommend adding our low-cost Damage Protection program which is designed to be easy to use, cover all bookings and not require admission of guilt by the guest.

However, some owners and PMs prefer an alternate method where the security deposit funds are actually fully collected ahead of time, as a payment, and then refunded to the guest after departure.  This is often referred to as a Refundable Damage Deposit or "RDD".

OwnerRez does not have a built-in feature specifically designed for RDDs, but it is possible to set this up manually using our surcharges, payments and refunds.

Create a surcharge for the RDD

The first step is to create a surcharge for the RDD for the full amount you want to hold.  You'll do this exactly like any other surcharge for cleaning fees, pet fees and so on.

Go to Settings > Surcharges and create a new surcharge.  Enter a recognizable description like "Refundable Damage Deposit" which will be shown to the guest on their quote and booking charges.  Enter the full amount you want to hold and make sure it's marked as applied "automatically".

As with other surcharges, you can select options and criteria for things like "per night" or "per guest" multipliers or that it only be applied to certain properties, listing sites or seasons.  Once you're done, click the Save button.  If you have different RDD amounts for different properties, create them all.

Understand how the RDD charge is applied and paid for

After your RDD surcharges are created, new quotes and bookings will begin to show the RDD line item in the charges from that point forward.  If the RDD charge is not showing, check the criteria on the surcharges you created and make sure it applies to the type of quote or booking you created.  For instance, the season, listing site or property may be different.

It's important to understand that the charge that is created is the same as any other type of surcharge.  There is nothing special about an RDD charge that changes how it's shown or paid for.  It simply increases the total of the quote or booking by that amount exactly the same as if you entered a new management fee or higher rent amount.

Because of this, you cannot target the RDD amount to be collected on its own date outside of the normal payment schedule.  The booking will still collect payments according to the First Payment and Second Payment rules shown on the property, quote or booking Rules.

If you want a different payment schedule because of the RDD, you have a couple choices:

  • Adjust the first payment to be larger or smaller to include or exclude the RDD amount.  However, the First Payment rules of % or flat amount still apply, so you may not be able to exactly include the RDD amount.
  • Manually schedule another payment for the RDD amount.  So you may have a First Payment rule of flat amount $100 and then a manually-scheduled payment for an exact amount of $500 to cover the RDD.  Your final scheduled payment would then be for "remaining balance".  This would allow you to collect exact amounts but requires manually scheduled payments after the booking is in place.  There is no way to automate this or configure a quote to show this prior to booking.

After departure, adjust the RDD charge

Remember that the booking's charges are an "invoice" of what the guest is actually paying.  Because of that, charges should be changed or removed if the guest is not actually paying them (eg. you give back the pet fee).

The same applies in this scenario.  After the booking departure, you need to remove or negate the RDD charge to reflect what the guest is actually paying in the end.  If you are giving back the entire RDD amount, add a new line item to negate the amount which effectively zero's it out. (While you could just delete the original charge for the RDD, we recommend adding the refund as a line item to keep your record keeping as accurate as possible.)

Adding the extra line, as in this example, shows the guest what happened and creates a record for the future that there was a RDD but it was fully returned.  Notice that the RDD surcharge is selected in the Type drop-down as well but the amount is changed to negative.

If you are keeping part of the RDD for damages, simply show the amount that are you keeping by making the negative line item less than the RDD amount or enter two line items - one that returns the RDD and another for the (positive) charge for the damage.

Actually give the RDD back

After the charges are adjusted, there will be an overpayment balance on the booking since the guest paid too much - the new Guest Balance includes the credit for the RDD you entered above.

To resolve this negative balance, refund the balance back to the guest. Return to the overview page for the booking and you should see the guest now shows a negative balance in the "Total Owed" field. If they paid by credit card, click on the "Transactions" item in the menu, then choose the Refunds button and click on "Send Refund (Run Card)".

Note: Depending on the policies of your credit card processor, you may be charged for the refund transaction.

If you do not have the guest's credit card on file, you will need to send the refund manually via whatever means you and the guest agree upon. If you need to send them the money offline, make sure to record the manual refund of check or cash.

If you are keeping part of the RDD for damages, remember to only refund the part of the RDD that is going back, not the entire amount.

That's it!  The booking has now had a RDD created, paid for and refunded.

Vrbo API instructions

If you are using the Vrbo API, and you want to use refundable damage deposits, make sure that the Surcharge you create has the word "Refundable" in it.  This will be detected by Vrbo, and it will be displayed to prospective guests as an RDD.

Airbnb

Airbnb does not support Refundable Damage Deposits.