Do you need to cut a check out of AP for the deposits to pass on to the new owner?

If so, you could go with a couple of different options:

Option A: Refund the deposits out of PM, change the invoices in AP to be payable to the new owner (see knowledgebase article 29998 for how to do this), select the invoice for payment, then cut a check.

Option B: Create a charge in PM to apply the deposits to. In AP create an invoice to the owner for the total of the deposits. You'll probably want to use the revenue account (credit account) from the charge created in PM as the expense account (debit account) on the invoice so that account will wash to zero. Then select the invoice for payment and cut the check.

Does that help?

We keep the deposit because we already handled the monies at closing with the buyer.  I am thinking option B but what account would i post the deposit to?  They don't owe any rent.

I have this same issue.  Building was sold and the deposits were included in the closing transaction.  The deposits need to be adjusted somehow so I can reconcile the account and terminate the lease.  There is no information on the knowledge base that I can find...

You can create a new Charge Type for the closing transaction so that it has the correct GL account to use (assigned as the Revenue account on the charge type) when closing out the deposit. Then you'll create a charge using this new Charge Type for the amount of the deposit, then in Reconcile Account, apply the deposit to this charge. 

Thanks!!!