What is a contingency reserve account?

Do you know the difference between contingency reserves and operating funds?

Operating funds are monies that our real estate brokerage uses to pay for our business. Operating funds are our money.  On the other hand, escrow funds are different.  Escrow funds are monies that Nesbitt Realty is holding on behalf of tenants, landlords, buyers and sellers. Escrow funds are not our money, but they are monies that we are trusted to safeguard. At any given time, Nesbitt Realty has hundreds of thousands of dollars in escrow accounts.

In Northern Virginia, the Commonwealth of Virginia requires that all real estate licensees manage escrow funds in a particular manner. Most importantly the Commonwealth requires that escrow funds are properly accounted for at all times. In additional all escrow funds must be kept separate from operating funds.  The biggest portion of our escrow funds are tenant security deposits, but also hold deposits for buyers (and sometimes sellers) as we'll as contingency reserve funds for property owners.

Contingency reserve is a special type of escrow.

A contingency reserve account is money that is held in escrow to pay for repairs and other incidentals that occur during property management. Although the money is in our escrow account, the money belongs to the landlord. If the property management ends, that money is promptly returned to the landlord.

When a repair bill arises we use money in the contingency reserve account to pay that bill.  When bills are paid in this manner the account is depleted.  When the account is missing funds, at the end of the month when new rents are paid, Nesbitt Realty replenishes the count with money withheld from this rent. As property managers, Nesbitt Realty prepares a statement each month to show if/when money is depleted and how/when money is replenished into the contingency reserve account.

Property owners do not pay us money to set up the contingency reserve account. Instead, Nesbitt Realty withholds money from the first month of rent in order to set up the account.

 

Northern Virginia Property Management Resources

Basics

Basic information regarding management services in Northern Virginia.

Learn More

Getting Started

Learn more about getting started with rental property management

Learn More

Find A Tenant

List your property to rent to find a dependable tenant in Northern Virginia fast.

Learn More

Accounting

How does Nesbitt Realty keep track of income and expenses for property owners?

Learn More

Cost

A list of prices of rental management services in Northern Virginia

Learn More

Vetting

How Nesbitt Realty vets renters for our clients.

Learn More

Reserves

What is a contingency reserve account?

Learn More

Territory

Where does Nesbitt Realty manage rental investments?

Learn More

Clients

Who uses Nesbitt Realty management services?

Learn More

Contact

Call (703)765-0300 to speak to a rental specialist now.

Email

Should you know more about this area?

Nesbitt Realty's Guide to Real Estate is a helpful tool for anyone who hopes to investigate real estate facts about Northern Virginia and neighboring communities.  The Guide to Real Estate includes information regarding what has sold and what is for sale, as well as a couple of shocking facts that you may not know.  In addition, our Guide has quite a few of the assets of residing in Northern Virginia.  Definitely, all of this is interesting for buyers and sellers, but owners and tenants will probably also find these tools to be very informative.