What is a contingency reserve account?

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

Operating funds are funds that our property management and real estate business uses to fund our business. Operating funds are our money.  In contrast, 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 Manchester Lakes, 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 savings to pay for maintenance and other incidentals that occur during rental management. Although the money is in our escrow account, the money belongs to the landlord. When the property management ends, that money is promptly returned to the real estate investor.

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.

Landlords 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.

 

Manchester Lakes Property Management Resources

Basics

Basic information about what property management in Manchester Lakes.

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 great tenant in Manchester Lakes fast.

Learn More

Accounting

How does Nesbitt Realty keep track of income and expenses for real estate investors?

Learn More

Cost

A list of prices of property management services in Manchester Lakes

Learn More

Vetting

How Nesbitt Realty checks the backgrounds of renters for landlords.

Learn More

Reserves

What is a contingency reserve account?

Learn More

Territory

Where does Nesbitt Realty manage property?

Learn More

Clients

Who uses Nesbitt Realty management services?

Learn More

Contact

Call (703)765-0300 to speak to a property manager now.

Email

Do you need know more about this area?

Our Guide to Real Estate is a free tool for everyone who needs to find out more about Manchester Lakes and neighboring areas.  The Guide to Real Estate provides data regarding what has sold and what is on the market, as well as a couple of compelling facts that you may not know.  And, our Guide spotlights some aspects of life in Manchester Lakes.  As might be expected, all of this is interesting for purchasers and sellers, but real estate investors and renters might also find these resources to be quite eye-opening.