Do you know the difference between contingency reserves and operating funds?
Operating funds are funds that our real estate brokerage uses to fund our business. Operating funds are our money. But, 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 Fairfax, 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 purchasers (and sometimes sellers) as we'll as contingency reserve funds for landlord clients.
Contingency reserve is a special type of escrow.
A contingency reserve account is money that is held in escrow 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 real estate investor. If the property management ends, that money is promptly returned to the property owner.
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.
Fairfax Property Management Resources
Do you need know more about our community?
Our Guide to Real Estate is a helpful tool for anyone who wants to find out more about Fairfax and neighboring communities. The Guide to Real Estate provides facts about what has sold and what is on the market, and some interesting facts that you might not know. Furthermore, our Guide spotlights some fundamentals of residing in Fairfax. Yes, most of this is useful for buyers and sellers, but property owners and tenants may also find these resources to be very sobering.
a useful archive for landlords in Fairfax
- Before you lease out your rental in Fairfax
- Collections and evictions
- Communications with the renter
- During tenancy
- End of lease term and what happens when a tenant breaks the lease
- How does the owner get paid?
- How your managment company handles the association and your community
- How your property management company handles utilities
- How Nesbitt Realty & Management finds renters
- Insurance matters for property owners using our property management
- How Nesbitt Realty & Management manage keys
- Fairfax landlord responsibilities
- Maintenance, repairs & inspections for your rental investment in Fairfax
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental
- When landlords don't yet know their new address
- Vetting tenants in Fairfax