Do you know the difference between contingency reserves and operating funds?
Operating funds are monies that our property management and real estate business uses to pay for our business. Operating funds are our money. Above all, 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 real estate investors.
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 rental 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 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.
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.
Fairfax Rental Management Resources
Do you need understand more about the local real estate market?
Nesbitt Realty's Guide to Real Estate is a handy tool for anyone who wants to investigate real estate facts about Fairfax and neighboring communities. The Guide to Real Estate has information about what has sold and what is on the market, and some compelling facts that you might not be aware of. In addition, our Guide features quite a few of the aspects of residing in Fairfax. Of course, all of this is useful for buyers and sellers, but landlords and renters might also find these resources to be somewhat informative.
a handy archive for landlords in Fairfax
- Before you move a tenant into your rental property in Fairfax
- Collections and evictions
- Communications with the tenant
- During tenancy
- End of lease term and what happens when a renter breaks the lease
- How does the rental investor get paid?
- How your property manager handles the association and your community
- How your property management company handles utilities
- How Nesbitt Realty & Management finds tenants
- Insurance matters for rental investors using our rental management
- How Nesbitt Realty & Management manage keys
- Fairfax owner responsibilities
- Maintenance, repairs & inspections for your property in Fairfax
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental investment
- When owners don't yet know their new address
- Vetting tenants in Fairfax