Do you know the difference between contingency reserves and operating funds?
Operating funds are monies 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 County, 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 landlord clients.
Contingency reserve is a special type of escrow.
A contingency reserve account is money that is held in savings 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 real estate investor. If 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.
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 County Rental Management Resources
Should you know more about our area?
Nesbitt Realty's Guide to Real Estate is a free tool for anyone who wants to investigate real estate facts about Fairfax County and neighboring communities. The Guide to Real Estate includes facts regarding what has sold and what is currently listed, as well as some interesting facts that you may not know. Also, our Guide highlights quite a few of the assets of residing in Fairfax County. As might be expected, all of this is interesting for purchasers and sellers, but owners and renters might also find these resources to be very eye-opening.
a free reference for rental investors in Fairfax County
- Before you put a renter in your rental in Fairfax County
- Collections and evictions
- Communications with the tenant
- During the lease term
- End of tenancy and what happens when a renter breaks the lease
- How does the property owner get paid?
- How your property management company handles the association and your community
- How your managment company handles utilities
- How Nesbitt finds renters
- Insurance matters for owners using our property management
- How Nesbitt Realty & Management manage keys
- Fairfax County rental investor responsibilities
- Maintenance, repairs & inspections for your rental investment in Fairfax County
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your property
- When landlords don't yet know their new address
- Vetting renters in Fairfax County