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 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

Basics

Elementary information about what management services in Fairfax County.

Learn More

Getting Started

Learn more about getting started with property management

Learn More

Find A Tenant

List your property to rent to find a reliable tenant in Fairfax County 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 rental management in Fairfax County

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 rental investments?

Learn More

Clients

Who uses Nesbitt Realty management services?

Learn More

Contact

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

Email

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.

Do you need advice about rental property management?

Talk to one of our experts about rental property in Virginia.