What is a contingency reserve account?

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.  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 Clifton, 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 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 landlord. When the property management ends, that money is promptly returned to the landlord.

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.

Real estate investors 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.

 

Clifton Property Management Resources

Basics

Fundamental info regarding management services in Clifton.

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 Clifton fast.

Learn More

Accounting

How does Nesbitt Realty keep track of income and expenses for landlords?

Learn More

Cost

A breakdown of prices of property management services in Clifton

Learn More

Vetting

How Nesbitt Realty checks the backgrounds of tenants for our clients.

Learn More

Reserves

What is a contingency reserve account?

Learn More

Territory

Where does Nesbitt Realty manage rentals?

Learn More

Clients

Who uses Nesbitt Realty management services?

Learn More

Contact

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

Email

Do you want know more about the community?

Our Guide to Real Estate is a handy tool for anyone who wants to learn more about Clifton and nearby areas.  The Guide to Real Estate compiles data about what has sold and what is for sale, as well as a few interesting facts that you might not be aware of.  Not to mention, our Guide spotlights quite a few of the aspects of life in Clifton.  Naturally, all of this is interesting for buyers and sellers, but real estate investors and renters will also find this information to be very informative.

Do you need advice about rental property management?

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