What is a contingency reserve account?

Do you know the difference between contingency reserves and operating funds?

Operating funds are funds that our real estate brokerage 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 North Springfield, 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 property owners.

Contingency reserve is a special type of escrow.

A contingency reserve account is money that is held in savings 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 property owner. 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.

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.

 

North Springfield Property Management Resources

Basics

Fundamental info about what property management in North Springfield.

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Getting Started

Learn more about getting started with rental property management

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Find A Tenant

List your property to rent to find a great renter in North Springfield fast.

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Accounting

How does Nesbitt Realty keep track of income and expenses for real estate investors?

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Cost

A breakdown of prices of rental management in North Springfield

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Vetting

How Nesbitt Realty vets renters for our clients.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage rentals?

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Clients

Who uses Nesbitt Realty management services?

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Contact

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

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Do you want understand more about this area?

Nesbitt Realty's Guide to Real Estate is a helpful resource for anyone who hopes to investigate real estate facts about North Springfield and surrounding areas.  The Guide to Real Estate includes facts about what has sold and what is currently listed, and some surprising facts that you might not know.  Also, our Guide features quite a few of the assets of life in North Springfield.  As might be expected, most of this is useful for buyers and sellers, but landlords and renters will probably also find this data to be quite eye-opening.