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 Edsall Park, 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 escrow 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 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.

 

Edsall Park Property Management Resources

Basics

Basic info regarding property management in Edsall Park.

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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 tenant in Edsall Park fast.

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Accounting

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

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Cost

A breakdown of prices of rental management services in Edsall Park

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Vetting

How Nesbitt Realty vets renters for property owners.

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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 rental specialist now.

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Do you want understand more about the area?

Our Guide to Real Estate is a helpful tool for everyone who hopes to find out more about Edsall Park and neighboring areas.  The Guide to Real Estate provides information about what has sold and what is for sale, as well as many interesting facts that you may not be aware of.  And, our Guide features many of the fundamentals of living in Edsall Park.  Certainly, most of this is helpful for buyers and sellers, but real estate investors and renters might also find the facts to be very edifying.