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.  Above all, 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 Frederick 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 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 property 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.

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.

 

Frederick County Property Management Resources

Basics

Elementary information regarding management services in Frederick County.

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Getting Started

Learn more about getting started with rental property management

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Find A Tenant

Market your property to rent to find a reliable renter in Frederick County 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 list of prices of rental management in Frederick County

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Vetting

How Nesbitt Realty checks the backgrounds of 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 property?

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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 manager now.

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Should you understand more about this area?

Our Guide to Real Estate is a helpful tool for anyone who hopes to review important real estate information about Frederick County and surrounding communities.  The Guide to Real Estate includes information regarding what has sold and what is for sale, and many interesting facts that you may not be aware of.  Furthermore, our Guide features quite a few of the aspects of residing in Frederick County.  Yes, most of this is interesting for purchasers and sellers, but real estate investors and tenants will also find these resources to be somewhat sobering.