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.  In contrast, 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 Stanley, 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 escrow 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.

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.

 

Stanley Property Management Resources

Basics

Basic info about what management services in Stanley.

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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 dependable tenant in Stanley fast.

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Accounting

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

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Cost

An overview of prices of rental management services in Stanley

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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 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 need know more about this area?

Our Guide to Real Estate is a free tool for everyone who hopes to find out more about Stanley and surrounding areas.  The Guide to Real Estate has data about what has sold and what is on the market, as well as a few compelling facts that you might not know.  Furthermore, our Guide spotlights quite a few of the assets of life in Stanley.  As a matter of course, most of this is interesting for buyers and sellers, but real estate investors and renters will also find these resources to be very useful.