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 fund 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 Warren 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 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 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.

 

Warren County Rental Management Resources

Basics

Basic info about what property management in Warren County.

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Getting Started

Learn more about getting started with property management

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Find A Tenant

Market your property to rent to find a reliable tenant in Warren 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 fees associated with rental management in Warren County

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Vetting

How Nesbitt Realty vets renters for landlords.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage rental investments?

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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.

Email

Do you want understand more about this area?

Nesbitt Realty's Guide to Real Estate is a handy resource for anyone who needs to find out more about Warren County and surrounding areas.  The Guide to Real Estate has data about what has sold and what is for sale, as well as a couple of interesting facts that you may not know.  Furthermore, our Guide has some elements of residing in Warren County.  Certainly, most of this is helpful for purchasers and sellers, but owners and tenants will probably also find this data to be very useful.

Do you need a rental property manager?

Learn more about our rental management services. We service landlords in Virginia.