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 fund our business. Operating funds are our money.  Conversely, 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 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 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 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.

Landlords 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.

 

Springfield Rental Management Resources

Basics

Fundamental information regarding rental managment in Springfield.

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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 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 list of prices of rental management services in Springfield

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Vetting

How Nesbitt Realty checks the backgrounds of tenants 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 property manager now.

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Do you need know more about this local real estate market?

Our Guide to Real Estate is a free resource for everyone who wants to investigate real estate facts about Springfield and neighboring communities.  The Guide to Real Estate has data about what has sold and what is currently listed, as well as many shocking facts that you might not know.  Furthermore, our Guide features many of the elements of residing in Springfield.  Of course, most of this is interesting for purchasers and sellers, but property owners and tenants will likely also find this data to be quite edifying.