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.  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 Falls Church, 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 property owners.

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. If 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.

Real estate investors 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.

 

Falls Church Rental Management Resources

Basics

Fundamental information about what rental managment in Falls Church.

Learn More

Getting Started

Learn more about getting started with property management

Learn More

Find A Tenant

Market your property to rent to find a reliable tenant in Falls Church fast.

Learn More

Accounting

How does Nesbitt Realty keep track of income and expenses for real estate investors?

Learn More

Cost

A list of fees associated with rental management in Falls Church

Learn More

Vetting

How Nesbitt Realty checks the backgrounds of tenants for property owners.

Learn More

Reserves

What is a contingency reserve account?

Learn More

Territory

Where does Nesbitt Realty manage rental investments?

Learn More

Clients

Who uses Nesbitt Realty management services?

Learn More

Contact

Call (703)765-0300 to speak to a property management specialist now.

Email

Do you need understand more about the local real estate market?

Nesbitt Realty's Guide to Real Estate is a helpful resource for everyone who needs to review important real estate information about Falls Church and surrounding areas.  The Guide to Real Estate has facts about what has sold and what is on the market, as well as some interesting facts that you might not know.  Furthermore, our Guide spotlights quite a few of the aspects of life in Falls Church.  Of course, most of this is helpful for purchasers and sellers, but rental investors and tenants should also find these tools to be very edifying.

Nesbitt Realty provides award-winning property management services.

Learn more about how we can help you achieve your real estate goals.