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.  But even so, 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 Penn Laird, 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 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 real estate investor.

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.

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.

 

Penn Laird Property Management Resources

Basics

Fundamental information regarding property management in Penn Laird.

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Getting Started

Learn more about getting started with property management

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Find A Tenant

List your property to rent to find a reliable renter in Penn Laird fast.

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Accounting

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

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Cost

A breakdown of prices of rental management services in Penn Laird

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Vetting

How Nesbitt Realty vets 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 our area?

Nesbitt Realty's Guide to Real Estate is a handy resource for anyone who hopes to review important real estate information about Penn Laird and surrounding areas.  The Guide to Real Estate includes information regarding what has sold and what is on the market, and some compelling facts that you may not be aware of.  And, our Guide has some assets of residing in Penn Laird.  Of course, all of this is interesting for buyers and sellers, but owners and tenants may also find this data to be quite enlightening.