Property Management
A Virginia property management company holds security deposits in a separate escrow account. This is required to:
AEarn interest for the property manager
BPrevent commingling of tenant funds with operating funds✓ Correct
CSatisfy federal lending requirements
DQualify for Virginia Housing tax credits
Explanation
Virginia law requires security deposits to be held in a separate, federally insured escrow account, preventing commingling with the landlord's or property manager's operating funds.
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Key Terms to Know
Escrow
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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