Special Fund for Major Works: When It Is Mandatory

The condominium special fund for major works is an accounting tool designed to protect the building's financial stability when facing significant extraordinary maintenance projects. It is not left to the property manager's discretion: it is a legal obligation that kicks in whenever certain conditions related to the nature and size of the approved works are met.

The legal basis for the obligation

Article 1135 of the Italian Civil Code provides that, when the assembly approves extraordinary maintenance works or innovations of significant value, it must also resolve to set up a special fund equal to the total cost of the works. The purpose is to prevent the condominium from having to urgently find large sums during the execution of the works, or worse, from taking on debt toward the contractor because of delayed payments from owners in arrears.

This approach strengthens protections both for contractors, who can rely on a dedicated pool of funds before the site opens, and for compliant owners, who no longer risk having to front money to cover someone else's default.

When the special fund obligation applies

The obligation covers extraordinary maintenance works and innovations, not ordinary building management expenses, which follow the normal annual budget and final accounts cycle. The fund must be set up for an amount equal to the total cost of the approved intervention, so that the expense is fully covered before the works even start, or in any case before their completion.

The resolution approving the work and the one establishing the special fund are closely linked: an assembly that approves significant extraordinary works without also resolving on the fund exposes the resolution to challenge, precisely because it skips a step the law treats as an integral part of the decision to carry out the work.

Installments and work progress reports

In practice, the special fund is almost never paid in a single lump sum. The assembly can set an installment payment plan, often tied to work progress reports, known in Italy as SAL, so that owners' payments are spread out over time in line with how the site actually progresses and with the invoices issued by the contractor.

This mechanism limits the immediate financial impact on owners, avoiding a demand for the full amount before work begins, while still guaranteeing that the funds needed for each phase are actually available when it is time to pay the accrued progress reports.

Keeping the fund's accounting separate

The special fund must be kept distinct from the condominium's ordinary management, with separate accounting that makes it possible at any time to check how much each owner has paid and how much is still outstanding. This separation is essential both for transparency toward the owners and for the final accounting of the works, which must clearly report how the collected sums were used against the expenses actually incurred.

When reporting, the property manager must show the movements of the special fund separately from those of ordinary management, so owners can clearly track the financial progress of the extraordinary work.

What happens with unpaid special fund installments

If an owner fails to pay their share of the special fund by the deadline set by the assembly, the property manager can recover the debt using the same procedures available for ordinary arrears, including an immediately enforceable payment order. Setting up the fund does not eliminate the risk of individual defaults, but it does give the condominium a more solid overall pool of funds than traditional budget based management, because the amount requested matches exactly the cost of the approved works.

The special fund does not eliminate arrears, but it makes the condominium financially stronger when facing extraordinary work.

The advantage for contractors and contract negotiations

Many contractors, especially for high value interventions such as facade renovations or structural work, explicitly require proof that the special fund has been set up before signing the contract, or at least treat it as a sign of a reliable client. A condominium that can show the fund is in place and installments are being paid generally negotiates better contract terms, because it reduces the risk the contractor perceives around payment timeliness.

The property manager's role in planning

Careful planning of the special fund, with a clear schedule of installments tied to the expected progress reports, significantly reduces the risk of friction among owners and simplifies managing the entire construction site. Dedicated management tools help the property manager keep track of payments, deadlines and fund reporting separately from ordinary management.

AmministraPro offers features designed precisely for managing special funds and extraordinary works, described on the features page, with the available plans detailed in the pricing section.