Condominium expense adjustment: how to calculate it

The condominium expense adjustment is the difference between what each owner paid in advance during the year under the estimated budget and what the building actually spent according to the final accounts. It arises because the instalments paid during the year are estimates: only at year end, when all invoices arrive and the accounts are closed, is the real amount known. Hence the need to rebalance, asking for a top-up from those who paid too little and returning a credit to those who paid too much.

How the condominium expense adjustment is calculated

Calculating the condominium expense adjustment follows a simple formula: actual share in the final accounts minus advances already paid under the budget. The result can be positive or negative. If the real cost charged to the individual exceeds the advances, the owner must pay the difference; if they paid more than due, they build up a credit. The calculation is done for each owner using the same millesimal (thousandth) tables or allocation criteria applied to the budget, item by item.

A practical example

Imagine an owner whose millesimal share, under the budget, corresponded to instalments of 1,200 euro for the year. In the final accounts, their actual share turns out to be 1,350 euro, because some common expenses rose. The adjustment owed is 150 euro. If instead the real cost had been 1,050 euro, they would have earned a credit of 150 euro, normally deducted from later instalments.

Budget and final accounts: why the adjustment arises

The estimated budget is the forecast of the year's costs, from utilities and insurance to ordinary maintenance, split among owners in periodic instalments. The final accounts, by contrast, capture the costs actually incurred and documented. Since the estimate almost never matches real spending, the adjustment is the item that reconciles the two documents and closes the year's books.

Debit and credit adjustments

We speak of a debit adjustment when the owner must pay an additional amount, because actual costs exceeded the advances. There is a credit adjustment when the advances exceeded the spending: in this case the administrator, unless the meeting decides otherwise, offsets the credit against the first instalments of the following budget, rather than physically refunding it.

When the adjustment is paid

The adjustment becomes due after the owners' meeting approves the final accounts. It is the approval resolution that makes the condominium's claim against the individual certain, liquid and enforceable, and from that moment the obligation to pay runs within the terms set by the meeting or the regulations. Before approval, the amount remains an accounting projection.

Who pays the adjustment after a sale

When the apartment was sold during the year, the adjustment follows a precise rule. Under article 63 of the implementing provisions of the Italian Civil Code, the incoming owner is jointly liable with the outgoing one for the contributions relating to the current year and the previous one. In their internal relationship, however, the cost falls on whoever owned the unit when the obligation arose, that is when the meeting approved the relevant spending resolution. This is why it is good practice to settle adjustments in the deed of sale.

How the adjustment is communicated to owners

After the accounts are approved, the administrator notifies each owner of their adjustment position, stating the amount owed or credited, the payment deadlines and the expense item it derives from. A clear notice, with the detail of the calculation and the advances already paid, reduces disputes and eases payment. It helps to attach or refer to the allocation schedule, so that each owner can check how the requested figure was reached and compare it with what they paid during the year.

The limitation period for the adjustment

The condominium's claims for contributions and adjustments are subject to a five year limitation period, since they are sums payable periodically under article 2948 of the Civil Code. The term runs from the payment deadline set after approval of the accounts. An adjustment not claimed within this period becomes hard to recover, one more reason to close each year on time.

The most common mistakes in adjustments

• Applying different tables to the adjustment than those used for the budget.
• Confusing accrual based costs with cash based ones, charging the wrong year.
• Failing to offset owners' credits against later instalments where required.
• Requesting the adjustment before the meeting approves the accounts.
• Charging the new owner costs that belonged to the seller without checking.

Managing the adjustment with software

With management software the condominium expense adjustment is calculated automatically: the system compares the advances paid with the allocation of the final accounts and produces, for each owner, the debit or credit position using the same millesimal criterion. AmministraPro generates aligned budget, final accounts and adjustments, handles offsets against later instalments and tracks the deadlines relevant to the limitation period. You can see how it works on the features page or compare the plans in the pricing section.