Cash fund and special fund in a condominium: what they are for

The condominium cash fund and the special fund are two reserves of money with different functions that are often confused with each other. The cash fund ensures the liquidity for the ordinary and recurring running expenses, while the special fund is the sum the law requires to be set aside to finance extraordinary works. Understanding the difference matters, because using a fund for the wrong purpose, or failing to set up the mandatory one, can make the related resolution unlawful.

What the condominium cash fund is

The cash fund is a liquidity reserve that covers the ordinary and current expenses of the condominium: utilities, cleaning, minor maintenance, the administrator's fee. It allows suppliers to be paid on time even when some owners are late with their instalments. It is not imposed by a specific rule: setting it up is a choice of the meeting, which decides its amount in relation to the approved budget.

How the cash fund is set up and topped up

The cash fund is resolved by the meeting and financed with the owners' payments based on the thousandths. It is a stable endowment, replenished periodically as it shrinks through payments. Since it is not tied to a single work, the administrator uses it with some flexibility for day-to-day management, always within the ordinary purposes for which it was created.

What the special fund under article 1135 is

The special fund has a completely different nature. Article 1135, paragraph 1, number 4, of the Civil Code provides that, in the case of extraordinary maintenance works and improvements, the meeting must resolve to set up a special fund equal to the amount of the works. It is a guarantee of financial coverage: it serves to show that the condominium has the necessary resources before entrusting the job to a contractor.

The special fund and staged payment of the works

The general rule is that the special fund equals the full amount of the works. The law provides an exception, however: if the contract provides for gradual payment linked to the progress of the works, the fund may be set up in relation to the individual payments due. In practice, the condominium sets aside the sum needed for the next instalment each time, rather than the full amount in one go.

The special fund is mandatory

Unlike the cash fund, the special fund is mandatory for extraordinary works and improvements. Case law has clarified that a resolution on extraordinary works without the simultaneous setting up of the special fund is defective. The fund, moreover, is bound to the specific purpose set by the meeting: the sums set aside for a particular work cannot be used for other purposes.

The main differences at a glance

• The cash fund covers ordinary expenses, the special fund finances extraordinary works.
• The cash fund is optional, the special fund is mandatory for extraordinary maintenance and improvements.
• The cash fund is flexible and replenished over time, the special fund is tied to a single work.
• The special fund equals the amount of the works, except where staged payment is linked to progress reports.

Mistakes to avoid when managing the funds

The most frequent mistake is using the special fund of one project to cover ordinary expenses or another work: a practice that exposes the administrator to liability and the owners to disputes. Equally risky is resolving on extraordinary works without setting up the fund, or failing to keep separate accounts that allow anyone to reconstruct at any time how the earmarked payments were used.

Keeping funds separate with software

Management software makes it possible to track the cash fund and the special funds of individual projects distinctly, with the millesimal allocation of payments and real-time verification of the coverage reached. This way the accounting of the earmarked funds stays transparent and verifiable at the meeting.

AmministraPro lets you manage the cash fund and special funds with separate accounting, automatic allocations and monitoring of the coverage of extraordinary works. You can see how it works on the features page or compare the plans in the pricing section.