The condominium reserve fund: what it is for and how to set it up

The condominium reserve fund is a sum of money that the building sets aside to keep immediate liquidity available when it is needed. Its purpose is practical: to cover ordinary expenses while owners' instalments are still coming in, and to prevent an unpaid quota or an unexpected cost from blocking payments to suppliers. It is not a general legal obligation, but it is a tool that many buildings adopt to manage cash calmly. Let us look at what it really does, how it is set up and how it differs from the special fund required for extraordinary works.

What the reserve fund is for

The reserve fund, often also called the cash fund, gives the condominium a steady supply of money. Owners' instalments arrive in stages across the year, while some expenses are fixed and recurring: electricity for common areas, cleaning, lift maintenance, the administrator's fee. Having a liquidity buffer means these commitments can be honoured without waiting for each individual quota to come in.

The fund also softens the impact of arrears. When an owner does not pay, the missing money does not immediately block the management, because the fund temporarily covers the gap while the administrator starts recovering the debt. Finally, it serves for small unexpected costs, such as an urgent repair, that cannot wait for a meeting to be called.

Is the reserve fund mandatory?

In general the reserve fund is not mandatory. The law does not require the condominium to set money aside for ordinary management: creating it is a matter of good administration. The case of the special fund for extraordinary works is different, being governed by article 1135 of the Italian Civil Code, which is mandatory and must be treated separately.

Many condominium regulations, especially those of a contractual nature, expressly provide for a reserve fund and set its amount. In that case the set-aside becomes binding on everyone, because it stems from a rule shared from the very origin of the condominium.

How the reserve fund is set up

The reserve fund can come about in two ways. The first is a provision of the condominium regulation, which establishes the existence of the fund and its amount. The second is a resolution of the owners' meeting, which decides to create it and to feed it with a payment charged to the owners.

When it is set up through the meeting, the resolution must be approved with ordinary majorities. The amount is then allocated among owners on the basis of the thousandth (millesimal) tables, like a normal management quota, and flows into the budget. The set-aside is thus tracked in the accounts and verifiable in the annual statement.

Difference from the special fund for extraordinary works

It is important not to confuse the reserve fund with the special fund required by article 1135, paragraph 1, number 4, of the Civil Code. The latter is mandatory when the meeting approves extraordinary maintenance or improvements: it must be set up at the same time as the resolution approving the works and must cover the entire cost of those works.

Case law is clear on this point: a resolution approving extraordinary works without setting up the special fund is null. If the contract with the contractor provides for payments linked to stages of progress, the fund can be set up in relation to the payments due from time to time. The reserve fund, on the other hand, concerns ordinary management and remains a discretionary choice of the condominium.

How it is handled in the accounts

The reserve fund must be kept separate from other budget items. In the financial statement it appears among available funds, so that owners can clearly see how much is set aside and how it has been used, if at all. If part of the fund is used to cover an expense, the administrator must account for it and provide for the amount to be restored in the following budget.

Orderly management avoids ambiguity: the fund's money is not a stash at the administrator's disposal, but a reserve of the condominium with a precise purpose. Transparency on this point is what makes the fund a tool of trust rather than a source of disputes.

Managing the fund with management software

With management software the reserve fund is kept under control without manual calculations: set-asides are allocated automatically across the millesimal tables, movements stay tracked and the fund balance updates in real time along with the rest of the cash. At statement time the item already appears valued among available funds, ready for the meeting.

AmministraPro manages the reserve fund and the special fund alongside the condominium's accounting, with automatic millesimal allocations and balances always aligned with the bank. You can see how it works on the features page or compare the plans in the pricing section.