Special Fund for Extraordinary Works: Duty and Rules

When the meeting approves extraordinary works or improvements it must set up a special fund equal to the total amount of the works, as required by Article 1135, first paragraph, number 4 of the Italian Civil Code. If the work is carried out under a contract that provides for payments by progress states, the fund may be built up gradually in relation to the individual payments due. This is a condition for the validity of the resolution, not a mere accounting formality: omitting it can make the resolution voidable.

Why the special fund exists

The fund was introduced by the condominium reform to protect both the contractor and the owners' community. Before the reform, sites often started without financial provision, and the contractor risked not being paid while the condominium faced injunctions and work stoppages. Setting up the fund before or during execution means the necessary money is set aside and available: the manager pays from certain resources rather than personal advances.

When it is mandatory

The duty applies to extraordinary works and to improvements approved by the meeting. It does not concern ordinary maintenance covered by current management. Setting up the fund must be resolved at the same time as approving the work and must be minuted: the meeting decides the total amount, the allocation among owners according to the applicable thousandths and the payment deadlines coordinated with the payment plan to the contractor.

The amount and the progress-payment method

The basic rule requires a fund equal to the entire amount of the works. The law, however, allows an alternative method when the contract staggers payments by progress states: in that case the fund can be built up in relation to the individual payments due, providing each time the amount matching the instalment falling due. This flexibility avoids tying up large sums at once and aligns the condominium's cash flow with the actual progress of the site.

• Fund equal to the entire amount of the works as the general rule
• Gradual build-up allowed only if the contract provides for progress-state payments
• Allocation by the thousandths of Article 1123 or the applicable special tables
• Payment deadlines coordinated with the schedule of payments to the contractor
• Minuting at the same time as the works resolution

Accounting for the fund

The special fund must be kept separate from ordinary management: it is an item earmarked for the specific work. In practice the manager opens a dedicated line in the chart of accounts, records owners' payments and payments to the contractor, and periodically reconciles the balance. At the end of the works the fund should return to zero, save for surpluses to refund or balancing amounts to request. Separate accounting makes the use of the money transparent and simplifies the final statement for the intervention.

An owner in arrears on the fund

Payment into the fund is, for all purposes, a condominium contribution due under the resolution. If an owner does not pay their share, the manager can act for recovery with an immediately enforceable injunction, as for other approved expenses. The arrears of a few must not block the work: for this very reason the fund should be scheduled with deadlines ahead of the payments to the contractor, leaving a margin to manage any delays.

Mistakes to avoid

The most frequent mistakes are failing to set up the fund, providing for it only formally without payment deadlines, confusing it with the ordinary cash account, and applying the gradual method to a contract with no progress states. Starting the site before collecting the provision also exposes the condominium to financial strain. Planning the amount, allocation and deadlines already in the approval minutes is the safest way to avoid flaws.

Keeping the special fund separate, tracking payments in and out and producing the statement for the work is immediate with dedicated software. AmministraPro lets you create earmarked funds for each intervention, monitor the shares paid in and link payments to the contractor to progress states: the tools are described on the features page and the plans on the pricing page.