Managing installments for an extraordinary expense

The meeting resolution and the special fund

Article 1135 of the Italian Civil Code requires that, for extraordinary maintenance works, the general meeting set up a special fund equal to the cost of the works before the works are definitively approved. This means the installment plan is not an optional practice left to the manager's discretion, but a step that must already appear in the meeting minutes, stating the number of installments, the due dates, and the amount owed by each unit based on its ownership shares.

A well drafted resolution also states the allocation criterion, whether general shares or a specific table for stairs or elevator depending on the nature of the works, the deadline by which the fund must be complete, and the consequences of non payment. The more detailed the resolution, the less room remains for later challenges, which article 1137 allows within thirty days.

Building a sustainable installment schedule

The installment schedule should account for both the works timeline and owners' spending capacity. In practice it works well to anchor due dates to the progress reports agreed with the contractor: a first installment when the contract is signed or the site opens, further installments as specific percentages of work are completed, and the final installment at completion or final acceptance.

The opposite mistake should be avoided too: installments spaced too closely together or too large relative to owners' average income increase the risk of widespread arrears right when the building's cash flow needs it most. A careful property manager presents the meeting with more than one installment scenario, with different numbers of installments and different timing, so owners can make an informed choice.

• First installment at resolution or at signing the works contract
• Interim installments tied to progress reports
• Final installment at completion or final settlement with the contractor
• A few weeks of margin between each due date and the related payment to the contractor

Tracking collections and reconciliation

Every installment paid must be attributed to the correct owner and to the specific extraordinary expense, keeping ordinary and extraordinary accounting separate as required by condominium accounting practice and by transparency toward owners. Management software such as AmministraPro automatically records each payment against the specific installment plan, updates each unit's position in real time, and produces the separate statement to present at the meeting, cutting down the manual work of reconciling bank transfers against amounts due.

Traceability also matters when a unit is sold during the works: article 63 of the implementing provisions of the Civil Code states that whoever transfers a unit remains jointly liable with the buyer for the contributions relating to the current year and the previous one, so having an accurate record of what has been paid and what is still owed prevents disputes between seller, buyer and the building.

Handling arrears during the installment plan

When an installment is not paid by its due date, the property manager has a duty, not merely an option, to act for debt recovery within the terms set out in article 1129 of the Civil Code, unless the meeting expressly exempts them. An isolated delay can be handled with a prompt reminder, but a build up of unpaid installments on extraordinary works can force the building to advance its own funds or slow payments to the contractor, with possible contractual penalties.

For this reason it is good practice to include a cash margin in the installment plan, monitor overdue amounts monthly, and, in case of persistent default, pursue the provisionally enforceable payment order specifically available for condominium contributions. Digital collection management, with automatic reminders and overdue reporting per installment, allows the manager to step in before a delay becomes structural.

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