Practical guide
Budgeting for a condominium in difficulty
A condominium in financial difficulty, with widespread arrears or a nearly depleted reserve fund, requires a different approach to budgeting than the ordinary case. Simply adding up last year's expenses is not enough: the manager must set priorities between what is indispensable and what can wait, calibrate sustainable installments for owners who pay regularly, and report transparently to the assembly on the choices made. A manager facing this situation must move carefully on the legal aspects, particularly expense allocation under article 1123 of the Italian Civil Code and arrears management under article 63 of the implementing provisions. This guide sets out a concrete method for building a realistic budget that can be defended before the assembly and is sustainable for households already paying their share.
Get a real picture before drafting the budget
The first step is not filling in the budget form but understanding what is genuinely recoverable and what is not. This requires an updated list of defaulting owners with the amount owed, the age of each debt, and the status of any recovery actions already started, such as reminders, injunctions or attachments. A debt in litigation for two years has very different recovery odds than an installment that fell due last month.
This picture drives the most delicate decision: how much of the budget can rely on expected collections and how much must be based solely on the contributions of owners in good standing, to avoid finding an empty cash reserve mid-year because defaulters, predictably, did not pay.
Setting spending priorities
When resources are limited, not every expense item carries the same weight. Indispensable and non-deferrable: utilities for common areas, building insurance, maintenance with safety implications such as electrical systems, elevator checks under periodic inspection requirements, and urgent work on structural elements. Postponing these exposes both the manager and the condominium to liability.
Necessary but deferrable: routine maintenance that is not urgent, minor cosmetic work, non-mandatory upgrades. These can be spread across more than one budget year or postponed until liquidity improves.
To be honestly assessed by the assembly: significant extraordinary works, such as facades or roofing, that if not legally urgent should probably be suspended until the condominium restores a minimum liquidity base, even at the cost of delaying useful projects.
Building sustainable installments without shifting the burden onto paying owners
A common mistake is budgeting as if every owner will pay on time, only to discover mid-year that funds are missing because defaulters did not pay. The more correct approach, and the one easier to defend before the assembly, is to structure the budget on two levels: a minimum cash reserve for non-deferrable expenses, funded through slightly more frequent installments, for example bimonthly instead of quarterly, to catch new delays earlier, and a separate spending plan for deferrable works, conditional on the recovery of overdue amounts.
Where the assembly approves it, it is also useful to set up a dedicated arrears reserve fund, calculated conservatively on the historical rate of unpaid amounts, so the entire risk of new delays does not fall on owners who consistently pay.
Installment schedules should be communicated well in advance and explained: owners who understand why the January installment is above average tend to accept it far better than those who only discover it on the invoice.
Recovering arrears: what the manager can do
Article 63 of the implementing provisions of the Italian Civil Code allows the manager to obtain an immediately enforceable payment order for unpaid contributions, based on the expense allocation approved by the assembly. This tool is often underused out of excessive caution, but acting promptly on recent debts significantly increases the chances of collection compared with waiting for the debt to accumulate over years.
The recovery plan, meaning reminders, payment orders and any agreed repayment schedules with the defaulting owner, should be kept distinct from the ordinary expense budget: mixing the two creates confusion in the financial statements and makes it harder for owners to understand how much they are actually paying for services versus covering gaps left by others.
Transparency at the assembly: how to present the budget
In a condominium facing financial difficulty, transparency is not merely a formal obligation but a tool for rebuilding trust. The budget should come with a document explaining, item by item, what was deemed indispensable, what was postponed and why, the current state of arrears, and what recovery actions are underway.
Management software that keeps the payment schedule, installment details and the status of recovery cases in one place, such as AmministraPro, helps the manager present this data clearly and verifiably during the assembly, reducing disputes tied to poorly understandable accounts.
Frequently asked questions
Should the budget of a condominium with arrears include contributions that will probably never be collected?
No, it is more prudent to base the budget for indispensable expenses on collections reasonably expected from owners in good standing, keeping works that depend on the recovery of arrears in a separate plan. This avoids finding, mid-year, insufficient cash for expenses that cannot wait, such as utilities and insurance.
Can the manager refuse to advance expenses on behalf of defaulting owners?
The manager administers the common fund and is not required to advance unpaid contributions out of pocket. If liquidity is not enough for an indispensable expense, the correct solution is to bring a plan to the assembly with closer installment intervals or a reserve fund, not a personal advance, which exposes the manager to risk.
How long does it take to obtain a payment order against a defaulting owner?
Timing varies by court and workload, but article 63 of the implementing provisions of the Italian Civil Code allows a manager to request an immediately enforceable payment order based solely on the expense allocation approved by the assembly, without waiting for a full merits trial. Acting promptly on recent debts, rather than letting them accumulate, makes recovery faster and more likely.
How should the assembly be told that some works are being postponed for lack of funds?
With a document that clearly separates indispensable, non-deferrable expenses, such as safety and utilities, from deferrable ones, explaining the choice with real cash and arrears data. Transparency about the figures, more than the decision itself, is what reduces disputes: owners tend to accept a delay when they understand the concrete reason behind it.
Does condominium management software actually help in a situation of widespread arrears?
Yes, having the payment schedule, per owner payment detail and the status of recovery actions in a single tool makes it easier to prepare a well-justified budget and present it to the assembly with up to date data. AmministraPro tracks these elements in an integrated way, so the manager arrives at the assembly with verifiable figures rather than rough estimates.
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