How to prepare the annual condominium budget

Expense categories: ordinary, extraordinary and reserve fund

The budget collects all foreseeable expenses for the year's ordinary management: utilities for common areas, cleaning contracts, routine maintenance of the elevator and shared systems, building insurance, the administrator's fee, stationery and banking costs. Added to these, when applicable, are installments for extraordinary works already approved (facade renovation, replacement of a centralized boiler) and any contribution to the special reserve fund for extraordinary maintenance, mandatory under article 1135 of the Civil Code.

Keeping ordinary items separate from extraordinary ones is not just a matter of bookkeeping clarity: allocation criteria can differ (expenses for preserving the building generally follow ownership shares, while expenses for heating or the elevator follow specific criteria under articles 1123 and 1124) and the assembly approves each category with different required majorities depending on the nature of the expense.

• Recurring ordinary expenses: utilities, cleaning, scheduled maintenance, insurance, administrator's fee
• Extraordinary expenses already approved: installments for works passed in previous assemblies
• Contribution to the special reserve fund for future works, if resolved
• Contingency: a prudent allowance for unplanned repairs

Using historical spending as the basis for estimates

The most reliable way to estimate next year's items is to start from the actual figures of the last two or three fiscal years, not from rough guesses. For utilities, look at consumption trends and any tariff changes already known; for routine maintenance, consider existing contracts and their expiry dates; for variable expenses (minor repairs, unplanned interventions), use an average of recent years, avoiding both overly optimistic estimates that generate heavy year end reconciliations and overly cautious ones that inflate installments unnecessarily.

A systematic, line by line comparison between the previous year's budget and its final statement helps identify recurring discrepancies and correct course: if an item is consistently underestimated, it should be revised upward in the next budget. Software such as AmministraPro keeps the historical record for each building and allows an automatic line by line comparison between budget and final statement, cutting down the manual reconstruction work.

Allocation criteria: ownership shares and specific tables

Each expense item must be allocated according to the correct criterion. Expenses for preserving common areas generally follow ownership shares under article 1123 of the Civil Code; expenses for assets serving unit owners to different degrees, such as stairs or the elevator, follow usage based criteria under article 1124; centralized heating, when present, is split based on actual consumption recorded by heat meters plus a fixed share tied to ownership, in line with the UNI 10200 standard. A common mistake is applying the general ownership table to expenses that would require a dedicated table, producing incorrect charges that then need correcting at year end, with friction among owners.

In multi-building complexes (supercondominio) the matter gets more complex: expenses for assets and services shared across multiple buildings must be allocated on the multi-building shares, distinct from the shares of each individual building, under article 1117 bis of the Civil Code. A budget that confuses the two levels produces incorrect allocations from the outset.

Installments and cash flow: when and how much to ask owners

The budget translates into periodic installments, typically quarterly or every four months, calculated by dividing the annual total by the number of planned installments. Good practice aligns installment due dates with the periods when the building actually needs to pay suppliers and utilities, avoiding cash flow strain that would force the administrator to advance personal funds or delay payments. If extraordinary works have already been approved, their installments should be shown separately from ordinary management installments, so each owner clearly sees what each payment covers.

Digital installment management, with an automatic payment schedule and reminders to owners in arrears, reduces the risk of delinquency that would otherwise fall on the whole building: the administrator must still advance the funds needed for payments that cannot be postponed even when some owners are in arrears, under article 1129 of the Civil Code.

Assembly approval and handling deferrals

The budget must be approved by the assembly with the majority required for ordinary administration acts, meaning a majority of attendees representing at least one third of the building's value on first call, under article 1136 of the Civil Code. To secure approval without delays, it helps to send the budget to owners well in advance of the meeting notice, accompanied by a short report explaining the most significant changes from the previous year, and to be ready to address the most contested items in the assembly, typically the administrator's fee and the reserve fund contribution.

If the assembly does not approve the budget, the administrator cannot demand installments based on a document that was not resolved: the assembly must be reconvened with the requested changes. For this reason it is worth drafting a budget with realistic margins from the first version, avoiding figures the assembly systematically rejects for excessive caution or lack of detail on individual items.

Frequently asked questions