Condominium law
What is the special works fund
When the assembly resolves to carry out extraordinary maintenance works, Italian condominium law requires setting up in advance a special fund equal to the value of those works. This is not left to the property manager's discretion: it is a statutory duty under Article 1135 of the Italian civil code, designed to stop a condominium from starting a project without financial cover and then being exposed toward the contractor. This guide explains when the obligation applies, how the amount is calculated, how owners' contributions and progress payments are handled, and how this fund's accounting fits within the building's ordinary bookkeeping. It concerns property managers, owners and contractors alike, and it is exactly the kind of item software such as AmministraPro helps track precisely, line by line.
The obligation under Article 1135 of the civil code
Article 1135, paragraph 1, number 4 of the Italian civil code requires that, whenever the assembly resolves extraordinary maintenance works or innovations, it must set up a special fund equal in amount to the cost of those works. The rule protects both suppliers, who need a real reserve before starting the works, and the owners themselves, who would otherwise risk being liable for debts the condominium contracted without ever having approved the related expense.
The obligation applies to interventions that qualify as extraordinary, meaning those exceeding ordinary administration in economic or technical relevance: facade renovation, lift replacement, structural work, or significant work on shared systems. For ordinary maintenance, financed through regular management instalments, the special fund is not required.
How the fund's amount is determined
The special fund's amount matches the budget estimated for the works, as shown in the cost estimate or quotation submitted for the assembly's approval. If variations emerge during execution that increase the cost, a new resolution is needed to top up the fund, since the original reserve no longer covers the full cost of the works.
Contributions are apportioned among owners according to the ordinary criteria set out in the bylaws or the relevant apportionment table for that type of intervention (for example ownership shares for facade work, specific tables for lifts). The property manager must record in the minutes both the total amount of the fund and each owner's share, so the payment becomes formally due.
Owners' contributions and management of the reserve
Once approved, the fund must be paid in by owners according to the deadlines set by the assembly, often in one or more instalments linked to the progress of the works. The property manager's task is to chase payments, record them in a dedicated or clearly traceable account, and verify that the reserve collected is actually available before authorizing payments to the contractor.
Operational points to keep under control:
If an owner falls behind on payments to the special fund, the property manager can use the same recovery tools available for ordinary charges, but a single owner's delay does not suspend the condominium's obligations toward the contractor, so prompt follow up on collections is essential.
- verify the amount collected matches what was resolved before every payment out
- keep separate, traceable bookkeeping for the fund distinct from ordinary management
- keep supporting documents for every contribution received and every payment made to the contractor
- keep owners updated on the state of collection and any delays
Progress payments and their link to the fund
On larger projects, payments to the contractor are typically released against progress reports (stati di avanzamento lavori, or SAL): the contractor invoices based on the value of work actually completed and certified, and the property manager authorizes payment only if the fund collected for that phase is sufficient. This mechanism reduces the condominium's risk, since it ties cash outflow to verifiable work rather than to the mere passage of time on site.
Orderly reporting of the fund, with traceability of every contribution received and every payment made against progress reports, is what the assembly expects to see in the final report on the works. Software such as AmministraPro allows the special fund to be kept separate from ordinary management and each payment to be linked to its corresponding progress report, so reporting stays clear for both the property manager and the owners at approval.
Frequently asked questions
Is the special fund always mandatory for any work in a condominium
No. The obligation under Article 1135 of the civil code applies to extraordinary maintenance works and innovations, not to ordinary maintenance, which is financed through regular management instalments. Whether an intervention qualifies as extraordinary, based on its economic and technical significance, determines whether the fund must be set up before work starts.
What happens if an owner does not pay their share of the special fund
The property manager can use the same recovery tools available for arrears on ordinary charges, including formal reminders and, if necessary, legal action. A single owner's non payment does not exempt the condominium from its own obligations toward the contractor, so the property manager needs to manage collection promptly to avoid compromising the progress of the works.
Must the special fund be held in a separate bank account
The law does not require a dedicated bank account distinct by statute, but it does require that the condominium's transactions be traceable through the mandatory condominium bank account. In practice it is still good practice to keep separate, clearly identifiable bookkeeping for the special fund, so the correspondence between amounts collected and amounts spent on that specific intervention can be demonstrated at any time.
How are payments to the contractor linked to progress reports managed
The property manager authorizes payment for each progress report only if the fund collected for that phase is sufficient, checking the correspondence between the works certified by the site supervisor or the appointed technician and the amount invoiced by the contractor. This ties every cash outflow to actual progress on site and limits the risk of uncovered expenditure.
Is the special fund included in the condominium's ordinary annual financial statement
The special fund has its own dedicated reporting for the specific works it was set up for, separate from the ordinary management statement, even though it is still presented to the assembly for approval. Keeping the two accounting areas separate, with clear evidence of contributions received and payments made against each progress report, is the practice that makes verification easiest for owners.
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