Setting Up the Special Fund When the Works Are Approved

What Article 1135 says about the special fund

Article 1135, first paragraph, number 4 of the Italian Civil Code provides that when the meeting resolves on extraordinary maintenance and improvements, it must set up a special fund equal to the cost of the works. The purpose is to protect both the contractor and the condominium: before the site opens, resources must be committed and distributed among the owners, so that works do not start without financial cover.

The rule was later supplemented to allow a more flexible option when the works contract provides for staged payments. In that case the fund may be set up in relation to the individual payments due, following the work progress. The principle remains: no extraordinary works start without a resolved fund covering them.

The fund is not the manager's money nor a generic line in the budget: it is a mass earmarked for the specific project, kept separate from ordinary management and channelled through the dedicated condominium bank account required by Article 1129.

Why the fund must be set up at the same time

The fund must be created in the same session and the same minutes that approve the works. It is not acceptable to approve the project and postpone the fund decision to a later meeting: this simultaneity is what makes the resolution compliant with Article 1135. Splitting the two moments exposes the decision to challenge.

For this reason the notice of meeting must expressly place on the agenda both the approval of the works and the estimate, and the setting up of the special fund with its allocation. An agenda that only vaguely mentions works, without referring to the fund, weakens the validity of the decision taken at the meeting.

Full fund or fund tied to progress stages

The first operational choice is between two methods. With a full fund the meeting resolves an amount equal to the entire value of the works, which owners pay before or during execution according to an installment plan. This is the simplest method to account for and the most prudent for the condominium.

With a fund tied to progress stages, allowed when the contract provides for staged payments, the meeting commits resources in relation to the individual payments due to the contractor as the site progresses. This method eases the owners' initial outlay but requires more careful accounting, because each progress stage must be covered by the fund before it is paid.

• Full fund: amount equal to the total, advance payments, linear accounting
• Progress-stage fund: resources committed per single payment, gradual outlay
• In both cases the fund stays earmarked for the specific project

How to allocate the fund among owners

The fund is split among owners according to the criteria applicable to the expense it finances. For works affecting all owners the general table of thousandths is generally used, under Article 1123. For works on parts serving owners to different degrees, such as stairs or roof terraces, the specific criteria of Articles 1124 and 1126 apply.

Each owner's share of the fund follows ownership of the unit at the time of the resolution. If a unit is later sold, the parties should settle between themselves who bears the remaining installments, but towards the condominium the person who was owner when the obligation arose remains bound, under the rules on the allocation of extraordinary expenses.

Set up the fund accounting from the start

From the resolution onward it is best to open separate accounting for the fund, distinct from the ordinary financial year. Every owner payment and every payment to the contractor must flow into this accounting, so that at the end of the works it is immediate to show the meeting how much was collected, how much was spent, and what surplus remains.

Management software helps to set the fund up as a standalone item, to generate the owners' installments with the resolved deadlines, and to track payments on the dedicated account. With AmministraPro you can create the fund installment plan, link it to the condominium bank account, and follow the collection progress in real time; the features are described on the /funzioni page and the plans with their costs on the /prezzi page.

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