The annual budget and condominium fees are fundamental pillars to ensure the proper functioning of a condominium. This article explains how they are defined, distributed, and collected, with practical examples and useful tips for efficient management, always in compliance with the Portuguese Civil Code.
1. How Is the Budget Defined?
The condominium budget is an essential document detailing all expenses planned for the following year, ensuring the maintenance of common areas and fulfillment of financial obligations. Its preparation should be done by the administrator and submitted for approval at the general assembly of condominium owners. This budget should include:
- Fixed expenses: Regular services such as cleaning, electricity, elevator maintenance, and administration. These expenses are essential to maintain the building's functionality.
- Variable expenses: Unexpected repairs and improvements approved by the condominium assembly. These expenses are necessary to handle unforeseen situations or to enhance the condominium.
- Reserve Fund (RF): A mandatory reserve, as per Article 1436(f), intended for the maintenance of common areas. The minimum value is 10% of annual expenses and must be used exclusively for conservation and maintenance work.
Practical Example:
In a building with an annual budget of €20,000, the administrator included €2,000 (10%) in the RF for future roof repairs. This fund will be used to ensure the long-term preservation of the building.
2. Distribution of Fees
Condominium fees are how the budget is funded, typically distributed based on the fractional share or equally among residents. Let’s explore each method:
2.1. By Fractional Share
The most common method of calculating fees is by fractional share, where each owner contributes proportionally to their unit's area in relation to the total building.
Formula:
Fee = (Fractional share ÷ 1000) × Total budget
Example:
| Unit | Fractional Share | Annual Fee (€) | Monthly Fee (€) |
|---|---|---|---|
| Unit A | 400‰ | 6,000 | 500 |
| Unit B | 300‰ | 4,500 | 375 |
| Unit C | 300‰ | 4,500 | 375 |
2.2. Equal Distribution
This less common method distributes expenses equally among all units, regardless of fractional share. It can only be adopted with unanimous approval in the assembly.
Formula:
Fee = Total budget ÷ Number of units
Example:
| Number of Units | Total Budget (€) | Annual Fee per Unit (€) | Monthly Fee per Unit (€) |
|---|---|---|---|
| 6 | 12,000 | 2,000 | 166.67 |
3. Consequences of Non-Payment
Non-payment of fees can cause serious financial issues for the condominium, affecting its ability to meet obligations. The consequences include:
- Late fees: Financial penalties to encourage timely payment.
- Legal action: The condominium may resort to courts to recover debts, including legal costs and fees.
- Restrictions on the use of common areas: Depending on internal regulations, a delinquent owner may be restricted from using certain facilities.
Practical Example:
In the "Blue Sea" building, Mr. Antonio accumulated 5 months of unpaid fees. After several unanswered notifications, the administrator initiated legal proceedings, recovering the debt with added interest and legal costs. The situation was resolved but with additional charges for the resident.
4. Tips for Efficient Budget Management
- Plan for unforeseen events: Keep the Reserve Fund updated and sized for future needs.
- Request regular reports: Ensure financial transparency with periodic presentations from the administrator.
- Meet deadlines: Avoid financial problems by paying fees within the stipulated period.
5. Relevant Articles in the Civil Code
- Fee calculation: Article 1424
- Reserve Fund: Article 1436(f)
- Budget planning: Article 1433
Conclusion
Condominium budgets and fees are crucial for the effective management of a building. With proper planning, clear communication, and adherence to legal obligations, it is possible to ensure sustainability and harmony among residents. If you have any doubts, consult the administrator or a legal expert in horizontal property law.
