The condominium reserve fund is one of the issues that most raise doubts in property rental contracts. After all, who should pay: the owner or the tenant?
As a landlord, when renting your property, it is essential that you know what your rights and duties are to always act in accordance with the law.
With this in mind, the Zimobi team will explain, in this article, what the condominium reserve fund is and who is responsible for paying this expense. Understand, next!
What is the condominium reserve fund?
The condominium reserve fund is almost a savings for extraordinary expenses. The objective is to use the money only for specific and indispensable expenses, such as situations not foreseen in the budget plan.
Therefore, the reserve fund is a preventive action so that eventual emergencies do not end up compromising the condominium’s budget.
How can this fund be used?
The condominium reserve fund must be regulated through the convention and bylaws. In addition, in order for it to be moved, it is necessary to hold an assembly with the approval of the tenants.
When the reserve fund is created, the person responsible for its use must be specified, as well as the permitted cases. As previously mentioned, its use is intended for extraordinary expenses, that is, those not related to the routine maintenance expenses of the building.
In this sense, savings are commonly used in construction or maintenance, such as defects in the physical structure of the building, facade painting or leakage problems in the pipes.
The reserve fund can also be used for investments that enhance the property, such as the implementation of a security system, construction of swimming pools and leisure areas – or even a renovation.
Who should pay the reserve fund?
Considering that the condominium reserve fund is only used for extraordinary expenses, it therefore differs from the condominium fee, which is used for fixed costs. These include, for example:
- Cleaning and consumption of water and light in common areas;
- Maintenance of the elevator;
- Employee salary;
- Conservation of premises and facilities for common use.
It is important to understand this distinction, as it is a basis for the payer. According to article 23, item XII, of Law No. 8,245 / 1991, known as the Tenancy Law, “the lessee is obliged to pay the ordinary condominium expenses”.
Article 22, item X, states that “the landlord ( owner of the property ) is obliged to pay the extraordinary condominium expenses ”.
It is evident, therefore, that it is up to the owners of the property units to pay for the condominium reserve fund.
What if the fund is used for ordinary expenses?
It is worth remembering that it is only as an exception and under emergency conditions that the reserve fund can be used for ordinary condominium expenses. But, if used for this purpose, tenants must return the corresponding amount.
This is because, according to the Tenancy Law, art. 23, § 1, point i, it is determined that the lessee must pay the replacement of the reserve fund, wholly or partially used to finance or supplement ordinary expenses, except if referring to a period prior to the beginning of the lease.
What are the rules for setting up the reserve fund?
The Law No. 4,591 / 64, also called the Condominium Act, determines in its art. 9th that the owners must prepare the Condominium Convention and also approve the Internal Regulations of the building. Among the information that must appear in this Convention is the form of contribution to the constitution of a reserve fund.
This document will determine the amount to be paid by the owners. Generally, the amount of the contribution varies from 5% to 10% of the condominium fee.
Other rules must also be included in the Convention, such as:
- Types of expenses covered by the reserve fund and permitted use cases;
- Collection time for the fund (if for a fixed or indefinite period);
- Form of apportionment of the value among the tenants;
- Replenishing the bottom after use.
It is worth mentioning that any matter related to the condominium reserve fund must be deliberated and approved by the meeting, whether to address a topic not specified in the Convention or to propose any changes. In addition, the meeting must include a quorum of two-thirds of the tenants.
How to manage the condominium reserve fund?
It is important to highlight that the fund is part of the condominium’s assets. Thus, once the contribution is made, the owner authorizes the amount contributed to be the property of the place.
In this sense, the money cannot be refunded, even in cases of sale of the unit. In addition, it is important for residents to pay attention so that the fund is not devalued.
For this, the most recommended is to apply the values in investment funds, in a savings account or in other applications that are short-term. This act is important because the fund must be able to be redeemed quickly and practically.
Another point of attention for the administration concerns the bank account. It is recommended to deposit the amounts in an account different from that of the condominium. Thus, the amount allocated to extraordinary and ordinary expenses is separated.
This not only makes accounting easier, it also makes financial management more transparent.