By The constitution of a reserve fund by the owners association is an obligation of the same that is included in the law of horizontal property, determining that the said fund will exist in the community of owners to attend the works of the conservation and repair of the community and, if necessary, for the rehabilitation works.
With a charge to the reserve fund, which must be provided with an amount that in no case may be less than 5% of the last regular budget of the community, an insurance contract can be signed to cover the damages caused on the community or conclude a permanent maintenance contract for the property and its general facilities. The ownership of the reserve fund corresponds to all effects to the owners association.
Rules of Constitution of the Reserve Fund
Without prejudice to the provisions in use by the autonomous communities in their use, the constitution of the reserve fund will comply with the following rules;
- The fund should be constituted at the moment of approval by the Board of Owners of the ordinary budget of the community. The new owners association will constitute the reserve fund when it approves its first regular budget.
- At the time of its constitution, the fund will be provided with an amount of not less than 2.5% of the community’s regular budget. For this purpose, the owners must make the necessary offerings in advance as per their respective quota.
- When approving the regular budget for the year immediately following that in which the reserve fund is constituted, its budget must reach the minimum amount established which is 5% of the regular budget.
Allocation and Maintenance of the Reserve Fund
At any time during the financial year, the reserve fund may not be lower than the established legal minimum.
The amounts deducted from the fund during the financial year to cover the expenses of the works or actions will be counted as an integral part thereof for the purpose of calculating its minimum amount.
At the beginning of the next financial year, the necessary contributions will be made to cover the amounts withdrawn from the reserve fund as indicated in the previous paras.
Obligation of Contribution by All Owners
All of the owners are obliged to contribute to the reserve fund that will exist in the owners association to attend the works of conservation and repair of the community and, as the case may be, for the rehabilitation works.
