The reserve fund: what the law requires and what it is really for

The reserve fund is compulsory, has a minimum set by law, and is probably the single tool that spares a building the most grief. It is also the one that gets misunderstood most.

What the law says

Spanish horizontal property law requires a reserve fund of no less than 10% of the community last ordinary budget. It is funded through owner contributions and forms part of the budget — it is not an optional extra.

What it is for

To cover conservation, repair and refurbishment works on the building. It can also go towards the building insurance policy or a permanent maintenance contract.

Put plainly: it is the cushion that stops every unforeseen problem turning into a special levy.

Why almost no building has it right

Because 10% is a minimum, not a target. In a building with a lift, some age on it, or ageing installations, that minimum falls a long way short of what a serious repair costs.

And because once the fund is used, many buildings never top it back up. A fund that has been spent and not replenished is a fund that does not exist.

What makes the difference

• Funding it above the minimum if the building calls for it. Nudging the monthly charge up hurts far less than a levy all at once, and it is exactly the same money spread over time.
• Keeping it in an identifiable account, not mixed in with day-to-day cash.
• Replenishing it after use, as matter-of-factly as it was used.

And a simple way to put it to the meeting

Instead of arguing over an abstract percentage, put on the table what the thing that might actually happen really costs: a roof repair, replacing lift machinery, a facade. Once people see the real figure, the conversation about the reserve fund changes completely.