Law
Common reserve fund in Portugal: rules, minimum and use
The common reserve fund: the 10% legal minimum, what it is for, who decides how it is used, where it must be held and what happens when you sell your unit.
· 5 min read · Condgest
The common reserve fund (fundo comum de reserva) is compulsory in every condominium and is used to pay for the upkeep of the building. Each owner contributes at least 10% of their share of the condominium's other expenses, the money must be held in a bank, and it is the owners' meeting that manages it (Article 4 of Decree-Law 268/94). Put simply: it is the building's savings for the works that, sooner or later, will be needed.
What the law says
Article 4 of Decree-Law 268/94 establishes:
- Compulsory: every condominium must set up a common reserve fund.
- Purpose: to pay for the upkeep of the building or group of buildings.
- Minimum contribution: each owner contributes an amount equal to at least 10% of their share of the condominium's other expenses.
- Deposit: the fund must be held in a bank.
- Management: it is managed by the owners' meeting.
The condominium administrator also has, among their duties, the obligation to check that the common reserve fund exists (Article 1436 of the Civil Code).
How the minimum is calculated
The basis for the calculation is the condominium's other expenses, that is, the budget for running costs approved at the owners' meeting. The reserve fund is added on top.
| Monthly fee for running costs | Minimum contribution to the fund (10%) | Minimum monthly total |
|---|---|---|
| €30 | €3 | €33 |
| €50 | €5 | €55 |
| €80 | €8 | €88 |
If a building's annual budget for running costs is €20,000, the common reserve fund must receive at least €2,000 that year, split between the owners in the same proportion.
Is 10% enough?
The 10% is a legal minimum, not a technical recommendation. The owners' meeting can approve a higher percentage. In an older building, with façades, roof or lifts nearing the end of their useful life, the minimum rarely covers the work needed. The sensible way to decide is to start from a maintenance plan: know which works are foreseeable over the coming years and what they cost. Our annual building maintenance checklist is a good starting point.
What it can be used for
Maintenance works
The natural use of the fund is the upkeep of the building: repairs to roofs and façades, waterproofing, common plumbing, structural repairs, among others. In practice, the fund is what avoids having to ask all owners for a large extraordinary fee in one go.
Urgent works
Essential and urgent repairs to the common parts are those needed to remove, at short notice, defects that could at any moment cause or worsen damage to the building or to property, or put people's safety at risk (Article 1427 of the Civil Code). A fund with a sufficient balance makes it possible to act without delay.
Other purposes, with an obligation to replenish
The owners' meeting may resolve to use the fund for a purpose other than upkeep. In that case, the owners must pay, within a maximum of 12 months of the resolution, the extraordinary contribution needed to replace the amount used (Article 4 of Decree-Law 268/94, as worded by Law 8/2022). The fund should not, therefore, be treated as working capital to cover running costs or unpaid fees.
How the use of the fund is decided
As the fund is managed by the owners' meeting, its use must be decided by a resolution of the meeting. Some good practice:
- Put the item on the agenda in the notice of meeting, explicitly, stating the works or purpose and the estimated amount.
- Present quotes. For extraordinary maintenance works or improvements (inovações), the administrator must present at least three quotes from different sources (Article 1436 of the Civil Code).
- Record in the minutes the amount approved, the purpose and, where applicable, the replenishment plan.
- Report on how it was used at the following meeting.
See how to prepare the meeting in our owners' meeting guide.
Where the money should be held
The law requires the fund to be held in a bank. Good practice is to keep it in a separate account from the running-costs account, so the balance is visible at any time and does not get mixed up with day-to-day money. In the financial reports, the fund's balance should be shown separately.
At Condgest, owners check the condominium's accounts on the owners' portal, including the financial information presented at the owners' meeting.
What happens when you sell your unit
Contributions to the common reserve fund belong to the condominium and stay with the building. According to the prevailing view, the seller of a unit does not get back what they contributed, and the buyer benefits from the accumulated fund. A well-stocked fund is therefore a selling point.
At the deed of sale, the statement of charges issued by the administrator (Article 1424-A of the Civil Code) shows the charges in force and any debts on the unit, which includes unpaid contributions to the fund.
Common mistakes
- Not setting up the fund, or leaving it with a token balance.
- Mixing the fund with the condominium's current account.
- Using it to cover unpaid fees without a resolution and without replenishment. See what to do in unpaid condominium fees.
- Approving works without comparable quotes. In how to reduce condominium maintenance costs we explain how to plan.
This article is for information only and is not a substitute for legal advice on a specific case.
A fund planned for the works ahead
Condgest plans the building's preventive maintenance and provides clear financial reports, available online. Request a proposal for your condominium.
This article is for information only and is no substitute for legal advice on a specific case. It is a translation of the Portuguese original; the law referred to is Portuguese law.