Co-ownership works fund: the Complete Guide
Since 2017, the Alur law has required the creation of a works fund by co-ownerships: this must make it possible to anticipate and better bear the cost of work carried out for the maintenance, conservation or renovation of common areas .
Which condominiums are concerned?
In principle, all condominiums “for total or partial residential use” must set up a special fund. Some benefit from an exemption:
- Condominiums of new buildings benefit from a temporary exemption from the creation of funds for a period of 5 years after acceptance of the works.
- Condominiums relating to buildings of less than 10 lots have no obligation to create funds if the decision is voted unanimously at a general meeting.
- Co-ownerships for which the DTG - Global technical diagnosis - does not note any work required for the next 10 years are exempt from the fund for the duration of the DTG, ie 10 years.
For the financing of what works?
The works fund is used to finance:
- All compulsory work, prescribed for example by prefectural decree,
- Work decided at a general meeting , outside the estimated budgets, such as maintenance work, conservation of the building or equipment - elevator, etc., improvement or even technical studies,
- Urgent work to safeguard the building
Setting up and supplying the fund
The creation of the fund must be part of the general meeting agenda, and be recorded within 3 months of the meeting.
To set up the fund, the co-ownership must first of all have a specific and separate account, different from the one that finances the current expenses, but in the same banking establishment as this one. Contributions must be paid into this specific account for the works fund.
The account must then be funded to the tune of at least 5% of the estimated budget for the year, by a compulsory annual contribution by each co-owner. This is calculated on the directors' fees, if no forecast has yet been established, nor specific allocation. Otherwise, it must be calculated on the planned distribution keys.
Apart from the compulsory annual contributions, it is possible to feed the fund in a complementary way, according to specific needs, after decision in the general meeting.
It is also provided that in the event that the amount of the works fund exceeds the amount of the provisional fund, it is possible to suspend the provision of the account.
TIP: The tax treatment of your contributions
If the owner is a lessor, contributions intended for the works fund cannot be deducted from property income as provisions for condominium charges. If the owner is an occupant, he cannot benefit from any deduction.
The expenses resulting from these contributions may however be deductible under certain conditions. Interest from contributions may be taxable.
If necessary, the site budget must be voted by an absolute majority, ie more than 50% of the votes of all the co-owners, including the absent represented. If one third of the votes are in favor, it is possible to request a second vote, for adoption by simple majority, ie 50% of the votes plus one vote of a co-owner present.
In the event that the work relates to special common parts, that is to say assigned to certain owners, the vote only concerns the co-owners who are users and users of these parts.
The future of the fund in the event of a sale
When selling or transferring their lot, a co-owner cannot recover the sums paid for the works fund, whether or not they have been used: the Alur law specifies that these are definitively attached to the lot, and acquired by the syndic of co-owners.
It is then possible, in the deed of sale, to include a special mention for the reimbursement of the sums estimated by the future purchaser, insofar as when entering the co-ownership, he will benefit from the works fund already constituted and supplied by the previous owner.