The reserve fund represents the financial resources (savings) collected from co-owners, intended to cover the building’s common obligations.
All mandatory building costs, as well as regular and extraordinary maintenance of common parts and installations, are paid from the reserve fund. The costs financed from the reserve fund are prescribed by law and by a Government regulation of the Republic of Croatia. Co-owners may also decide that other expenses related to the maintenance of common parts and devices are to be covered from the fund.
“The property manager, in cooperation with the representative of the co-owners, prepares the Annual Management Program (AMP), or a multi-annual program when applicable. The AMP is a plan in tabular form showing the building’s expected revenues and planned expenditures for the period concerned. Co-owners have the right to submit proposals, remarks, or amendments to the proposed AMP and may adopt or modify it in accordance with the prescribed decision-making procedures.”
Any unspent reserve fund resources remain available to the building and are carried over into the next calendar year. The purpose of the reserve fund is precisely to accumulate funds for financing future interventions, especially larger maintenance and renovation works.
Obligation to Pay the Reserve Fund
- Every owner of an individual unit within a building (apartment, commercial space, etc.) is required to pay a monthly reserve fund contribution (service charge).
- The amount of the reserve fund is determined by co-owners through a majority of ownership shares.
- Any changes to the amount can also be decided by a majority of signatures, whenever convenient for the co-owners.
- The reserve fund may not be lower than €0.36/m² (the legal minimum).
- The amount is determined individually for each unit, in proportion to the total area of the apartment/unit.
Role of the Property Manager
The manager organizes collection of the reserve fund. Funds are paid into the building’s dedicated account and are allocated as needed, in accordance with the law and co-owners’ decisions.
Formula for calculating the minimum legal reserve fund:
Reference construction price × 0.54% annually ÷ 12 months
Example calculation with current reference construction price:
- Reference construction price: €796.34/m²
- 0.54% annually: €796.34 × 0.54% = €4.30 annually per m²
- Monthly amount: €4.30 ÷ 12 = €0.36/m² monthly
This obligation is prescribed by the Ownership and Other Real Rights Act (Articles 375–386).
WHAT IS PAID FROM THE RESERVE FUND?
Building maintenance
• Repairs and renovation of roof, façade, foundations, staircases, hallways, balconies, loggias (if common)
• Repair of cracks, moisture, plaster, paint
• Replacement and repair of doors and windows in common areas
Installations and equipment
• Maintenance and repair of electrical, plumbing, sewage, gas, and heating installations that are common
• Elevators (service, repairs, replacement of parts)
• Fire protection systems (hydrants, extinguishers, emergency lighting)
• Intercoms, video surveillance, doorphones, communal antennas
Regular costs
• Building insurance against fire and other risks
• Cleaning of stairwells and common areas (if contracted)
• Chimney sweep services (mandatory inspections and cleaning)
• Minor ongoing repairs (e.g., replacement of lightbulbs, locks, handles)
Administrative costs
• Fee for the building manager (legal entity or individual)
• Compensation for the representative of co-owners (if agreed in the Co-ownership Agreement)
• Preparation of the annual management program and accounting
Major works and capital maintenance
• Energy renovation (façade, windows, roof)
• Replacement of elevators or major installation repairs
• Structural works on foundations, roofs, common parts
• Works to improve building safety (fire protection systems, video surveillance if decided by majority)
WHAT IS NOT PAID FROM THE RESERVE FUND?
- Utilities within apartments (electricity, water, gas, heating)
- Repairs and maintenance inside apartments (except when caused by common installations)
- Individual co-owners’ expenses
Where is the Reserve Fund Kept?
- In a separate bank account of the building (opened and managed by the manager)
- Subject to inspection and review by co-owners
- Spending of the reserve fund must be approved by the representative of co-owners and the co-owners themselves
