What Is an Operating Budget? How to Prepare the Annual Budget

What an apartment's expenses will be over the year and on what basis its dues will be set is not a matter of guesswork; a plan is made for this. This plan is called an "operating budget" and forms the basis of the apartment's budget. In this guide we explain what the operating budget is, how it is prepared and the objection process under Article 37 of the Condominium Ownership Law No. 634 (KMK).

What is an operating budget?

An operating budget is an apartment's or complex's estimated annual income-expense plan. It shows the expenses to be incurred during the year, how these expenses will be distributed among the units and the dues/advance payment each owner will pay. In short, it is the apartment's annual budget and is the basis of the dues schedule.

Who prepares the operating budget?

Under the law, if there is no operating budget approved by the assembly of unit owners, the manager prepares one without delay (KMK Art. 37). The duty to prepare the budget therefore rests primarily with the manager. The budget prepared is submitted for the unit owners' approval. The assembly may, if it wishes, discuss and amend the budget or approve one it has itself prepared.

What is included in the operating budget?

As required by law, the operating budget includes the following:

• Estimated expenses: All expenses estimated for one year of the main property's management.
• Share per owner: The estimated amount from these expenses that will fall to each unit owner under KMK Art. 20 rules.
• Advance payment amount: The advance each owner is to pay to cover estimated and other possible expenses.

The budget therefore clearly shows both what the expense is and how much each will pay.

Objection process to the operating budget

The operating budget prepared is notified to the unit owners or those actually benefiting, against signature or by registered letter. From the date of notification, an objection can be raised within 7 days (KMK Art. 37). If an objection is raised, the budget is examined by the assembly of unit owners and finalised. This process ensures that the budget is fair and transparent. If no objection is raised or the assembly approves, the budget becomes final.

The legal value of the operating budget

The operating budget has an important legal value. A finalised operating budget or a decision of the assembly of unit owners can qualify as a document in the enforcement proceedings initiated to collect the dues debt. In other words, a sound operating budget is not just a budget plan but also the management's basis for debt collection. It is therefore critically important that the budget be prepared and notified in accordance with the procedure.

How is the annual budget prepared?

For a sound annual budget: the previous year's actual expenses are reviewed, regular expenses (doorkeeper, electricity, cleaning, maintenance) are estimated, foreseen major repairs are added, some reserve fund is planned, and the total expenses are distributed to the units according to the statutory rules. A realistic budget reduces the need for additional payments mid-year and secures the management's cash flow.

Summary

The operating budget is the apartment's annual income-expense plan and is the basis for dues. If there is no assembly-approved budget, the manager must prepare one. The budget contains estimated expenses, the share per owner and the advance payment. An objection can be raised within 7 days of notification. A finalised budget can qualify as a document in enforcement proceedings.

Preparing the annual budget, converting it into dues and tracking it manually is complex. Apt Yönet consolidates the whole process from the operating budget to the dues schedule in a single panel, providing the management with an orderly budget and collection system.

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Frequently Asked Questions

Who prepares the operating budget?

If there is no assembly-approved budget, the manager prepares one without delay and submits it for the owners' approval (KMK Art. 37).

How can I object to the operating budget?

An objection can be raised within 7 days of notification; if an objection is raised, the budget is examined by the assembly of unit owners.

Is the operating budget mandatory?

It is necessary for the orderly setting of dues and advance payments; if there is no assembly-approved budget, the manager is obliged to prepare one.

Is the operating budget useful in enforcement proceedings?

Yes. A finalised operating budget or assembly decision can qualify as a document in the collection of a dues receivable.

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This content is for general information only and does not constitute legal advice. You are advised to consult a legal expert about your specific situation.