Is a Reserve Fund (Repair Fund) Mandatory?

In an apartment, when the elevator suddenly breaks down, the roof starts leaking or a water pipe bursts, where is this unexpected expense met from? If there is not enough money in the treasury, a large payment must suddenly be demanded from the residents, which causes discomfort. The reserve fund (repair fund) exists precisely for such situations. In this guide we explain what the reserve fund is, whether it is mandatory and its importance.

What is a reserve fund?

A reserve fund is a fund built up in advance to cover the apartment's unexpected or large expenses. It is also called a repair fund. Part of the regular dues, or a separately set amount, is transferred to this fund, creating an accumulation over time. The aim is to have a ready resource so that when a sudden need arises, large amounts do not have to be demanded from residents at short notice.

Is a reserve fund mandatory?

The Condominium Ownership Law allows a reserve fund (operating fund) to be created in the management plan or by a decision of the assembly of unit owners. In practice, many management plans provide for the collection of a certain reserve fund. In other words, a reserve fund is collected if it is regulated in the management plan or accepted by an assembly decision. Whether it is mandatory largely depends on the management plan and the decisions taken. However, if provided for, unit owners are obliged to contribute to this fund.

Why is a reserve fund important?

The benefits of a reserve fund are significant:

• Preparation for sudden expenses: Provides a ready resource for unexpected breakdowns or repairs.
• Protects residents: Eliminates the need to suddenly collect large amounts.
• Balances the dues: Prevents a major expense from being loaded onto the dues at once.
• Flexibility for management: Provides the ability to act quickly in emergencies.

How is a reserve fund built up?

A reserve fund is generally built up in two ways: either by adding a small reserve fund share into the regular dues and accumulating it each month, or by setting it as a separate item in the annual budget. What matters is that this fund is accumulated regularly and transparently and tracked separately. The reserve fund must be kept apart from day-to-day operating expenses and used only for its intended purpose (major/urgent expenses).

How should the reserve fund be used?

The reserve fund must be used not randomly but for its intended purpose. The fund is used for major repairs, urgent breakdowns or unforeseen mandatory expenses, not for routine operating costs. The use of the fund should, where possible, be made by a decision of the assembly of unit owners or within the authority provided in the management plan. This both ensures transparency and prevents the fund from being spent outside its intended purpose.

Summary

A reserve fund (repair fund) is a fund built up in advance for the apartment's unexpected and major expenses. It is collected if regulated in the management plan or accepted by an assembly decision, and unit owners are obliged to contribute. It provides preparation for sudden expenses, protects residents and balances the dues. It must be kept separate from day-to-day expenses and used for its intended purpose.

Tracking the reserve fund separately from operating expenses transparently is important for management. Apt Yönet tracks reserve fund and operating items separately, providing the management with a fund management system that clearly shows accumulation and use.

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Frequently Asked Questions

Is a reserve fund mandatory?

It is collected if regulated in the management plan or accepted by an assembly of unit owners' decision, and owners are then obliged to contribute.

What is the reserve fund used for?

For major repairs, urgent breakdowns and unforeseen mandatory expenses, not for routine operating costs.

How is the reserve fund collected?

It is accumulated regularly by adding a small reserve fund share into the dues or by setting it as a separate item in the annual budget.

Who uses the reserve fund?

The fund must be used by assembly decision or within the authority provided by the management plan, in line with its intended purpose.

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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.