When a co-owner receives a call for funds, they may feel that they are being asked to pay an invoice. That is not quite the case, however. A call for funds corresponds to their share of the sums the co-ownership needs in order to operate and to pay its expenses.
Where does the amount requested come from ?
Each year, the general meeting votes a provisional budget for the co-ownership. This budget estimates the expenses that the building will have to bear during the financial year: collective heating, water, electricity for the common areas, insurance, maintenance, cleaning, lift or the property manager's fees. This amount concerns the building as a whole. It must therefore be apportioned among the co-owners.
The apportionment is carried out according to the shares applicable to each unit. These are defined in particular in the co-ownership regulations and do not necessarily correspond to an equal division between all the owners. Once this apportionment has been made, the property manager asks each owner for the sum corresponding to their unit. This request constitutes a call for funds.
Why must you pay before the expenses are known ?
The annual budget is based on an estimate. Not all the invoices have yet been received when the first calls for funds are sent out. The co-ownership must nonetheless have money available to pay its suppliers as it goes along. It cannot wait until the end of the year to pay the insurance, the heating or the maintenance contracts.
Calls for funds therefore make it possible to build up the necessary cash gradually. Each co-owner pays their share before all the final expenses are known. They do not necessarily pay more: they pay in advance an estimate of what the building is expected to spend.
Is a call for funds optional ?
No. A call for funds becomes due on the date set. Even though it is based on a provisional budget, it is not a mere indication. The co-ownership relies on everyone's payments to honour its commitments.
When a co-owner pays late, it is not only their own situation that is affected. The lack of cash may force the co-ownership to delay certain payments or to make the other co-owners temporarily bear the shortfall. In the event of non-payment, the property manager may initiate the recovery procedures provided for by the applicable legislation.
Do all the sums called serve the same purpose ?
No. In particular, a distinction must be drawn between the provisions intended for current expenditure and the sums paid into the works fund. The current provisions finance the running of the building during the financial year. The works fund serves a different purpose and must remain separately identifiable in the accounts. A sum available in the works fund does not therefore automatically constitute a reserve that can be used to pay the building's ordinary charges.
When is the final amount known ?
The exact amount of the charges is only known after the close of the financial year, when the actual expenses are compared with the provisions called. This comparison is presented in the annual statement. It may reveal an additional amount to pay or, conversely, a balance in the co-owner's favour. The call for funds is therefore an advance. The annual statement then makes it possible to reconcile this advance with reality.
Reference texts
The operation of calls for funds is governed in particular by the amended Law of 16 May 1975 establishing the statute of co-ownership of built property and by the Grand-Ducal Regulation of 13 June 1975 adopted for its implementation. The works fund is governed by Article 11bis of the Law of 16 May 1975, introduced by the Law of 30 June 2022.