The financial management of a co-ownership requires rigorous budget planning, to ensure not only the stability of the structure, but also the satisfaction of all co-owners. As a condominium manager, one of your main responsibilities is to develop and manage a budget that meets the needs of the community, while ensuring that the condominium remains in good financial health.
In this guide, we give you the keys to successful budget planning for a condominium corporation, by exploring the essential elements that make it up.
Assessment of needs and resources
Before defining a budget, it's important to study the condominium's needs and know what financial resources are available. This step involves gathering all relevant financial data, including :
- Revision of maintenance contracts ;
- Review of operating costs;
- Analysis of past expenditure ;
- Consultation with the co-owners' representative, the Conseil Syndical, to define priorities for short- and long-term repair and replacement needs.
It's important to take into account fixed costs, such as common area maintenance and administrative costs, as well as variable costs such as unexpected repairs.
Draw up a list to prioritize needs according to their urgency and impact on the condominium.
Budget preparation
Once you've established a clear list of needs and resources, you're ready to draw up a detailed condominium budget. This should include all current expenses for the coming year, as well as reserves for unforeseen expenses. You should also anticipate major long-term expenses, such as facade renovation, electrical upgrades, roof renovation...
There is no legal basis for calculating a condominium budget. It simply has to be prepared once a year and submitted to the general meeting of co-owners for approval.
Items to be included in the budget vary from condominium to condominium, but generally include:
- Maintenance and upkeep of common areas;
- Utility charges such as water, electricity and gas;
- Insurance costs ;
- Managing agent's fees ;
- Administrative management fees ;
- Property taxes ;
- Provisions for renovations and major repairs.
Balancing income and expenditure
Your budget must be balanced to avoid a deficit that would lead to an excessive increase in condominium charges.
Make sure that income, mainly from condominium owners' contributions, covers all planned expenses for the coming year. If this is not the case, adjustments will have to be made, notably an increase in charges, but also the postponement or cancellation of certain expenses.
Creation of a precautionary reserve
To cover unforeseen, essential and urgent expenses, it is advisable to set aside a precautionary reserve in the budget.
Ideally, this reserve should represent a percentage of total annual expenses to avoid a sudden increase in the amount of expenses when the time comes. Incidentally, since January 1, 2017, setting up a contingency fund has been mandatory.
Transparent communication
Transparency is the best way to gain the trust of condominium board members, and to work collaboratively with them. Keep them regularly informed of planned expenses and any adjustments, and organize ad hoc meetings to gather their opinions and comments.
Budget monitoring and review
Budget planning doesn't stop once the budget has been drawn up. Ongoing monitoring is essential to ensure that the condominium manager's expenses remain in line with those initially planned. If there are any discrepancies, you need to make adjustments quickly.