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Guides · 2026-08-23

How to Build an Owners Association's Annual Budget

An owners association's annual budget is built from the actual operating record, not by copying last year's numbers and adding to them. The general assembly approves it, and the same assembly sets the start and end of the association's financial year and the rules for spending from its budget.

An association that holds a record of what was actually spent on each asset prepares its budget in one sitting. One that does not spends weeks gathering invoices and arrives at a number it cannot defend.

Where the numbers come from

Every budget line has a source that should exist before you start:

• Active maintenance contracts: their values are known and renewal dates are set.
• Shared electricity and water consumption in common areas.
• Recurring services: cleaning, security and pest control.
• What was actually spent on emergency work in the year just ended.
• Assets nearing the end of their service life that need renewal or replacement.

Why memory-based estimates fail

Because emergency work is both the most forgotten and the most draining. A failure handled mid-year with an urgent payment appears in no contract, is remembered by no one at budget time, and then recurs.

When work orders are linked to the asset they were performed on, "what did this lift cost us last year?" becomes a figure drawn from the record rather than a guess.

The reserve amount

The executive regulation allows the general assembly to decide on forming a reserve amount to meet costs exceeding the association's approved budget.

A budget with no reserve assumes nothing will fail off-schedule. That assumption has never held in any building.

Who decides and who executes

The regulation is clear: the general assembly sets the subscription amount and payment methods, and sets the financial year's start and end and the spending rules. The manager spends from the approved budget and takes financial actions within the granted authority.

Present the budget so it can be reviewed

Owners object less to the number than to its opacity. The minimum that makes approval straightforward:

• Cost broken into clear lines rather than a single total.
• What was actually spent last year against what was estimated for it.
• Which assets consumed more than others, and why.
• The proposed reserve amount and what it covers.
• Each unit's share calculated on the area-proportion rule.

The regulation also requires transactions to be entered in dedicated records that every owner may inspect. A budget backed by a record is not merely good practice — it answers an existing right.

The provisions on budget, subscriptions and the financial year are published in the Real Estate Unit Ownership, Partitioning and Management Law and its executive regulation at the General Real Estate Authority.

To see per-asset cost drawn from the operating record before budget season, book a demo with the MRFQ team.

Frequently asked questions

Who approves an owners association's annual budget?

The general assembly. It also sets the subscription amount and payment methods, the start and end of the financial year, and the rules for spending from the budget.

When does the association's financial year begin?

The general assembly sets the start and end of the association's financial year, so it is not a single date imposed on every association.

Must the budget include a reserve amount?

The executive regulation allows the general assembly to decide on forming a reserve amount to meet costs exceeding the approved budget, so the decision rests with it.

How do we estimate emergency work?

From the record of what was actually spent on it in prior years, linked to the asset that failed. Memory-based estimating usually drops this line entirely, and it is among the most draining.