The ideal scenario for any condominium association and its administrator is to have a contingency fund in the budget that ranges from 8% to 15% of the total expenses. In this case, the need to issue extra fees is very unlikely, unless a major repair or repair occurs. In condominiums where the budget does not include a contingency fund, it is common to have two or more extra fees issued per year.
SANTO DOMINGO.- Faced with the reality of high non-payment rates among residents of many condominiums who fail to meet their monthly maintenance fee obligations, many buildings have opted to establish late fees as a consequence for those who do not pay.
“Many condominium regimes establish late fees when payments are not made on time, which is a positive consequence in the pursuit of ensuring that everyone commits to paying their monthly maintenance fee on time,” says Edwin Martínez, Manager of MP Condominios, which manages 20 towers in the National District and Santo Domingo East.
It states that non-payment by condominium owners affects the fulfillment of monthly obligations, placing the administrator at a disadvantage in their management. “Sometimes we have to decide which services to stop paying for when there aren't enough funds to cover all the month's expenses,” says the executive, who laments that foreigners have a better payment culture than Dominicans.
The situation worsens when there are several delinquent owners in the same building, whose collection process begins with a request via email and/or telephone. “If payment is not received through this process, services are suspended (gas, electricity, access to common areas, among others). The final step is the initiation of legal collection actions, based on Law 5038, the Condominium Law, which allows for the registration of a lien against the property (opposition to transfer), seizure, and all other measures necessary to collect the amount owed for maintenance and additional fees.”.
Funds management
As with any process involving financial resources, the potential for mismanagement is ever-present, and condominiums are no exception. Both in Santo Domingo and in other areas, there are modern towers where significant sums of money are managed each month.
Martínez, a marketing graduate from APEC University with a specialization in condominium management from UNIBE, explains that these situations occur when monthly expense reports are not submitted. “In our years of experience, we have seen several cases where there is no transparency in the handling of funds, and this generally happens when the administrator does not submit monthly income and expense reports.”.
He explains that in the traditional model, where the administrator is one of the owners of an apartment, the funds are generally handled directly by him in a personal account in his name, which does not happen when it is an external company.
“In an administration with an external company, the funds are deposited into a bank account in the name of the condominium, and the responsible signatures are in charge of at least two members of the board of directors (who must be owners), with joint signature, that is, to issue a check or a transfer, two people must approve it,” says the executive who has been at the head of the company for eight years.
He adds that twice a month, the administrator issues payment requests with the expenses to be covered in the fortnight, such as payroll, services, fuel, among others, to be reviewed by the directors and proceed to sign the checks or approve the transfers.
Martínez believes that managing condominium funds is the most important aspect of good administrative management. He recommends always avoiding managing resources independently and instead relying on the board of directors. “This has numerous advantages, including transparency and building trust. Every administrator handles third-party funds and must do so with honesty.”.
Extra fees vs. unforeseen expenses
Martínez maintains that each condominium is managed differently and that extra fees are defined based on annual budgets, approved by the condominium assembly.
“The ideal scenario for any condominium and administrator is that the budget includes a contingency fund of between 8% and 15% of the total expenses. In this case, it is very unlikely that extra fees will be needed, unless there is a very high-value repair. In the case of condominiums whose budget does not include funds for contingencies, it is normal to have two or more extra fees issued per year,” he explains.
Advantages of a company
He understands that a condominium that hires the services of an external company has multiple advantages, among which he cites administrative organization, timely response to any emergency or unforeseen event that may arise, vetted and supervised employees, efficient collection management, optimization of resources, optimal maintenance of the structure, preventive maintenance of equipment and legal and tax advice.
“I’ve always said that the importance of having an external company is having someone to turn to in any situation. The work of an administrator who performs their duties responsibly and enthusiastically is limitless and goes beyond the functions defined in Law 5038. For example, an administrator should only intervene in common problems, but generally, when there’s a problem within an apartment or between apartments, they can get involved by collaborating in finding a solution,” notes the manager of MP Condominiums. He maintains that his company’s work schedule includes supervision at least three times a week.
