Buyer’s Q&A
What happens if a major repair is needed?
Reserve fund covers it first; if costs exceed the reserve, a pro-rata special assessment is levied on each owner.
The short answer: The LLC's reserve fund covers the cost first. Reserve funds are sized to cover most expected major repairs over a property's lifecycle. If the cost exceeds what is in the reserve fund, the LLC levies a special assessment — each owner contributes pro-rata. Operators with well-funded reserves rarely trigger special assessments. Operators that under-fund the reserve to keep annual fees looking low produce more frequent surprises.
The sequence of events
When a major repair is needed (full roof replacement, structural work, full HVAC overhaul, major exterior renovation), the operator's property manager assesses the scope and gets contractor quotes. The operator then proposes a funding plan to owners:
- Reserve fund first. The property's reserve fund covers as much of the cost as it can.
- Insurance second. Where the repair is covered by the LLC's insurance (e.g. storm damage), the insurance claim covers the relevant portion.
- Owner vote on remaining gap. If reserve + insurance don't cover the full cost, the operator proposes a special assessment for the gap. Owners vote per the LLC operating agreement.
- Pro-rata billing. Once approved, each owner is billed pro-rata for their share of the gap.
Realistic examples
| Repair | Typical cost | Per 1/8 share if reserve doesn't cover |
|---|---|---|
| Full roof replacement (Mediterranean villa) | €30,000–€60,000 | €3,750–€7,500 |
| Full HVAC system overhaul | €25,000–€50,000 | €3,125–€6,250 |
| Foundation work after settlement | €40,000–€100,000 | €5,000–€12,500 |
| Major weather damage above insurance | €15,000–€80,000+ | €1,875–€10,000+ |
| Pool resurfacing + replumb | €8,000–€20,000 | €1,000–€2,500 |
In a well-managed property with a properly-funded reserve, owners typically pay none of these out of pocket — the reserve absorbs them. In an under-managed property, a portion or all of the cost can hit owners as a special assessment.
Who decides what counts as "major"
The LLC operating agreement defines the threshold above which the operator must seek owner approval (typically a stated euro amount). Below the threshold, the operator can act unilaterally and draw from reserves. Above it, owner vote is required.
What protects owners from operator over-spending
Three structural protections that buyers should verify exist in any operator's LLC operating agreement. First, voting thresholds for special assessments — usually requiring 50%+ or 67%+ owner approval depending on size. Second, contractor-quote transparency — owners should be entitled to see multiple competitive quotes before approving major work. Third, reserve-fund balance transparency — owners should be able to verify the reserve balance at any time, not just at annual reviews.
Insurance handles more than buyers expect
The LLC carries property insurance that covers most weather-related damage, theft, fire, accidental damage to fixtures, and (where applicable) flood/earthquake riders. The deductible eats into the reserve fund, but the bulk of major weather damage is insurance-funded, not owner-funded. Buyers should ask the operator what's covered and what's excluded under the specific property's policy.
What an owner can refuse
Owners can vote against a proposed special assessment if they believe it's premature, over-specified, or unfair. If the assessment fails the operating-agreement voting threshold, the operator must either rework the scope or defer the work. Owners who repeatedly vote against necessary work typically face the reality that deferred maintenance compounds and the eventual cost is higher.
What buyers should ask before purchase
Four questions. What is the LLC's current reserve fund balance, and what does the capital plan say it should be? What is the operator's history of special assessments on this property over the past 5–10 years (size, frequency, reason)? What does the operating agreement say about owner voting thresholds for special assessments? What is the operator's property insurance coverage limit, and what's the deductible?
Where to compare reserve-fund disclosure across operators
Co-Ownership Property's marketplace includes properties whose reserve-fund balances and special-assessment history are disclosed per listing.