Most Common Errors in Condominium Property Management

The significant responsibility of condominium property management today is of utmost importance. This role handles the most crucial aspects of the community, such as managing financial resources, controlling properties, and ensuring the budget is managed correctly for the well-being of the condominium.

However, during the administration of these properties, it is very common for errors to be made that can cause consequences both inside and outside the condominium. I will share the most common errors that tend to arise:

● Financial Errors

The administration of financial resources in condominiums is a task that carries a high risk of errors. This is because condominiums often handle a large amount of income and expenses that, in many cases, are not recorded properly due to the lack of clear and organized accounting. Likewise, bank reconciliations often show inconsistencies or significant differences that reflect deficiencies in financial control. Among the most common errors are the failure to record special assessments, omissions in service payments, and the improper use of funds designated for maintenance.

These errors can cause distrust among condo owners, delays in meeting obligations, and a loss of control over common funds. Therefore, it is essential to have accurate accounting records, clear financial policies, and periodic reviews.

● Not Having Contracts with Suppliers

Suppliers are essential for the proper functioning of the condominium, so it is important to formalize agreements through written contracts. However, it is common for these not to be executed, which can lead to improper charges, non-compliance with services, and a lack of clarity in responsibilities. Having formal contracts provides security, transparency, and protection for both the administration and the suppliers, especially when significant amounts are handled.

It is recommended that the administration periodically review and update contracts, ensuring they include clear clauses on payments, deadlines, obligations, and penalties for non-compliance.

● Controlling Beneficiary of the Condominium

The Federal Fiscal Code (Mexico) establishes that condominiums must identify their controlling beneficiaries—that is, the individuals who have decision-making power or control within the administration. However, in practice, this obligation is rarely met, as many condominiums do not have updated records for the members of the board of directors.

Having this information is very important, as it allows for maintaining transparent administration and complying with tax provisions. Furthermore, not having complete records can lead to high fines and serious penalties from the authorities. Complying with this measure helps avoid legal problems and reinforces trust in the condominium's management.

To comply with this obligation, it is recommended that the administration keep the records of the board members updated, including copies of official identification, proof of address, and documentation that supports their position or function. Starting with the July 2025 reform, the obligation to identify controlling beneficiaries will be strengthened, as the information must not only be safeguarded but also published or registered according to the guidelines issued by the authorities regarding anti-money laundering (AML) law (general rules are currently pending, which will dictate the registration process).

● Delinquent Condo Owners

In many condominiums, it is common for there to be outstanding maintenance fees owed by some condo owners, which over time can turn them into delinquent owners due to their increasing debts. The main error of the administration is usually not applying periodic or consistent collection strategies, which causes the condominium's general debt to increase.

It is recommended to establish more efficient collection methods, implement penalties for late payments, and offer discounts for prompt payment. These actions incentivize punctuality and help recover debts. In cases of persistent non-compliance, stricter measures can be adopted, or legal proceedings can even be initiated according to the applicable law.

● Not Respecting or Not Having an Annual Budget

At the beginning of each year, the condominium administration has the responsibility to present the annual budget to the assembly for analysis and approval. This document is an essential tool for financial planning, as it allows for projecting income (such as regular dues, special assessments, rents, and other concepts) and expenses (maintenance, services, salaries, and special projects) expected during the fiscal year.

However, in practice, it is common for this budget not to be prepared or presented in a timely manner, which generates financial disorder and hinders informed decision-making. Even when a budget exists, it is not always followed as approved, a situation that causes problems such as incorrect collections, improper use of resources (e.g., using maintenance funds to cover professional fees), and a lack of transparency in the condominium's economic management.

To avoid these deficiencies, the administration must implement budgetary controls and periodic financial reports (bimonthly or quarterly), in addition to being accountable to the board. Likewise, it is recommended to conduct internal or external audits to verify compliance with what was agreed upon.

Consequently, these are some of the most common errors that tend to occur in condominium management, although they are not the only ones. If you are an owner or administrator and believe any of these problems are happening in your condominium, it is recommended to take corrective measures as soon as possible to avoid greater consequences.

Likewise, the Cadena Advisors team can provide you with accounting, legal, and audit advisory services to ensure your condominium's management stays in order and complies with current regulations.