Does the developer of a Condo have voting rights for each unsold unit.

[Kevsie]

I have purchased a freehold Condo I’m my name. I’m English. I was appointed to the committee recently to find out the developer is using the unsold units to control the AGM and committee.

I presume the transfer tax on each unit has to be paid before he can use the vote.

I am aware he can only hold 50% of the committee vote.

He is now allowing these units to be rented on short term rentals sometimes 2 or 3 days not months or weeks.

 

 

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[tjg27]

This is my observation too. A very interesting topic but I don't know what is legal or what isn't. I suspect anything that is illegal is still common practice and difficult to challenge.

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[Langsuan Man]

I know that in my moo bann,  the owner / developer had voting rights when we formed the committee and used his votes to insure a quorum

 

Now that the moo bann has sold out he no longer has a vote

 

So I think that unsold units would still retain their voting rights  

[Kevsie]

Even if they are not registered or he has a majority? Mmmh


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[Delight]

 To my understanding it is simple.

When a   building is granted Condominium Juristic Person status then every unit has an owner i .e the owner of every unit is in the name  of the Corporation(i.e. the Developer) that made the application.

As units are sold  then they are transferred

For reasons that  I cannot explain the name of the Developer does not appear on the Condominium Title Deed.

That ommision may suggest that my understanding is flawed.

 

  However if I am correct then the Developer has the rights and obligations as per every other co -owner. Certainly the Developer has to pay maintenance fees on un sold units.

Section 47 of the Act states that no single owner can have more votes than the total votes of all the other co -owners.

i.e if the total vote of all the other co -owners is 15 % of the total voting allocation-then the developer can only have 15%

 

 

 

 

[Kevsie]

Great reply thanks. But I have 2 more issues. Are you he has to pay maintenance fees on each unit? And secondly, how does the transfer tax Impact on the unit ownership? Or is it simply another way of getting money?


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[smutcakes]

6 minutes ago, Kevsie said:

Great reply thanks. But I have 2 more issues. Are you he has to pay maintenance fees on each unit? And secondly, how does the transfer tax Impact on the unit ownership? Or is it simply another way of getting money?


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They are supposed to pay Condo fees when the condo is registered as per any other owner as per the Condominium Regulations.

Transfer fee is paid when they transfer the unit, the transfer fee is not paid to the developer.

 

Delight is correct in that they can only have vote equal to the total other Co-owners, although if there vote is reduced to 15% if they have only transferred 15% to other owners, then this then becomes the 50% mark, so in reality it is very simple for them to pass resolutions as they only need one more vote out of the 15% transferred to pass resolutions which require not less than one half of the total ownership. Shrewd developers will have foreseen this and either fostered relations to someone in the 15% to vote with them, or transferred units into other company names etc outside of the main holding company.

[Kevsie]

Yeah just as I thought. Another big hole that need filling. Thanks all


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[lkn]

22 hours ago, Kevsie said:

the developer is using the unsold units to control the AGM and committee

While they can effectively control the AGM because they have 50% of the votes, they cannot control the committee, as only one person can represent the developer when it comes to being elected as committee member.

[Kevsie]

Correct but as he has control of the AGM he effectively picks his own committee


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[jackdd]

Renting out rooms on a daily basis requires a hotel license, so if you don't like what he does you should check if he has one

[cheeryble]

6 hours ago, jackdd said:

Renting out rooms on a daily basis requires a hotel license, so if you don't like what he does you should check if he has one

....for a minimum number of rooms and a minimum term i believe.

Edited March 14, 2018 by cheeryble

[Kevsie]

He certainly does not have one. This is a condo for residential purposes only.


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[smutcakes]

Probably an unpopular point, but in most cases where developers still hold large inventory of unsold stock they do actually have the best interests of the condominium at heart given that negative actions will have a negative impact on the value of the units they are holding.

 

The problems normally occur when what the developer considers good for the condominium is often not what other Co-owners feel, especially at the beginning of the condominium as there is often many contentious issues like defects, ongoing construction works, general getting up to speed on say to day management etc. which can be frustrating to Co-owners who have moved in early on.

 

The hotel part is a fairly grey area and i think you would have limited chances of getting anywhere going down that route. My advice would be to try and come to mutual understanding and having some level of working relationship with the developer even if you cannot get everything you want. It will probably be a give and take relationship, but being on talking terms and if possible amicable terms would probably make the developer concede and be more accommodating on certain issues than all out trench warfare.

[joebrown]

I once made the mistake of buying an 'off the plan' condo in Jomtien. The developer adopted an attitude which translated as 'what right do you think you owners' have to question what we do?'

It got to the stage where a Committee member co-owner was threatened with legal (defamation) action, because he was witnessed talking to another co-owner about Common Fees.

If you are in any doubt about what Common Fees/Sinking Fund payments should be paid on any unsold unit, I would ask the developer to supply the Committee with a list of all sold units and the Fees paid, which should be cross-checked to copies of the bank book(s) IMO any unit that is occupied whether sold, rented or otherwise should have all the relevant fees paid on it, just like any other genuine co-owner.

If the developer is reluctant to co-operate, it might be he has something to hide. The well worn phrase 'Caveat Emptor' is the overriding advice I can suggest when buying a condo in Thailand, or any where else.

[KittenKong]

Probably an unpopular point, but in most cases where developers still hold large inventory of unsold stock they do actually have the best interests of the condominium at heart given that negative actions will have a negative impact on the value of the units they are holding.

Most developers here are only interested in themselves and their bottom line. In fact I suspect that they are all only interested in that. And this is why they will happily raid the sinking fund in order to avoid increasing common fees, or will happily watch maintenance go to pot in order to keep costs down, or will rent out units on a hotel basis in clear breach of the law, or will ride rough-shod over the desires of other co-owners by manipulating votes at meetings.

The idea of developers here being in any way philanthropic is insanity and in my experience they are a despicable bunch, rather like management companies.

[smutcakes]

2 hours ago, KittenKong said:

Most developers here are only interested in themselves and their bottom line. In fact I suspect that they are all only interested in that. And this is why they will happily raid the sinking fund in order to avoid increasing common fees, or will happily watch maintenance go to pot in order to keep costs down, or will rent out units on a hotel basis in clear breach of the law, or will ride rough-shod over the desires of other co-owners by manipulating votes at meetings.

The idea of developers here being in any way philanthropic is insanity and in my experience they are a despicable bunch, rather like management companies.

Yes because a best way for a developer to further their interest is to let the development go to rack and ruin and decimate the value of the units they still hold.

 

[Delight]

2 hours ago, joebrown said:

 

If you are in any doubt about what Common Fees/Sinking Fund payments should be paid on any unsold unit, I would ask the developer to supply the Committee with a list of all sold units and the Fees paid, which should be cross-checked to copies of the bank book(s) IMO any unit that is occupied whether sold, rented or otherwise should have all the relevant fees paid on it, just like any other genuine co-owner.

 

 

It is very likely that the developer has not opened a separate co -owner bank account.

If so all co -owner money will be paid into the original developer's bank.

The name of the co -owners account will  typically be

name of condo Condominium Juristic Person.

If there is no new account -it is highly unlikely that he will  not allow inspection of the developer's account.

 

 

[jippytum]

Given the developer is paying maintenance fees on the unsold units he has the right to vote the square meter value of every unit but not more than 50% of the overall vote .He is not allowed to rent units in the condo for less than a minimum period of thirty days  per calendar month

[KittenKong]

Yes because a best way for a developer to further their interest is to let the development go to rack and ruin and decimate the value of the units they still hold.

That's entirely a matter of percentages. Some projects will probably never be fully sold, and the developer will have been entirely aware of this from the outset and it will have been part of their business plan. In those cases the developer will not be very concerned about the value of unsold units.

Most companies and people in Thailand are very short-sighted and cant see beyond the end of their nose. They certainly dont like the idea of spending money today for benefit tomorrow. The proof of this is everywhere you look: corners cut, jobs bodged and maintenance ignored, just to save a handful of Baht. Even more so if the money they would have to spend would mostly benefit other people, which is of course entirely the case in a condo development. In most cases here a developer's only interest is minimising costs, maximising profit and getting rid of the stock: he is not there for the long term and never will be. This is why most new builds here are constructed out of chipboard and bling rather than good quality durable materials. Anyone who thinks otherwise probably also believes in Father Christmas.

[KittenKong]

Given the developer is paying maintenance fees on the unsold units ....

It is not unusual for developers here to evade paying the maintenance fees on unsold units, sometimes with the connivance of the JPM who may be their appointee. There have been several such cases reported in this forum.

[lkn]

11 hours ago, KittenKong said:

The idea of developers here being in any way philanthropic is insanity and in my experience they are a despicable bunch, rather like management companies.

If you ask our former chairman, I’m sure he’ll be quick to blame our developer for all sorts of stuff, including refusal to pay common fee.

 

Fact is, the accounting was a bloody mess and the developer did not receive correct invoices, and no-one could properly document what they owed.

 

And if you ask me, I have far worse things to say about the former chairman (a foreigner) than our developer.

 

I know there are terrible developers, but I am shocked at how many terrible foreigners are also here, and how badly they run the buildings.

 

It’s actually a somewhat interesting question: Why are there so many problems running buildings in Thailand? Does the setup just invite too much abuse of power? Or is it possible that Thailand just attracts a lot of dodgy types that can act in ways that no-one would tolerate back home?

 

[KittenKong]

Please dont imagine that my poor opinion of developers here extends only to Thai ones. On the contrary, I would say that some of the farang developers here are even worse, and they also seem to be more likely to go bust.

And I'm sure that in some cases any non-payment of common fees is indeed down to incorrect billing as you mention. However I suspect that the majority of cases are not.

Why are there so many problems running buildings in Thailand? Does the setup just invite too much abuse of power? Or is it possible that Thailand just attracts a lot of dodgy types that can act in ways that no-one would tolerate back home?

It is a good question. A mixture of both, I would say. Plus a measure of farang co-owners simply not understanding just how widespread corruption can be here, be it with management or with the co-owners and committee. I know a surprisingly large number of sensible committee members in various committees here who have resigned simply because they could not stand the general corruption and incompetence on both sides of the fence, and from people of all sorts of nationalities. Not something I ever came across in the west.

Edited March 15, 2018 by KittenKong

[smutcakes]

11 hours ago, lkn said:

If you ask our former chairman, I’m sure he’ll be quick to blame our developer for all sorts of stuff, including refusal to pay common fee.

 

Fact is, the accounting was a bloody mess and the developer did not receive correct invoices, and no-one could properly document what they owed.

 

And if you ask me, I have far worse things to say about the former chairman (a foreigner) than our developer.

 

I know there are terrible developers, but I am shocked at how many terrible foreigners are also here, and how badly they run the buildings.

 

It’s actually a somewhat interesting question: Why are there so many problems running buildings in Thailand? Does the setup just invite too much abuse of power? Or is it possible that Thailand just attracts a lot of dodgy types that can act in ways that no-one would tolerate back home?

 

I think its a mix of a number of things:

1) disreputable developers and crooks

2) No or limited due diligence of developer or building before people purchase

3) Lack of understanding of roles of JPM, Management, Developer and Committee

4) Many people purchasing who have never lived in multi owned buildings and what this entails.

5) A large proportion of unhinged farangs with to much time on their hands for idle gossip

[pipeflaw]

If the developer is not paying MF on unsold units, and the payment is 6 months or more delinquent, then the owner loses his/her vote until what is owed is fully paid with accrued interest.  We litigated this in court and the court ruled that the developer was liable for MF on unsold units.

[smutcakes]

20 hours ago, pipeflaw said:

If the developer is not paying MF on unsold units, and the payment is 6 months or more delinquent, then the owner loses his/her vote until what is owed is fully paid with accrued interest.  We litigated this in court and the court ruled that the developer was liable for MF on unsold units.

They lose their vote but do not lose their ability to attend the meeting and use their ownership to form a quorum. They cannot vote on agendas but it can make passing things my simple majority of those present in the meeting difficult due to their presence being part of the total present in the meeting.