Apartment Service Charge

[Greenside]

Have been looking at an apartment which seems likely to be repossessed by a bank shortly. The current owner owes about 200k to the building for unpaid service charges and while the bank hasn't yet served the papers, the management is trying to broker a deal to get its money back and sell the apartment so the owner is let off the hook with "a nominal amount" over and above the bank debt to him. While the figures don't add up too badly, even with the unpaid service charge, I'm wondering:

1. Is it possible for unpaid charges of this sort to become the liability of the property in some way rather than the owner? It sounds unlikely but TIT.
   
2. If I were to wait and buy directly from the bank, the management would lose its leverage (and of course I might lose the deal to someone prepared to pay more) but then I'd have a difficult relationship with the building. Anyone been in a situation like this?
   

All advice appreciated.

[jbaldwin]

The transfer of ownership of a condo cannot be registered at the land office until all condo fee are paid. This would include the bank taking ownership by exercising its rights under a mortgage.

[quiksilva]

Yes I have seen these sorts of things before, and trust me they can be very messy.

You said that it has not yet been repossessed. Foreclosure takes forever and a day (okay up to 10 years) so the previous owner might just be dragging this case out.

If this is the case you can't buy it even if you wanted to, not yet anyway.

Also note that the management CAN block title transfer if they have not received CAM fees or have outstanding utility bills, but they can not actually broke a deal if the bank does not officially own it.

Speak to the bank directly and get the ownership status and intention to sell confirmed.

[Greenside]

Thank you. Both those posts are helpful.

It seems to me that maybe the condo management simply want to get their money back quicker than if the back actually forecloses on the owner, who is not in residence so I'm not sure I see much reason for him to be obstructive (saving face, perhaps?). I wonder if the mechanics of the deal are that the buyer would be expected to pay the owner a purchase price that includes the arrears (which would push up the closing costs and perhaps his tax liability?) or simply pay the building management directly.

Also, the place has been completely gutted as if for a refurb - other than the obvious reason of the owner changing his mind or running out of funds mid stream, is there any reason maybe to to do with impending foreclosure that one might do that?

[quiksilva]

You are still assuming that the owner actually wants to sell. If they want to keep it for whatever reason they could drag this process on for years.

I suggest that you forget it until you have ascertained that the owner truly wants to sell, at the same price you have seen, or if the banks have fully foreclosed.

The unpaid utilities and CAM fees is a minor concern when compared to this point.

[Greenside]

You are still assuming that the owner actually wants to sell. If they want to keep it for whatever reason they could drag this process on for years.

I suggest that you forget it until you have ascertained that the owner truly wants to sell, at the same price you have seen, or if the banks have fully foreclosed.

The unpaid utilities and CAM fees is a minor concern when compared to this point.

I take your point but why would the guy want to drag his feet if the bank is on the case already? If there is some coercion going on, I would expect the owner of the building who lives on the same floor to buy it at rock bottom and re-sell it and can't see why they should involve a third party as a buyer. Also. if the bank has indicated that its going to foreclose why wouldn't the owner want to sell and save face as well as his credit rating? The manager of the building is a money grubbing little weasel who undoubtedly will take some profit out of the deal but the overall price is still pretty fair and not suspiciously low.

We are thinking of making an offer because if the bank actually does foreclose, someone on the inside will snap it up, particularly if the price is anything less than has been asked of us. Bearing what you say in mind if we go ahead with the offer I will make it conditional on in-person confirmation from the owner, set a deadline and insist that any deposit is held in escrow. We have a good lawyer in reserve and the talks to date have been handled by an architect friend.

[dotcom]

One wonders how the condo (juristic person) would let anyone get so far in arrears? If it were me I would have disconnected his electric meter at about 90 days in arrears.

Agree with quicksilva. You need to confirm that the owner wants to sell it to you for what you consider to be a fair price & then he pays off his debt with the proceeds. OR you pay him fair market price less the condo fees which you then settle in cash.

Don't they do proper closing here where all the parties meet at the land office to swap paperwork & certified checks?

[Greenside]

One wonders how the condo (juristic person) would let anyone get so far in arrears? If it were me I would have disconnected his electric meter at about 90 days in arrears.

Because the place is "run" by a lazy management content to let the cost of maintenance fall on the people who do pay.

Agree with quicksilva. You need to confirm that the owner wants to sell it to you for what you consider to be a fair price & then he pays off his debt with the proceeds. OR you pay him fair market price less the condo fees which you then settle in cash.

Don't they do proper closing here where all the parties meet at the land office to swap paperwork & certified checks?

Have got tired of working through the manager who rejected our offer without passing it on yesterday. We now believe he is a self appointed agent and may be pitching the place without the knowledge of the owner so we're trying to track him down independently. The apt is in a good position but the way things are with the current pricing and the pound sinking lower by the hour I'm not going to fall over myself to do a marginal deal.

They do do proper closing here. You have to agree with the seller at the land office that the transaction is by mutual consent and, as someone pointed out, the property is free of liabilities as far as the building is concerned anyway. Not sure how it is for a house.

[quiksilva]

Ok first things first with all respect to architects everywhere they are good at design but they are not experts in real estate transactions and the law. Handle it yourself, or a lawyer or with a trusted reputable agent.

You are doing the right thing, forget the self appointed, self important manager. The only time you need to speak to them during this transaction is to pay the bills. Unless they can produce an engagement letter from the owner, which specifically confirms their appointment. However, even if they did I would still go direct in tis case, as their (un)professionalism shows through when they reject offers without passing them on, as they are morally obliged to do.

But all this is moot if the owner doesn't want to sell.

It is not uncommon here for Thai owners to drag out the foreclosure process. You spoke of face, but you are looking at it from the western point of view. In their eyes they would lose more face if they lost the apartment to the bank.

They are trying to save face by dragging it out until they can get back on their feet and pay it off when its convenient for them to do so. This (in their eyes) would be 'smart' and would help them to gain face. This is what happened in 1997, it was widespread.

[Greenside]

Ok first things first with all respect to architects everywhere they are good at design but they are not experts in real estate transactions and the law. Handle it yourself, or a lawyer or with a trusted reputable agent.

You are doing the right thing, forget the self appointed, self important manager. The only time you need to speak to them during this transaction is to pay the bills. Unless they can produce an engagement letter from the owner, which specifically confirms their appointment. However, even if they did I would still go direct in tis case, as their (un)professionalism shows through when they reject offers without passing them on, as they are morally obliged to do.

But all this is moot if the owner doesn't want to sell.

It is not uncommon here for Thai owners to drag out the foreclosure process. You spoke of face, but you are looking at it from the western point of view. In their eyes they would lose more face if they lost the apartment to the bank.

They are trying to save face by dragging it out until they can get back on their feet and pay it off when its convenient for them to do so. This (in their eyes) would be 'smart' and would help them to gain face. This is what happened in 1997, it was widespread.

Thanks for you helpful comments QS. My architect friend has been helping me make sense of the manager's position as my girlfriend's English isn't up to translating business conversations. If this gets serious then the lawyer will be first stop.

I take your point about face and the bank but guess I'd assumed that once the foreclosure process had reached a certain point he'd be pleased to accept some kind of deal in order not to let the bank take it. Who knows? To complicate matters, tracking down the owner is proving tough since the addresses in the block follow no set system (surprise, surprise!) and from canvassing the only available neighbour it sounds like a farang was living there last although as tenant or owner we have no idea.

It's turning into a detective story...

[dotcom]

Quicksilva makes a good point. If this building is so poorly managed - why on earth would you want to live there?

Keep looking.

[Greenside]

Quicksilva makes a good point. If this building is so poorly managed - why on earth would you want to live there?

Keep looking.

Don't want to live there but it's a good location and they're easy to rent out at the right price. I will keep looking though.