Filing Formal Complaint About Condominium Construction Company

[pepi2005]

Hello,

I've purchased a condominium in a new project in Pattaya about 2 years ago and already paid about 2/3 of the price. While they had made quite fast progress at the beginning, the construction has come to a standstill about 1 year ago.

Now I found out that the (farang) director of the company seems to have sold 75% of the shares to a Thai Company (not sure if this is even legally possible without the other shareholders agreeing to that, but that's what I've heard, there might be other <deleted> involved) and I worry to lose my investment if the bank claims its loan or they try to get rid of me and another buyer. Of course we don't have a chinod at this point, just our contract with the (former?) director of the construction company.

The other condo buyer I know told me that he filed a complaint about the construction at the Consumer's department or the Land Office (not sure where) so that everything related to the project is blocked until the conflict is resolved.

Does anyone know

a) where this complaint has to be filed

if this is sufficient or should I better take other steps too

c) is it sufficient if he already did it or would I have to do it as well to formally protect my very personal interests?

d) what other steps would you suggest?

thanks,

p.

[DC1]

Hire a lawyer. Formally terminate the contract for late completion (or other default by the developer). Then file suit in civil court to recover your investment. You can also file a complaint with the Consumer Protection Board. However, unless the registered address of the developer is in BKK, the Consumer Protection Board would not be very helpful.

[BWPattaya]

This is why I always tell people to buy a finished condo in a building that is already completed and functioning properly. It may seem cheaper buying before completion but your money is being used to build the project or line somebody's pockets. Too many people have lost money or spent years going through courts to try to get their money back.

[PattayaParent]

^I'm certainly glad that 3 1/2 years ago I bought a flat that was already completed as I can see from my window the unfinished skeletons of the places some developers and estate agents were recommending me to buy.

[dickie58]

This is why I always tell people to buy a finished condo in a building that is already completed and functioning properly. It may seem cheaper buying before completion but your money is being used to build the project or line somebody's pockets. Too many people have lost money or spent years going through courts to try to get their money back.

Totally agree with that, so many condos being launched in Ptty at the moment, & lot of developers offering discounts if your buy off plan early, but will they ever be built or finished on time?

As you say that gives the developer the clients money to build the condo with.

Really don't know where all these customers for these new condos are going to come from in the current world recession?

A number of the local realtors in ptty are really pushing these recently launched new condo developments, most of which of which are nowhere near starting yet

Edited September 28, 2010 by dickie58

[rgs2001uk]

This is why I always tell people to buy a finished condo in a building that is already completed and functioning properly. It may seem cheaper buying before completion but your money is being used to build the project or line somebody's pockets. Too many people have lost money or spent years going through courts to try to get their money back.

Totally agree with that, so many condos being launched in Ptty at the moment, & lot of developers offering discounts if your buy off plan early, but will they ever be built or finished on time?

As you say that gives the developer the clients money to build the condo with.

Really don't know where all these customers for these new condos are going to come from in the current world recession?

A number of the local realtors in ptty are really pushing these recently launched new condo developments, most of which of which are nowhere near starting yet

I have never understood why people will hand over money for something that doesnt exist.

If you cannot see it or touch it walk away, these developers can produce all the fancy brochures and CGI's they want, they mean absolutely nothing.

One born every minute as they say.

[TheWalkingMan]

There really should be a revamp of condo purchase rules where all the monies are held in escrow until the project is complete.

TheWalkingMan

[PattayaParent]

There really should be a revamp of condo purchase rules where all the monies are held in escrow until the project is complete.

TheWalkingMan

An Escrow Law has already been introduced, last year I think, but it's not compulsory for developers or sellers to use an escrow account so it's pretty pointless having it.

[InterestedObserver]

There really should be a revamp of condo purchase rules where all the monies are held in escrow until the project is complete.

TheWalkingMan

Then how would they build the condo? Their bank financing, if any, does not cover 100% of the construction costs.

Edited September 28, 2010 by InterestedObserver

[pepi2005]

Thanks for all the feedback and well-meant belated advice, though most of that is not helpful right now, thus the question here...

The project was looking good and the construction in speedy progress when we bought the condos, the financing was okay as well - we were aware of the risks but everything really seemed okay at this point. However, the manager who once looked like a professional, turned out not only to be incompetent but also an a**hole at the very end. While his first attribute let the development come to a stillstand after a bit less than a year, the second one let him finally try to sneak out of the mess he had let happen and probably also try to rip us off by selling it to someone whose intentions with the project we don't know at this point.

The construction time limit only runs out this December, so formally, I can't file a lawsuit about that now.

It would be great if anyone could deal with my questions outlined above.

I would even stay with the condo (rather than just try to get the money back) if it would have a chance to be completed at some point. I would also like to know if one of the parties involved could eventually somehow 'get rid' or 'forget' of the ones who already have a buying contract.

thanks, p.

Edited September 28, 2010 by pepi2005

[LennyW]

This may sound strange, but do you have any specific information as to the project or people involved, you are really asking people on here to give some insight whilst actually keeping us in the dark?, some might even see your post as trolling/shitstirring.

Send me a PM if you want, i would understand if you want to remain annonymous, some of us do know a lot of what goes on, but without specifics - it's a little difficult to advise.

[BWPattaya]

I don't recall if you said where the condo is located. However, first visit the local council office (tetsabaan) where the planning permission should have been granted, or go higher up to the provincial capital office. Visit a lawyer to ask for advice. Obviously don't use the same lawyer who had anything to do with the building company. Ask around and ascertain the name of a reputable lawyer. If you are outside of Bangkok try to use a bright young lawyer from Bangkok.

The land office may also be able to give you advice. Don't ask for advice from a local estate agent. People talk! Engage a good translator if your Thai isn't good.

Finally, don't get angry at any meetings you have or you will just get stonewalled.

I wish you all the best of luck.

[stgrhe]

[Then how would they build the condo? Their bank financing, if any, does not cover 100% of the construction costs.

Unless a developer can put in a substantial amount of his own cash in the project one should walk away and look elsewhere.

Escrow is not the only way as one could also use bank guarantees to secure one's investment, first an advance payment guarantee, then a performance bond and third a warranty guarantee. This kind of security is common in large business transactions. The advantage for the developer is that it doesn't freeze his capital but the is a cost to pay the bank. The buyer, provided it is an "on demand guarantee" is safe in that he call always reclaim his investment from the bank, which acts as an insurance company in this case.

[pepi2005]

@LennyW sorry but at this point, I can't reveal more details, otherwise I might damage my interests as the whole case is quite complicated. Telling more about it will certainly give the persons who might want to intentionally rip me off certain hints. However, if the ship is safe, I will happily tell more out of interest to warn/inform others from avoiding the same traps.

@BWPattaya: thanks a lot for the helpful post, I will do that.

[ThaiBob]

OP, what is the construction completion date in your contract and what penalties does the developer incur if the date is not met?

[pepi2005]

Its end of December, and they have to return the money with interest if the completion date can't be met (as it is already clear by now, there is no way it will).

However, as stated before, I'd prefer having the condo, even if it means 2-3 years of waiting till another investor buys the company or whatever, over having the money with interest. The previous director does not have this money I think and the new one? I don't know what he really plans.

That's where my question `could someone who is taking over the company and possibly restructures it or whatever try to `lose' me on the way?' derives from...

thanks, p

Edited September 28, 2010 by pepi2005

[PattayaParent]

[Then how would they build the condo? Their bank financing, if any, does not cover 100% of the construction costs.

Unless a developer can put in a substantial amount of his own cash in the project one should walk away and look elsewhere.

Escrow is not the only way as one could also use bank guarantees to secure one's investment, first an advance payment guarantee, then a performance bond and third a warranty guarantee. This kind of security is common in large business transactions. The advantage for the developer is that it doesn't freeze his capital but the is a cost to pay the bank. The buyer, provided it is an "on demand guarantee" is safe in that he call always reclaim his investment from the bank, which acts as an insurance company in this case.

The problem that is commonly faced here with security bonds though is that the bank requires the guarantor to deposit the full amount of the bond with the bank before they will issue the bond.

[ThaiBob]

OP,

What is the construction completion % to date and what do they say when you ask when will construction resume? If construction would resume how long do you think it would take to complete? When I had a condo contract there was the contract construction completion date but also a clause or extension for an additional year.

[pepi2005]

Have been at a lawyer's office today, basically they told

a) to wait till the completion date has arrived

then to file a lawsuit if the company has 'surprisingly' gone bankrupt or doesn't want to refund the installments paid so far with interest

c) I'd have pretty good chances as the responsible persons have been made aware of most, if not all the problematic details in advance and it is likely that it can be proven they intentionally ruined the project

d) probably the bank would take over or it ends up with the project being put to an auction by the government

e) at the end - but in the worst case, after it came to d), so maybe many years later - I'd still have my contract and my interests would have to be satisfied (by giving me my (or a similar) condo of the final project or to compensate my investment plus interest and other losses)

f) right away, I can go to the Consumer's department at City Hall to outline the situation, ask for advice and maybe file a complaint there as well to document the status of the affair.