Condo Building Insurance

[MattFS218]

I recently purchased a second hand condo in Thailand and am considering buying an adjoining unit but wanted to do more due diligence before plowing additional funds into an old high rise in Thailand. Are juristic person's required to buy a certain level of insurance for the building in thailand? I know there are some insurance plans that cover the inside of my condo unit from things like fire, and theft but I really want to make sure that if the building collapses tomorrow I won't be entirely out of luck. It's my understanding only the Juristic Person can purchase this insurance. Can I purchase it individually?

I had my gf read the minutes of the last few condo meetings, and it appears it was discussed but never purchased. The offer was for 200 million baht of insurance for 200,000/year from a company called MIGS.

I am a little worried because I also know the condo was forced to pay 480,000 to repair some structural elements or be forced to close by the city. Is this type of repair common in 10 year old high rises? There are 170 units and 17 floors so 480k is really only 4,000 baht per unit but I just wonder if it's an indication larger fixes might be down the road.

Thanks for the insight.

[trogers]

Highly unlikely the juristic office can buy insurance to cover the interior of any condo unit. You may spend Bt20k/sqm, while Somchai next door spent only Bt2k/sqm for his interior.

The juristic office can only buy cover to rebuild the structure, finish the common areas, and M&E services to the units. Individual owners will have to take up a separate cover for the interior portion according to what they put in it.

[DoubtingThomas]

Well, first, for a building of that size the insured amount is low. I would think 400million would be more appropriate, possibly higher given the number of units, depends on unit and common area size. As I recall the insurance for our building last year was 170k baht (for 400 million) of coverage, so 200k for 200M is just silly. Our building has half the number of units. I recall a couple of years ago getting quotes, easy to get from all the usual suspects, and there was not a huge difference between any of them, as you might expect. The Juristic person is required by law to obtain insurance and if you as an owner are left exposed by the failure of him/her to do so, you can go after him/her in court. Fat lot of good it might do you if the building falls down, mind you, since I doubt he/she will have 400M lying around! You will not, for obvious reasons, be able to individually insure you unit; the structure as a whole will need to be covered. As for contents/personal liability, it is in fact possible to get a blanket quote for that and it's not a bad idea to do it, because so many owners don't buy their own, get a leak or something which damages multiple other units then baulk because it will cost them megabaht from their own pockets to fix.

To give a simple answer to your repair question, for a ten year old unit you can bet there are big repair costs on the horizon. Hopefully the finances have been well managed and you have money in the sinking fund to cover most of them; if not, be ready to dip into your own pocket to cover the costs. You'll then find that too many of the co-owners think that ownership of a condo comes for free.

[trogers]

To give a simple answer to your repair question, for a ten year old unit you can bet there are big repair costs on the horizon. Hopefully the finances have been well managed and you have money in the sinking fund to cover most of them; if not, be ready to dip into your own pocket to cover the costs. You'll then find that too many of the co-owners think that ownership of a condo comes for free.

How big the cost of future repairs will depend on quality of construction and maintenance. But I do not recall any 17-storey condo project built in central Bangkok during 1998-2000. Your project may well have started construction before the Tom Yum Kung crisis (1995-1996) and only taken over and finished around 2000. This would also mean some alterations are needed to comply with the latest building regulations, rather than repairs.

If the juristic office has to ask each unit to share the Bt480k bill, you can conclude that sinking fund is less than that, if any.

Problem with buying into an old condo building is not so much the potential repair cost (which can be budgeted by an investor), but rather, the class of majority of the co-owners and their understanding, acceptance and ability to contribute to the maintenance cost and common fees. Thus, location and social class of the co-owners are prime consideration in purchasing an old condo unit.

[MattFS218]

Thanks for all the helpful comments.

I believe trogers is right, the condo started construction in 1996, but did not finish until 4-5 years later. The other condo unit is owned mostly by Bangkok people who use it as a vacation home, so I believe most can afford repairs. The condo association recently voted to increase the maintenance fee, after kicking out the old manager. Is it realistic to expect to see substantial improvements from and old building with the change of manager, or am I being to optimistic? New condos in the same general area go for about double on a per sq meter basis.

Do buildings need to be updated as new building codes are enacted or are older buildings grandfathered in? Are these codes set at the National level or city level? I assume the higher premium for insurance might have to do with the risk factor of the building. Thanks for the comments.

--matt

[trogers]

Thanks for all the helpful comments.

I believe trogers is right, the condo started construction in 1996, but did not finish until 4-5 years later. The other condo unit is owned mostly by Bangkok people who use it as a vacation home, so I believe most can afford repairs. The condo association recently voted to increase the maintenance fee, after kicking out the old manager. Is it realistic to expect to see substantial improvements from and old building with the change of manager, or am I being to optimistic? New condos in the same general area go for about double on a per sq meter basis.

Do buildings need to be updated as new building codes are enacted or are older buildings grandfathered in? Are these codes set at the National level or city level? I assume the higher premium for insurance might have to do with the risk factor of the building. Thanks for the comments.

--matt

Yes, but only the more crtitcal codes first, and over a gradual time. The first set of code to comply with relates to fire code - fire escape, detection and alarm. Sprinkler system installation is still not enforced, but inspection of the present hose and reel is strict.

[MattFS218]

Yes, but only the more crtitcal codes first, and over a gradual time. The first set of code to comply with relates to fire code - fire escape, detection and alarm. Sprinkler system installation is still not enforced, but inspection of the present hose and reel is strict.

I know there was some new Wind Load Factor building code introduced in 2008. Do you by chance know if this is strictly enforced or mandatory?

--matt

[trogers]

Yes, but only the more crtitcal codes first, and over a gradual time. The first set of code to comply with relates to fire code - fire escape, detection and alarm. Sprinkler system installation is still not enforced, but inspection of the present hose and reel is strict.

I know there was some new Wind Load Factor building code introduced in 2008. Do you by chance know if this is strictly enforced or mandatory?

--matt

Not yet for older buildings...lol I am waiting to see the day they will enforce the code for earthquake resistance...

[DoubtingThomas]

Thanks for all the helpful comments.

I believe trogers is right, the condo started construction in 1996, but did not finish until 4-5 years later. The other condo unit is owned mostly by Bangkok people who use it as a vacation home, so I believe most can afford repairs. The condo association recently voted to increase the maintenance fee, after kicking out the old manager. Is it realistic to expect to see substantial improvements from and old building with the change of manager, or am I being to optimistic? New condos in the same general area go for about double on a per sq meter basis.

Do buildings need to be updated as new building codes are enacted or are older buildings grandfathered in? Are these codes set at the National level or city level? I assume the higher premium for insurance might have to do with the risk factor of the building. Thanks for the comments.

--matt

Nothing wrong with optimism:rolleyes: but if you have just voted out one well known management company and replaced it with another, you'll need more than optimism, believe you me.

Trogers answered the second part of your question and I can tell you that even with a CAM fee increase and an extraordinary charge to co-owners those issue he refers to STILL didn't get done in our building. These were issues identified by the board and which the management company was instructed to address. They didn't. We went self managed and while it would be inaccurate to say it has been plain sailing ever since we have at least got critical safety and maintenance issues addressed, as well as some desperately needed cosmetic upgrades. Make no mistake, being involved in the management of a condo building is no picnic; it takes an awful lot of work by all concerned. Luckily, we have an excellent Thai/Foreigner board who work in harmony, and it's still hard. Having been on a board with at least one a*sehole I can tell you that then it becomes impossible! Good luck, you are going to need it.