Condo Comittee- Proposing Annual Contribution Shake Up

[regfrancis]

Our condo charged 6,000 bht a unit annual fee to date. There are about half unsold units in the complex. I believe under Thai law the developer has to contribute at the same rate for un-slold units.??

At the last meeting much to the attendees distress, the developer voted a change to the rules to allow him to pay at about a third of the rate that owners will pay. The developer said they opted to do that instead of a 'sinking fund' to make up the shortfall of expenses.

Their lawyer said the owners were welcome to sue if they disagreed with the change

Any one have experience with this?

[trogers]

Our condo charged 6' date='000 bht a unit annual fee to date. There are about half unsold units in the complex.

[/quote']

That's Bt500/mth/unit. Assuming there are 200 units, total collection of full payment is only Bt100k/mth.

What level of maintenance can you get for such a low sum? Either the sinking fund will be used up by the end of the 2nd year, or there will not be money to pay for electricity to the common areas.

Now you know the true colors of the developer from their request, and the reason for the high number of unsold units.

[briley]

I don't think it is legal, everyone has to pay the same percentage of the costs of the condo as their percentage ownership (by area).

The only exception is if some units get extra rights (use of a pool etc) then those cost are just made to the units concerned.

[Langsuan Man]

They know that, thus the dare to "sue"

[PattayaParent]

Try reporting them to the land Office first, that's where the condominium rules are lodged so maybe there is a process there to ensure enforcement.

Also point out to the developer that the publicity of being sued for trying to cheat the existing owners may not encourage sales of the remaining units.

[Delight]

It seems to me that in this case the blind are leading the blind

Developers do NOT manage condos . Managers manage condos . They follow policy determined by the committee.The committe fulfil the expectations of the co -owners

Sinking funds cannot be used for day to day expenditure.

The condo Act details a clear procedure for running a condo.

All the chanotes are registered in the name of some person /Company.

All chanote owners pay either as per the condo act. If this is changed via the Condo regulation then 50% by vote allocation have to agree.

Perhaps you could supply more specific data

1) Date when the building legally became a Condominium Juristic Person

2) Do you have AGM,s

3) Is a money in /money out statement produced every month

4) Do you have an effective committee.A committee can only be legal if it is registered at the local (to you) Land Office

5) Total chargeable meters

6) Baht /meter /month

7) Do you pay your monthly /annual bills to a Company Ltd or a Condominium Juristic Person

8) In spite of all do you sense that the co -owners in the main are 'Happy Customers'

Edited April 28, 2011 by Delight

[trogers]

It seems to me that in this case the blind are leading the blind

Developers do NOT manage condos . Managers manage condos . They follow policy determined by the committee.The committe fulfil the expectations of the co -owners

Sinking funds cannot be used for day to day expenditure.

The condo Act details a clear procedure for running a condo.

All the chanotes are registered in the name of some person /Company.

All chanote owners pay either as per the condo act. If this is changed via the Condo regulation then 50% by vote allocation have to agree.

Ever heard of proxy managers and creative accounting?

[PattayaParent]

It seems to me that in this case the blind are leading the blind

Developers do NOT manage condos . Managers manage condos . They follow policy determined by the committee.The committe fulfil the expectations of the co -owners

Sinking funds cannot be used for day to day expenditure.

The condo Act details a clear procedure for running a condo.

All the chanotes are registered in the name of some person /Company.

All chanote owners pay either as per the condo act. If this is changed via the Condo regulation then 50% by vote allocation have to agree.

Ever heard of proxy managers and creative accounting?

It is quite common for developers to manage condos, especially if the owners have not got together to form a committe and oust the developer.

Also if the developer owns more than 50% of the units by area then a committee of co-owners cannot be formed unless the developer agrees.

[Delight]

It seems to me that in this case the blind are leading the blind

Developers do NOT manage condos . Managers manage condos . They follow policy determined by the committee.The committe fulfil the expectations of the co -owners

Sinking funds cannot be used for day to day expenditure.

The condo Act details a clear procedure for running a condo.

All the chanotes are registered in the name of some person /Company.

All chanote owners pay either as per the condo act. If this is changed via the Condo regulation then 50% by vote allocation have to agree.

Ever heard of proxy managers and creative accounting?

It is quite common for developers to manage condos, especially if the owners have not got together to form a committe and oust the developer.

Also if the developer owns more than 50% of the units by area then a committee of co-owners cannot be formed unless the developer agrees.

It is true that the Developer is the Manager when the condo is within its first 6 months of its existence.

In this role his/her job title is that of Manager. The Manager reports to the committee.

Legally a Co -owners general meeting should take place within 6 months to confirm the a Managers position(or otherwise) ,establish a committee ,agree the regulations etc

I attach 4 JPEG,s which I think may help the O/P

In general terms my view is that Legal advise is required and should be sought.

Edited April 30, 2011 by Delight

[regfrancis]

Thanks to all your your valuable input. Particularly for advice that the 'sinking fund'' can not be used for day to day expenses. I still would like to know if the developer has to contribute equally to a 'sinking fund' (for his unsold units)

Here are the answers to questions asked

-------------------------------------------------------------------------

Perhaps you could supply more specific data

1) Date when the building legally became a Condominium Juristic Person I Think around 2005

2) Do you have AGM,s YES anually at the condo. There were two this year as 'there wasn'tenough attending the first meeting to vote'

3) Is a money in /money out statement produced every month Statement produced annually

4) Do you have an effective committee.A committee can only be legal if it is registered at the local (to you) Land Office YES all looks very official

5) Total chargeable meters about 40,000 sq meters

6) Baht /meter /month presently about 8 Baht per sq meter per month ( proposed increase to 17 Bt owner residents and 5 Bt developer)

7) Do you pay your monthly /annual bills to a Company Ltd or a Condominium Juristic Person Bills paid annually to Juristic person

8) In spite of all do you sense that the co -owners in the main are 'Happy Customers' yes very happy, but of course they don't like to be seen to be treated illegally. If the law is clear that developers pay equally, they feel it should stand.The developer still owns I think more than 50%. So owner/residents know their vote can not compete.

My un educated view is that the developer could say that they need a bigger contribution from co owners so that they dont have to flood the market with cheep units --thus reducing the value of existing co owners units and also reducing the quality of life of existing residents. They may feel this would be 'loss of face '' and prefer to bully their way through (it may even be necessary) The problem may be that they may not know when to stop bullying

[trogers]

1) Date when the building legally became a Condominium Juristic Person I Think around 2005

The developer still owns I think more than 50%.

My un educated view is that the developer could say that they need a bigger contribution from co owners so that they dont have to flood the market with cheep units --thus reducing the value of existing co owners units and also reducing the quality of life of existing residents.

Sorry to say this, but it is already a failed development, with >50% unsold for over 5 years.

The only thing that insufficient funds leading to poor maintenance can do is to depreciate all units faster. My guess will be that prices of units will fall below the value of their share of land within the next decade.

[regfrancis]

Hi Trogers,

The development is very well maintained and managed. I'm not sure that such a big number of unsold units is unusual in Thailand. Building costs are low- and prices are comparatively

high-- enough to make it unnecessary to sell all the units.

1) Date when the building legally became a Condominium Juristic Person I Think around 2005

The developer still owns I think more than 50%.

My un educated view is that the developer could say that they need a bigger contribution from co owners so that they dont have to flood the market with cheep units --thus reducing the value of existing co owners units and also reducing the quality of life of existing residents.

Sorry to say this, but it is already a failed development, with >50% unsold for over 5 years.

The only thing that insufficient funds leading to poor maintenance can do is to depreciate all units faster. My guess will be that prices of units will fall below the value of their share of land within the next decade.

[trogers]

Hi Trogers,

The development is very well maintained and managed. I'm not sure that such a big number of unsold units is unusual in Thailand. Building costs are low- and prices are comparatively

high-- enough to make it unnecessary to sell all the units.

Well maintained and managed for how long more? The developer has bled for over 5 years and still bleeding, esp. if most of the unsold units are not occupied by tenants. Market logic says price for the units has to fall to stimulate demand. But local developers refuse to lower prices for what they think are gold inlaid condo units...

And now these units are over 5 years old, and depreciating.

[Delight]

Thanks to all your your valuable input. Particularly for advice that the 'sinking fund'' can not be used for day to day expenses. I still would like to know if the developer has to contribute equally to a 'sinking fund' (for his unsold units)

Here are the answers to questions asked

-------------------------------------------------------------------------

Perhaps you could supply more specific data

1) Date when the building legally became a Condominium Juristic Person I Think around 2005

2) Do you have AGM,s YES anually at the condo. There were two this year as 'there wasn'tenough attending the first meeting to vote'

3) Is a money in /money out statement produced every month Statement produced annually

4) Do you have an effective committee.A committee can only be legal if it is registered at the local (to you) Land Office YES all looks very official

5) Total chargeable meters about 40,000 sq meters

6) Baht /meter /month presently about 8 Baht per sq meter per month ( proposed increase to 17 Bt owner residents and 5 Bt developer)

7) Do you pay your monthly /annual bills to a Company Ltd or a Condominium Juristic Person Bills paid annually to Juristic person

8) In spite of all do you sense that the co -owners in the main are 'Happy Customers' yes very happy, but of course they don't like to be seen to be treated illegally. If the law is clear that developers pay equally, they feel it should stand.The developer still owns I think more than 50%. So owner/residents know their vote can not compete.

My un educated view is that the developer could say that they need a bigger contribution from co owners so that they dont have to flood the market with cheep units --thus reducing the value of existing co owners units and also reducing the quality of life of existing residents. They may feel this would be 'loss of face '' and prefer to bully their way through (it may even be necessary) The problem may be that they may not know when to stop bullying

The areas that I can see where the Manager (Developer) is failing are :

1) Law demands that monthly Income /Expenditure info. is published

2) There is no provision for 2 -tier pricing. The law does allow that in the right circumstances some co -owners must pay more ie in your case more than the 17Baht.

Also

1)Did the manager chair the AGM -if so that would be illegal.

2) Any increase in the fees has to be agreed by 50 % by voting allocation . If he has say 55% then he will only have a voting allocation of 45% ie equivalent to the balance of the remaining votes.If he has precisely 50 % then his 50% will count(I think)

You need to see the voting allocation list.

The dog is wagging the tail.

The committee have more power than the manager. In fact the manager has very little independent authority.

[regfrancis]

Actually My condo unit is in Pattaya-- in a very nice area near the beach. As I said --there are around 50% sold and completed inside--over the five years. That seems 100% better than three other new projects with in a few hundred meters of mine--that have been built nearly as long-- but don't seem to have any residents at all yet!! Maybe the sales rate is better in bangkok--but. there is no way I could live there, because of the air pollution.

[PattayaParent]

8) In spite of all do you sense that the co -owners in the main are 'Happy Customers' yes very happy, but of course they don't like to be seen to be treated illegally. If the law is clear that developers pay equally, they feel it should stand.The developer still owns I think more than 50%. So owner/residents know their vote can not compete.

My un educated view is that the developer could say that they need a bigger contribution from co owners so that they dont have to flood the market with cheep units --thus reducing the value of existing co owners units and also reducing the quality of life of existing residents. They may feel this would be 'loss of face '' and prefer to bully their way through (it may even be necessary) The problem may be that they may not know when to stop bullying

No one person can have more than 50% of voting rights, anyone with more than 50% automatically has their voting rights reduced to the same percentage as the total of all other voting rights.

Oops, I see Delight already covered this.

2) Any increase in the fees has to be agreed by 50 % by voting allocation . If he has say 55% then he will only have a voting allocation of 45% ie equivalent to the balance of the remaining votes.If he has precisely 50 % then his 50% will count(I think)

You need to see the voting allocation list.

except that the 45% will be equivalent to 50% of the total voting rights anyway.

Edited May 9, 2011 by PattayaParent

[palm]

They know that, thus the dare to "sue"

No need to sue - just send a written complaint to compliance officer of the local Land Office in Thai and CC. the committee and developer.

[regfrancis]

Sorry about my ignorance-- but I think only 20 or so of the few hundred co owners attended and voted. How does that effect the vote percentage?

[PattayaParent]

^it's not the numbers of attendees but the % of voting rights that's important.

The attendees could have proxies to increase their voting %

But in any case a quorum is needed to conduct the meeting but if the Developer's representative was there that would represent 50% so it would be quorate and he would 'win' every vote.

[JeffreyMcCollum]

Actually My condo unit is in Pattaya-- in a very nice area near the beach. As I said --there are around 50% sold and completed inside--over the five years. That seems 100% better than three other new projects with in a few hundred meters of mine--that have been built nearly as long-- but don't seem to have any residents at all yet!! Maybe the sales rate is better in bangkok--but. there is no way I could live there, because of the air pollution.

As Pattaya gets more and more built or should I say over built. Why anyone thinks more and more will keep selling. In my condo in Pattaya, it is 100% sold and was from when it was completed 14 years ago. In Chiang Mai. I know of no condo with under 90% sold. Either yours and others are overpriced, or it's over priced and they made enough selling the few to make the payments.

[PattayaParent]

^agree, most likely the developer recovered the costs and made a profit on the 49% foreign quota sales.

Edited May 10, 2011 by PattayaParent