Sinking Fund

[colinp]

Is it common practice for a developer to charge a 'sinking fund'? Don't 100% certain I understand why I (the property buyer) would be charged it. If anyone could explain in laymans terms it would be aprreciated. Not looking at buying (yet?), more general interest/research.

Many thanks

C

[necronx99]

In what context and for what use was this fund requested?

Is thre common property involved?

[colinp]

I was browsing a website for a new housing development, on the unit pricing structure page (x amount at what stage) there was conditions attached:

3. Sinking fund 20,000 baht (single payment at completion). I assumed that a 'Sinking Fund' was the use of the payment (not being pedantic, thats all the information I have).

[necronx99]

I was browsing a website for a new housing development, on the unit pricing structure page (x amount at what stage) there was conditions attached:

3. Sinking fund 20,000 baht (single payment at completion). I assumed that a 'Sinking Fund' was the use of the payment (not being pedantic, thats all the information I have).

A sinking fund is typically an offset against future expenditure. If it's a moobahn it may be the first installment of rates used to maintain the common property until the homeowners take over.

[colinp]

If it's a moobahn it may be the first installment of rates used to maintain the common property until the homeowners take over.

Should have put the other conditions in:

1. Transfer fees 50% between buyer and seller.

2. Maintenance rate of 'x' amount per month (1 full year paid in advance).

Doesn't that cover it?

When do the homeowners take over, when all plots have been sold? If so, could it be to cover the deficit in maintenance rates from the unsold plots?

Sorry, I may be asking dumb questions but new to house buying of any sort, anywhere. Want to understand everything beforehand.

[Delight]

If it's a moobahn it may be the first installment of rates used to maintain the common property until the homeowners take over.

Should have put the other conditions in:

1. Transfer fees 50% between buyer and seller.

2. Maintenance rate of 'x' amount per month (1 full year paid in advance).

Doesn't that cover it?

When do the homeowners take over, when all plots have been sold? If so, could it be to cover the deficit in maintenance rates from the unsold plots?

Sorry, I may be asking dumb questions but new to house buying of any sort, anywhere. Want to understand everything beforehand.

A sinking fund in relation to a condo is strictly for maintenance. The' common maintenance fee' covers day to day expenditure-a sinking fund is there to cover items such as repainting the building-replacing the lift cable etc.

Never heard of such a fund for housing project.

Condos are covered by the Condo Act.This gives consumer protection. This Act only applies to Condos. I would be first interested to establish if there is some Thai legislation to protect consumers in a housing project.

If there is none, then the developer is not obliged to separate 'His' Money from the 'House Owners' money.How would you know what has happened to the money in future years?

[ballbreaker]

The sinking fund is a one time charge paid by the first owner. Its intended to be used for major repairs of common property. For instance, if you have a communal swimming pool and it needs major repair then sinking fund is used. Should the sinking fund be used up on a major repair then either a one time accessment of each owner or increase in monthly maintenance fee to replenish sinking fund will occur.

The monthly maintenance fee is not the same animal. This fee is used for security and maintenance of common area's not major repairs.

[PattayaParent]

^sinking funds are usually charged to secondary purchasers on the transfer of the property also.

[Markland]

yes.Funny the name when you think about it

sinking funds lol

[Pib]

In my western Bangkok moobaan a sinking fund charge occurred when the Thai wife and I bought the property. The charge was 400 baht per talang wah of land...this was suppose to be our one and only payment for community maintenance while living in the house...been here going on 4 years and haven't paid a stang since. Our house was new so we are the first owners. I think when a house is resold the new owner is suppose to pay into the sinking fund just like I did....400 baht per talang wah of land. It's to cover the cost of community maintenance (i.e., grounds keeping of community areas, keeping things repaired/painted in the community areas, sweeping the roads, garbage pickup, etc). It also covers security. Maybe also for maintenance of the clubhouse swimming pool but the clubhouse has a lot of money making activities always going on so maybe its actually a money maker/business for the moobaan developer. When we were house hunting it seems all the moobaans in western Bangkok that we checked out operated like this. I do know this moobaan is around 17 years old....and I know some folks who bought homes back them and they only paid the one time fee which was a charge per talang wah of land and they have never had to pay anthing since.

Edited April 10, 2012 by Pib

[colinp]

In my western Bangkok moobaan a sinking fund charge occurred when the Thai wife and I bought the property. The charge was 400 baht per talang wah of land...this was suppose to be our one and only payment for community maintenance while living in the house...been here going on 4 years and haven't paid a stang since. Our house was new so we are the first owners. I think when a house is resold the new owner is suppose to pay into the sinking fund just like I did....400 baht per talang wah of land. It's to cover the cost of community maintenance (i.e., grounds keeping of community areas, keeping things repaired/painted in the community areas, sweeping the roads, garbage pickup, etc). It also covers security. Maybe also for maintenance of the clubhouse swimming pool but the clubhouse has a lot of money making activities always going on so maybe its actually a money maker/business for the moobaan developer. When we were house hunting it seems all the moobaans in western Bangkok that we checked out operated like this. I do know this moobaan is around 17 years old....and I know some folks who bought homes back them and they only paid the one time fee which was a charge per talang wah of land and they have never had to pay anthing since.

So in your experience its an either/or charge. Either sinking fund or regular maintenance charge?

[Pib]

In my western Bangkok moobaan a sinking fund charge occurred when the Thai wife and I bought the property. The charge was 400 baht per talang wah of land...this was suppose to be our one and only payment for community maintenance while living in the house...been here going on 4 years and haven't paid a stang since. Our house was new so we are the first owners. I think when a house is resold the new owner is suppose to pay into the sinking fund just like I did....400 baht per talang wah of land. It's to cover the cost of community maintenance (i.e., grounds keeping of community areas, keeping things repaired/painted in the community areas, sweeping the roads, garbage pickup, etc). It also covers security. Maybe also for maintenance of the clubhouse swimming pool but the clubhouse has a lot of money making activities always going on so maybe its actually a money maker/business for the moobaan developer. When we were house hunting it seems all the moobaans in western Bangkok that we checked out operated like this. I do know this moobaan is around 17 years old....and I know some folks who bought homes back them and they only paid the one time fee which was a charge per talang wah of land and they have never had to pay anthing since.

So in your experience its an either/or charge. Either sinking fund or regular maintenance charge?

Don't know what the proper name would be...all I can say I paid 400 baht per talang wah of land which covers community mx/landscaping, garbage, security, and other type costs as long as we own the house. I do not have to pay any other thing on any periodic basic relating to the community/moobaan. This seemed to be a very common practice when we were house hunting in Bangkok...and still is as far as I know although the fee paid for talang wah of land will vary from moobaan development to moobaan development.