Juristic persons right to increase service charge

[jessie74]

Hi,

Sorry if the answer to my question is somewhere within the forum. I had a read through related sections, but couldn't find the answer.

I own a condo in a building in which over 95% of the units are owned by the juristic person. Some time ago I guess he sold a small number of units possibly due to cash flow problems.

I've owned the condo for 3 years and have never been invited to an annual meeting as he never calls one. I thought that it was a legal requirement to do so, but he never has.

Secondly, without consultantion he increased the service charge from 30 to 40 baht last year. He's now sent out a letter showing his intention to increase it to 50 baht next year - Again without consultation.

My wife has spoken to two other owners in the building who have thrown in the towel about getting anything done the right way. He never answers e mails, and avoids me like the plague if I have a suggestion or complaint to make relating to maintainance work needing doing. It's possible that the other Thai owners just let things be, and I am seen as a confrontational foreigner. In truth, I just expect that if I am paying my service charge, I expect that the lifts get repaired promptly and gym equipment is repaired after less than 3 months.

Firstly, is he able to get around having annual meetings because he owns 95% of the units?

Secondly, are there any limits to service charge increases? (As things stand, his intention is to increase from 30 to 50 baht over a 2 year period and the reality is that maintainace in the building has worsened) Does he have to justify the increases and where does the law draw the line? If he wanted to increase the service charge next year by 100% due to a personal gambling problem, could anyone stop him?

Thanks in advance for any help

[Delight]

The condo Act specifies that:

1 The condo must have a committee (min 3 max 9 members)

2 The committee must meet at least every 6 months

3 There must be a general meeting every 12 months. Extra general meetings can be arranged (special conditions apply)

The basic condo maintenance fee ,which is detailed in the condo Rules and Regs, can only be changed via a change in the Rules and Regs and they can only be changed at a general meeting . A minimum of 50% of total vote is required to make this change. The motion must still achieve a majority of the votes cast

Remember it is the committee that runs the condo. The Juristic Person Manager(JPM) reports to the committee. The committee is responsible to the co -owners. A responsibility of the JPM is to ensure that the committee operate within the law.

Section 45 of the Act specifies

Voting by individual owner, shall be equaled to the ownership ratio represented to common property.

If one owner has the right equaling to the total vote of all remaining owners, the ownership ratio of the single owner shall be reduced to equal the sum of other owners’ right.

I read this as if one owners has 95% of the vote-it must be reduced to 5%

So if an AGM attracts a 100% attendance(flesh or proxies) then his 5% could be balanced by the other 5% -therefore the motion –to change the fees –can potentially fail

The Thai politicians created the Condo Act . The Land Office police it.

Edited October 9, 2014 by Delight

[KittenKong]

"Firstly, is he able to get around having annual meetings because he owns 95% of the units?"

He may be having regular meetings but "forgetting" to tell anyone else about them.

[EnglishThaiVisa]

NOTICIAS - Notice (knowledge). You must receive a notice of any new changes regarding your condominium. Each notice is like a little contract. You can refuse, argue/justify/explain (both of them will create a dishonour/default) or you can accept or conditionally accept.

You can send a show cause order why there should be an increase of x baht per year. And you will not say in as a positive statement. You will say it in a negative. There is no evidence that the condominium should be increased x baht per year. The burden of proof on him.You will attach an affidavit, witnessed by two witnesses. 3rd witness should email it on behalf of you. You cant mail your own stuff - its important. You will also create a stipulation taht if he doesnt respond within x days without providing a good reason the new request to pay more will be null and void and further request to pay more will be accepted as extortion which may be a fraud and shall incur a penalty of x baht. Add your full fee schedule.

I've done this many times in various situations when I deal with solicitors in UK or lawyers in US. If you know contract law you are covered. Good luck

[jessie74]

Thank you very much for your replies. I have a much clearer picture now thanks to you. However, accroding to my wife, the owner has given rooms to family members such as his son in order to increase the number of votes in his favour. I guess that's an easy way to get the majority of votes to go his way and have the freedom to do as he chooses.

In addition, it seems like the other owners would prefer to just accept his increase rather than get involved in a confrontation.

Your advice is still much apprecaited just for the fact that you've taken the time to write a reply and set the record straight.

Best regards

[smutcakes]

NOTICIAS - Notice (knowledge). You must receive a notice of any new changes regarding your condominium. Each notice is like a little contract. You can refuse, argue/justify/explain (both of them will create a dishonour/default) or you can accept or conditionally accept.

You can send a show cause order why there should be an increase of x baht per year. And you will not say in as a positive statement. You will say it in a negative. There is no evidence that the condominium should be increased x baht per year. The burden of proof on him.You will attach an affidavit, witnessed by two witnesses. 3rd witness should email it on behalf of you. You cant mail your own stuff - its important. You will also create a stipulation taht if he doesnt respond within x days without providing a good reason the new request to pay more will be null and void and further request to pay more will be accepted as extortion which may be a fraud and shall incur a penalty of x baht. Add your full fee schedule.

I've done this many times in various situations when I deal with solicitors in UK or lawyers in US. If you know contract law you are covered. Good luck

This is incorrect on many levels. This is not contract law.

If the ownership votes to increase fees, by resolutions amounts as stipulated within the Condominium Act and the process is done according to the law, you as a single owner can question it until the cows come home, but the resolution of the General Meeting will be binding.

This is not an apartment building, its a Condominium owned jointly by all the Co-owners. You can complain about it as much as you like, but a) if you refuse to pay you will never be able to dispose of your unit. your unpaid amounts will be sitting there collecting interest.

What Delight highlights is correct re his voting will be reduced to that of the other owners, but for shrewd developer this is easily gotten around, by having units in different companies, appointing directors to some units to vote independently etc.

You need to try and get hold of a financial statement and find out what the money is being spent on. I would say its fairly unusual for a developer to increase the fees when they have such a large holding, so you either have an extremely good developer OR one who is not paying their own share, or is doing something wrong with the funds.

[isawasnake]

We had an increase in fees. It went up for a vote, from all I could tell nobody voted for it, as we were talking to people next to us and others and they were voting no. In the end it somehow passed amazingly, and our fees are higher now.

This stuff all comes down to how much it bugs you. Do you really want to go to a lawyer, spend days and days on end worrying about this and figuring it out, and paying a lawyer.

[smutcakes]

We had an increase in fees. It went up for a vote, from all I could tell nobody voted for it, as we were talking to people next to us and others and they were voting no. In the end it somehow passed amazingly, and our fees are higher now.

This stuff all comes down to how much it bugs you. Do you really want to go to a lawyer, spend days and days on end worrying about this and figuring it out, and paying a lawyer.

If you want to file a complaint, you have to file it with the lands department within 30 days. You don't need a lawyer it is fairly simple. To be fair to the lands department they are seemingly a lot stricter on complying with the law when accepting these types of issues than they have in the passed.

[iancnx]

The JP owns 95% ? Really? Doesn't sound like a condominium to me. Are you sure this building falls within the auspices of the condominium act?

[smutcakes]

The JP owns 95% ? Really? Doesn't sound like a condominium to me. Are you sure this building falls within the auspices of the condominium act?

I presume he means the developer owns 95%, and perhaps a representative of the developer is also JP.

Unless of course its an apartment building, and he has been sold a 30 year lease or the alike. I have noticed increasingly that new apartment buildings are masqueraded by the developers as Condominium buildings to assist with the sales.

Magnolias on Rajdamri springs to mind.

[isawasnake]

We had an increase in fees. It went up for a vote, from all I could tell nobody voted for it, as we were talking to people next to us and others and they were voting no. In the end it somehow passed amazingly, and our fees are higher now.

This stuff all comes down to how much it bugs you. Do you really want to go to a lawyer, spend days and days on end worrying about this and figuring it out, and paying a lawyer.

If you want to file a complaint, you have to file it with the lands department within 30 days. You don't need a lawyer it is fairly simple. To be fair to the lands department they are seemingly a lot stricter on complying with the law when accepting these types of issues than they have in the passed.

And they would actually come in and "investigate". I am a hopeless pessimist when it comes to Thailand and justice, but thanks for the suggestion, I will def keep it in mind. I know right where our land office is too.

[elgordo38]

Its because of problems like this that I would never buy only rent

[elgordo38]

Its because of problems like this that I would never buy only rent

[smutcakes]

We had an increase in fees. It went up for a vote, from all I could tell nobody voted for it, as we were talking to people next to us and others and they were voting no. In the end it somehow passed amazingly, and our fees are higher now.

This stuff all comes down to how much it bugs you. Do you really want to go to a lawyer, spend days and days on end worrying about this and figuring it out, and paying a lawyer.

If you want to file a complaint, you have to file it with the lands department within 30 days. You don't need a lawyer it is fairly simple. To be fair to the lands department they are seemingly a lot stricter on complying with the law when accepting these types of issues than they have in the passed.

And they would actually come in and "investigate". I am a hopeless pessimist when it comes to Thailand and justice, but thanks for the suggestion, I will def keep it in mind. I know right where our land office is too.

They would normally write to the Juristic Manager requesting clarification and submission of all voting slips, invitation letters etc.

Obviously these could be forged but i dont think many JPM's would be willing to risk messing around with that kind of thing to much.

I expect in your case, you may have a few silent owners with large/multiple unit ownership or the developer themselves. Having dealt a lot with these kinds of issues, often you get a very vocal group of Co-owners who get bees in their bonnets and spread around half truths etc whereas the reality of Co-owner opinion is very different.

You may be surprised that even in developments which openly the developers are despised, they normally do retain behind closed doors good relationships with a large number of the owners. You should be able to request minutes etc and see where that gets you.

[Delight]

In addition, it seems like the other owners would prefer to just accept his increase rather than get involved in a confrontation.

For certain this attitude is ‘popular’ in all condos.

As a matter of interest perhaps you could clarify a few points.

1) How many apartments does the condo have?

2) Apart from giving apartments to his relatives –what does the developer actually do with his 95%?

3) If he is increasing the fees then he pays 95% of the total increase. Are you sure that he is paying?

[jessie74]

"For certain this attitude is ‘popular’ in all condos.

As a matter of interest perhaps you could clarify a few points.

1) How many apartments does the condo have?

2) Apart from giving apartments to his relatives –what does the developer actually do with his 95%?

3) If he is increasing the fees then he pays 95% of the total increase. Are you sure that he is paying?"

Very good questions. To be honest, I've not looked into the facts of the matter as closely as I should have and don't know the ins and outs of what defines a condo or hotel for that matter. I guess there are 200-250 rooms in total. Some of which have regular visitors coming and going for short periods in what seems to be for the purpose of long term hospital stays at a hosiptal opposite. I guess 60% of rooms are occupied by tenants and the small minority have bought a unit from him.

In answer to question 2, he rents them out, or uses them as short stay hotel rooms. (By that I don't mean short time)

For number 3, I am not sure. We were given a breakdown of the accounts two years ago, but I didn't scrutinize them because it never occurred to me that they might have to include his (95% or so) contribution to the fund. Also, I assumed that if he's passing off payments under the umbrella of "repairs to building" I would doubt that I'd be able to get anything more specific than that. Therefore if I smelled a rat, it would have been a lost cause trying to identify what it was.

As you can see, my knowledge of these matters is so limited and I assumed that in Thailand, if my Thai wife is struggling to know what her rights are, what hope is there for me? As things are progressing, thanks to some of the advice you guys have given me, I may end up knowing more than her about it all.

[KittenKong]

We had an increase in fees. It went up for a vote, from all I could tell nobody voted for it, as we were talking to people next to us and others and they were voting no. In the end it somehow passed amazingly, and our fees are higher now.

The only way that the basic common fees can be increased is if a legal majority (75% as far as I know) of all co-owners votes for the increase.

Otherwise, a one-off fee can be voted with a much smaller majority (50% of those present at the AGM). This is what happens every year in my building as there are never enough owners present to vote for a permanent fee increase.

[smutcakes]

We had an increase in fees. It went up for a vote, from all I could tell nobody voted for it, as we were talking to people next to us and others and they were voting no. In the end it somehow passed amazingly, and our fees are higher now.

The only way that the basic common fees can be increased is if a legal majority (75% as far as I know) of all co-owners votes for the increase.

Otherwise, a one-off fee can be voted with a much smaller majority (50% of those present at the AGM). This is what happens every year in my building as there are never enough owners present to vote for a permanent fee increase.

75% was under the old act, it is now not less than one half of the total Co-owners, or not less than 1/3rd if not considered in first meeting.

[KittenKong]

75% was under the old act, it is now not less than one half of the total Co-owners, or not less than 1/3rd if not considered in first meeting.

Thanks. Doesn't matter much as in my building attendance doesn't even get to the 1/3rd level at any meeting (and even if it did I'm sure that most would vote against any increase).