Legality of Condo Developer Not Paying Full Share of Association Dues

[ThaiBob]

The situation is this. The developer of our condominium project has been paying his owner's annual dues at a rate 50% less than the amount paid by the other co-owners. The developer's units are unsold, undeveloped shells with only a finished bathroom, deck and ceilings. His logic is since the units are unsold he should pay less since there are no demands for common services as the units are unoccupied. I understand the developer's argument and he also claims his fixed rate is written into the project registration documents at the Land Office. The co-owners question the legality of having a dual rate payment structure, one for the developer and one for everybody else, as at the time the project was registered all financial burdens must be equally shared. This project is in Pattaya. Is their anything in Thai real estate law that supports either of these arguments? Is their some kind of grandfather clause in the law perhaps treating unsold shells differently? Any recommendations for a knowledgeable real estate lawyer in Pattaya? Thanks in advance.

[cheeryble]

Await the answer with interest.

The new condo buildings going up seem to have set very high common fees (by Thai standards).

Thaibob may have given us one of the reasons why.

If what you say is true it may place a particular burden on owners in buildings with many unsold units.

Another reason to prefer a better older building where all this has been long settled, one generally pays much lower fees yet one can see that the building has been running properly (or not) on those fees.

I would be particularly concerned about buying into a largely unsold building.

not only might you be paying double bubble but what if it's 80% unsold and the developer suddenly can't pay his share of the fees? What does the building run on?

Edited February 28, 2015 by cheeryble

[Delight]

The Condo Act in respect of ownership ratios was changed in July 2008

prior to that date the ratios were determined by 'Price'

i.e

SECTION 14.(before July 2008) The ownership of the co-owners in the common property shall be according to

the ratio between the price of each housing unit and the total price of all the housing units at the time of the private, commonly-owned

housing registration pursuant to Section 6.

After that date the ownership ratio was determined by 'Space'

SECTION 14( After July 2008). The ownership ratio in common property of co-owners shall be according to the ratio between the space of each housing unit and the total space of all the housing units at

the time of the private, commonly-owned housing registration pursuant to Section 6.

Price of course is variable and in your case the developer appears to be distorting 'Price' for 'Value'

If the condo in question was registered after 4th July 2008 then its all about ' Space' and not about 'Price 'or 'Value'

[KittenKong]

Some or all of the VT buildings that are not completely sold out (3, 5, 6, 7, 8) also have this problem, as far as I know.

It's illegal but as long as the developer is still providing the management services there isnt much that can be done.

If the developer is also the building management in this case then my advice would be to kick them out as soon as possible and replace them with an independent management company, as otherwise not only will they not pay their fees but they will also bleed the sinking fund dry. Once an independent management company is running the building you may find it easier to collect the full fees for the unsold units.

[ThaiBob]

The Condo Act in respect of ownership ratios was changed in July 2008

prior to that date the ratios were determined by 'Price'

i.e

SECTION 14.(before July 2008) The ownership of the co-owners in the common property shall be according to

the ratio between the price of each housing unit and the total price of all the housing units at the time of the private, commonly-owned

housing registration pursuant to Section 6.

After that date the ownership ratio was determined by 'Space'

SECTION 14( After July 2008). The ownership ratio in common property of co-owners shall be according to the ratio between the space of each housing unit and the total space of all the housing units at

the time of the private, commonly-owned housing registration pursuant to Section 6.

Price of course is variable and in your case the developer appears to be distorting 'Price' for 'Value'

If the condo in question was registered after 4th July 2008 then its all about ' Space' and not about 'Price 'or 'Value'

Yes, we made the conversion from price, value to sqm years ago. That is not really the question. The co-owners(us) pay x amount per sqm and the owner/developer pays y amount per sqm which is considerably less than x. Legal for his unoccupied, unsold shells?

[CRUNCHER]

Maintenance fees are based on a ratio on the share of ownership of common area. This should be in your condo regulations and should also be available from Lands Office, The developer has no right to pay only 50%.

The competent official is the Lands Office. You can try a complaint there and if that gets nowhere try City Hall. As a last result you can get a lawyer and go to the Consumer Protection Court in Pratamnack.

Good luck.

Edited February 28, 2015 by CRUNCHER

[KittenKong]

The Condo Act in respect of ownership ratios was changed in July 2008

prior to that date the ratios were determined by 'Price'

......

Price of course is variable and in your case the developer appears to be distorting 'Price' for 'Value'

As far as I know they use the official list price of each unit as calculated when the building was completed, as a percentage of the total. So not much room for imagination or distortion. Even if prices go up later for unsold units (or go down for that matter) this should not affect the voting rights calculation at all.

[Delight]

The Condo Act in respect of ownership ratios was changed in July 2008

prior to that date the ratios were determined by 'Price'

i.e

SECTION 14.(before July 2008) The ownership of the co-owners in the common property shall be according to

the ratio between the price of each housing unit and the total price of all the housing units at the time of the private, commonly-owned

housing registration pursuant to Section 6.

After that date the ownership ratio was determined by 'Space'

SECTION 14( After July 2008). The ownership ratio in common property of co-owners shall be according to the ratio between the space of each housing unit and the total space of all the housing units at

the time of the private, commonly-owned housing registration pursuant to Section 6.

Price of course is variable and in your case the developer appears to be distorting 'Price' for 'Value'

If the condo in question was registered after 4th July 2008 then its all about ' Space' and not about 'Price 'or 'Value'

Yes, we made the conversion from price, value to sqm years ago. That is not really the question. The co-owners(us) pay x amount per sqm and the owner/developer pays y amount per sqm which is considerably less than x. Legal for his unoccupied, unsold shells?

Maintenance fees are for common area maintenance .. No service is provided for individual condo units under this scheme. The condition of the units sold or unsold is irrelevant.The fees are linear to the Space( area) as detailed on each 'Condominium Title Deed'

There can be no dual pricing..

Also

Section 18 of the Act states ( partial quote)

The owners of the land and building under the provision of Section 6 shall be the co owners of condominium units that have not been transferred of ownership to any person and shall jointly contribute the expenses.

The developer must pay full price if the condo was registered after 4 July 2008. If before then he is under no obligation to pay.

Edited February 28, 2015 by Delight

[ThaiBob]

The Condo Act in respect of ownership ratios was changed in July 2008

prior to that date the ratios were determined by 'Price'

i.e

SECTION 14.(before July 2008) The ownership of the co-owners in the common property shall be according to

the ratio between the price of each housing unit and the total price of all the housing units at the time of the private, commonly-owned

housing registration pursuant to Section 6.

After that date the ownership ratio was determined by 'Space'

SECTION 14( After July 2008). The ownership ratio in common property of co-owners shall be according to the ratio between the space of each housing unit and the total space of all the housing units at

the time of the private, commonly-owned housing registration pursuant to Section 6.

Price of course is variable and in your case the developer appears to be distorting 'Price' for 'Value'

If the condo in question was registered after 4th July 2008 then its all about ' Space' and not about 'Price 'or 'Value'

Yes, we made the conversion from price, value to sqm years ago. That is not really the question. The co-owners(us) pay x amount per sqm and the owner/developer pays y amount per sqm which is considerably less than x. Legal for his unoccupied, unsold shells?

Maintenance fees are for common area maintenance .. No service is provided for individual condo units under this scheme. The condition of the units sold or unsold is irrelevant.The fees are linear to the Space( area) as detailed on each 'Condominium Title Deed'

There can be no dual pricing..

Also

Section 18 of the Act states ( partial quote)

The owners of the land and building under the provision of Section 6 shall be the co owners of condominium units that have not been transferred of ownership to any person and shall jointly contribute the expenses.

The developer must pay full price if the condo was registered after 4 July 2008. If before then he is under no obligation to pay.

Chanotes were transferred to the co-owners at the end of 2009 so I suspect project registration at the Land Office took place about that time. This builder has units for sale in various projects throughout Pattaya, some built before 2008 and some after but he has been paying less than the Co-Owner rate in all his projects. The concept is the same in all his projects; selling unfurnished, empty shells. I can understand his reluctance to pay full share for empty, unsold shells but the co-owners do not share his view, especially since annual fees must be increased to balance the financial ledger. He wants no part of that.

[cheeryble]

I would however be a little careful about throwing the baby out with the bathwater.

Better the devil you know (for a while) than the devil you don't?

IOW you need to have an alternative system in place before any action takes place or it could end up a mess.

[trogers]

That's the weakness in the Thai Real Estate market. No factors to force developers to offload completed projects.

This is why I only buy into old (>15 years) projects in good locations.

[ThaiBob]

Just some more factual information. I am holding the project bylaws in my hand from 2009 on file at the Land Office as part of the project registration process. The developer calls himself a co-owner but there are two separate clauses regarding rates, one for us and one for unsold units (him).

[rayongchelsea]

Regardless of whatever clause he may have added if it is contrary to the main condominium act it is not legal. Firstly, the land department will do nothing, it is an " internal " matter, as someone stated above remove the managing company, get a new one in, if need be change the rule in an AGM or call an egm. How many units as a percentage of total units are not sold ?

[CRUNCHER]

Just some more factual information. I am holding the project bylaws in my hand from 2009 on file at the Land Office as part of the project registration process. The developer calls himself a co-owner but there are two separate clauses regarding rates, one for us and one for unsold units (him).

Regulations (bylaws) must comply with Thai Law. Those do not and are ultra viras.

[ThaiBob]

Regardless of whatever clause he may have added if it is contrary to the main condominium act it is not legal. Firstly, the land department will do nothing, it is an " internal " matter, as someone stated above remove the managing company, get a new one in, if need be change the rule in an AGM or call an egm. How many units as a percentage of total units are not sold ?

The developer holds over 50% of the voting rights so removing management companies or managers almost impossible. In theory the developer could also vote and stack the committee to his liking although that is not currently the case. The developer is certainly not going to initiate a legal challenge against himself. Someone suggested using the Consumer Protection Agency, that might be worth a try? A co-owner could make a complaint, I am paying 50% more in dues (or the developer is not paying enough) and that is not legal.

[Delight]

The developer holds over 50% of the voting rights so removing management companies or managers almost impossible. In theory the developer could also vote and stack the committee to his liking although that is not currently the case. The developer is certainly not going to initiate a legal challenge against himself. Someone suggested using the Consumer Protection Agency, that might be worth a try? A co-owner could make a complaint, I am paying 50% more in dues (or the developer is not paying enough) and that is not legal.

A co -owner who owns many of the condos can only have the same voting allowance equivalent to all the other voting allowances combined.

No one can hold over 50% of the votes.

Also

The land office are there to police the condo act.

From what you state that organisation is acting illegally.

If I am correct -then maybe the new Prime minister may be interested

[ThaiBob]

The developer holds over 50% of the voting rights so removing management companies or managers almost impossible. In theory the developer could also vote and stack the committee to his liking although that is not currently the case. The developer is certainly not going to initiate a legal challenge against himself. Someone suggested using the Consumer Protection Agency, that might be worth a try? A co-owner could make a complaint, I am paying 50% more in dues (or the developer is not paying enough) and that is not legal.

A co -owner who owns many of the condos can only have the same voting allowance equivalent to all the other voting allowances combined.

No one can hold over 50% of the votes.

Also

The land office are there to police the condo act.

From what you state that organisation is acting illegally.

If I am correct -then maybe the new Prime minister may be interested

Yes, you are absolutely correct about the voting rights(the developer owns well over 50% sqm of remaining unsold units) and cannot have more than 50% voting rights. Of course, if push comes to shove, all co-owners must vote unanimously against the developer with the Chairman of the Committee holding the tie breaker. A highly unlikely scenario.

This developer has influential people in the Land Office so I am told and General Prayuth has more important matters to attend to (555). If government agencies are not fair and do not do their job, the co-owners (we) will lose because we don't have financial resources to pursue legal avenues.

[trogers]

The developer holds over 50% of the voting rights so removing management companies or managers almost impossible. In theory the developer could also vote and stack the committee to his liking although that is not currently the case. The developer is certainly not going to initiate a legal challenge against himself. Someone suggested using the Consumer Protection Agency, that might be worth a try? A co-owner could make a complaint, I am paying 50% more in dues (or the developer is not paying enough) and that is not legal.

A co -owner who owns many of the condos can only have the same voting allowance equivalent to all the other voting allowances combined.

No one can hold over 50% of the votes.

Also

The land office are there to police the condo act.

From what you state that organisation is acting illegally.

If I am correct -then maybe the new Prime minister may be interested

Yes, you are absolutely correct about the voting rights(the developer owns well over 50% sqm of remaining unsold units) and cannot have more than 50% voting rights. Of course, if push comes to shove, all co-owners must vote unanimously against the developer with the Chairman of the Committee holding the tie breaker. A highly unlikely scenario.

This developer has influential people in the Land Office so I am told and General Prayuth has more important matters to attend to (555). If government agencies are not fair and do not do their job, the co-owners (we) will lose because we don't have financial resources to pursue legal avenues.

Over 50% unsold? And have been like this for several years? Bad news for the owners.

[ThaiBob]

The developer holds over 50% of the voting rights so removing management companies or managers almost impossible. In theory the developer could also vote and stack the committee to his liking although that is not currently the case. The developer is certainly not going to initiate a legal challenge against himself. Someone suggested using the Consumer Protection Agency, that might be worth a try? A co-owner could make a complaint, I am paying 50% more in dues (or the developer is not paying enough) and that is not legal.

A co -owner who owns many of the condos can only have the same voting allowance equivalent to all the other voting allowances combined.

No one can hold over 50% of the votes.

Also

The land office are there to police the condo act.

From what you state that organisation is acting illegally.

If I am correct -then maybe the new Prime minister may be interested

Yes, you are absolutely correct about the voting rights(the developer owns well over 50% sqm of remaining unsold units) and cannot have more than 50% voting rights. Of course, if push comes to shove, all co-owners must vote unanimously against the developer with the Chairman of the Committee holding the tie breaker. A highly unlikely scenario.

This developer has influential people in the Land Office so I am told and General Prayuth has more important matters to attend to (555). If government agencies are not fair and do not do their job, the co-owners (we) will lose because we don't have financial resources to pursue legal avenues.

Over 50% unsold? And have been like this for several years? Bad news for the owners.

Bad news for the co-owners, bad news the developer, bad news for everybody. Almost 50% of the total units are in fact sold. The unsold units are big;the smallest being 115 sqm and the corner units are 257 sqm. Big size =expensive, not even the Russians when they were here in numbers had that kind of money.

Edited March 2, 2015 by ThaiBob

[ThaiBob]

A preliminary oral opinion from a Bangkok real estate lawyer says developer's paying less than co-owners is common in Thailand, written into the project bylaws and enforced by the Land Department. Will seek another opinion and pursue with the Office of Consumer Protection, hopefully one here in Pattaya at the City Hall. Anyone confirm?

[cheeryble]

The developer's move may or may not be illegitimate (it may be that you bought the condo and also "bought" the existing regulations in place for that building).You'd better work out carefully how much you are likely to save by this move if you're successful and whether it's worth the hassle and the risks associated with upsetting the applecart to possibly win a legal move.

At the least he'll be very pixxed off which may have real repercussions with his cooperativeness in future.

There may even be a small risk of the extra 50-100k per month bills bankrupting him or at least making things very tight.

If that happens how will sales proceed (and you need a fully sold building) with no advertising budget.....and who will pay the upkeep?

If I were you I'd look carefully at what pace sales are proceeding and do my best to judge his ability to pay before doing anything.....or you may end up "right" but "screwed".

Edited March 4, 2015 by cheeryble

[KittenKong]

The developer's move may or may not be illegitimate (it may be that you bought the condo and also "bought" the existing regulations in place for that building).You'd better work out carefully how much you are likely to save by this move if you're successful and whether it's worth the hassle and the risks associated with upsetting the applecart to possibly win a legal move.

At the least he'll be very pixxed off which may have real repercussions with his cooperativeness in future.

There may even be a small risk of the extra 50-100k per month bills bankrupting him or at least making things very tight.

If that happens how will sales proceed (and you need a fully sold building) with no advertising budget.....and who will pay the upkeep?

If I were you I'd look carefully at what pace sales are proceeding and do my best to judge his ability to pay before doing anything.....or you may end up "right" but "screwed".

The developer has no interest in the long-term well-being of the building or of its finances, so I would rather not have the developer running the building under any circumstances.

If the developer cant afford to pay his common fees that's tough for him but no real problem for the building because the building can apply to the court to have the units sold at auction and can then recover the unpaid fees from the sale proceeds.

[ThaiBob]

This developer has deep pockets. IF he sells just one 115 sqm unit he makes about 7 million, big unit about 16 million. Low annual fees means he has no incentive to sell; he doesn't advertise, does not pay commissions or finders fees, has no website. You pay his price, he doesn't discount but will increase prices per sqm based on the market . He always pays his dues on a monthly basis without fail. If he was making a concerted effort to sell he would get sympathy in this current market.

Edited March 4, 2015 by ThaiBob