A Condo Experience

[Beng]

On transfer of ownership in 2014 (new building), every owner had to pay 300 Baht per sqm into a fund (fixed deposit account) for future repairs/renovations.

Besides this, one time payment, all owners do annually pay a 30 Baht/sqm/month fee into a savings account for the monthly operation and maintenance of the communal property (cleaner, gardener, security, elevator and pool service, electricity, water, internet)

The new bill for 2016 is still at 30 Baht/sqm/month.

Out of interest, I looked up the balance of both bank accounts. Apparently, the condo management is spending more money than is available in the savings account and using some money from the fixed account as well.

As a result, the savings account is almost empty, while the fixed account has shrunk from 750K to 250K over 2 years.

The management is overspending our annual budget by 250K.

Has anyone ever encountered a similar situation and how to deal with it ?

[huawei]

This is normal. They advertise at 30 baht as a marketing angle not at realistic costs. Also if the developer is involved that just adds a further complications. You need to ask for the minutes of the committee as to where it was discussed that the sinking fund needed to be used.

How to deal with it.

1. Read the financials and then send your questions to the managing agent.

2. Request that this be bought up as a topic at the next agm.

3. Ask for a list of committee members and ask them the same exact questions.

4. Request a copy of all the committee meeting to date. Use of the sinking fund should have been discussed and approved.

5. Ask for a list of all major expenditures.

Reduce headcount, stop spending..revisit costs..they cannot increase the 30 baht unless approved at an agm..

This is somewhat normal in a new build. Good luck.

[Beng]

This is normal. They advertise at 30 baht as a marketing angle not at realistic costs. Also if the developer is involved that just adds a further complications. You need to ask for the minutes of the committee as to where it was discussed that the sinking fund needed to be used.

How to deal with it.

1. Read the financials and then send your questions to the managing agent.

2. Request that this be bought up as a topic at the next agm.

3. Ask for a list of committee members and ask them the same exact questions.

4. Request a copy of all the committee meeting to date. Use of the sinking fund should have been discussed and approved.

5. Ask for a list of all major expenditures.

Reduce headcount, stop spending..revisit costs..they cannot increase the 30 baht unless approved at an agm..

This is somewhat normal in a new build. Good luck.

We had only one meeting in early 2014.It lasted around 45 min. We picked the committee members, were introduced to the manager, etc..

I don't think that the sinking fund was discussed at all.

[trogers]

Remember those sticky questions a US government was asked?

One thousand dollars for a hammer and two thousands for a toilet seat?

[KittenKong]

This is normal. They advertise at 30 baht as a marketing angle not at realistic costs

I dont think this is normal at all. The fixed common fee (30B/sqm in this instance) should indeed reflect the likely costs of running the building for one year on a day-to-day basis at the time the building is finished. However it does not take into account things like replacing elevators, repainting the building, or fixing major pool leaks. Hopefully these should not be required in a new building, or if they are required the developer should pay for them.

Many older buildings had a common fee of much less than 30B/sqm, and the requirements of the building rules and the condo act often mean that once fixed there may never be a quorum big enough to increase these fees. So many older buildings resort every year to collecting a second (variable) fee for regular costs, though this still doesnt go towards the sinking fund.

I think the condo act also requires that the sinking fund be kept above a specific proportion of its original value - is it 75%? - and yet another special payment may be required for this.

Technically the management in this building should not be taking money from the sinking fund to pay regular bills, but if the developer is still in charge then all sorts of shenanigans are possible. Management companies and managers are also not above misappropriating money from one fund to use in another.

So many crooks here.

[KittenKong]

We had only one meeting in early 2014.It lasted around 45 min. We picked the committee members, were introduced to the manager, etc..

I don't think that the sinking fund was discussed at all.

This is illegal.

Your committee/management/JPM must present a proper financial report every year within 120 days of the end of your financial year. The report must contain full details of income and expenses, and must also contain details of money on deposit.

An AGM must be held at this time, and at least once a year.

At every alternate AGM the co-owners have the opportunity of choosing their committee and their JPM (for a term of two years). The committee then has the task of selecting/prolonging a management company (if any) and a building manager. Occasionally the co-owners may vote to choose a management company themselves but there is no requirement for this.

[Delight]

The fact that you could 'Out of interest, I looked up the balance of both bank accounts' suggests that the condo is not managed by the developer.

If so then the fees need to be raised.

I am assuming that the 30baht/M 2 is the original fee-set by the developer and is specified in the Rules and Regulations.

Typically it is impossible to change this fee since it would require as a minimum 50 % of co -owner vote to agree this at a legally convened general meeting. The 50% vote is required since the committee will be attempting to change the Rules and Regs

The answer to this problem is for the co -owners to agree by a simple majority vote ,at such a general meeting , to accept a Special Assessment ' fee.

This extra fee will reflect the true cost of the condo upkeep.

Providing that this Special Assessment 'is only valid for 3 years then the land office will accept it. This statement is based on experience at the condo where I live.

So it is reviewed every 3 years and is agreed at a general meeting to renew.. Typically the AGM is the place to do it.

It is the committee who ensure that the calculations are carried out and that this initiative appears on the agenda

Without this increase you condo will be in serious trouble.

If your condo is still managed by the developer then the committee may wish to replace the current JPM. This action will get rid of both the current JPM and the developer.

This action is subject to the details in your contract with the developer.

For example in the condo where I live the co -owners had to wait 3 years to get rid.

The condo Act details the actions require to replace JPM's. Not too difficult.

[Beng]

At our first (one and only) meeting a management company was already in place. They are not the developer, but must have put there by the developer.

In the meeting, everybody was asked to sign a paper, stating that we choose this company as our manager.

The majority of our expenses goes to the management company. Our budget is around Baht 1 Mio/year for a 6 storey building with 78 units.. The management firm is charging us 750K (which all co owners think is too much), that leaves only 250K to pay the daily bills and that is not enough. So they take money from our sinking fund to cover the gap.

Can I asked the JPM to arrange a meeting ?

[StefanBBK]

Not living in a condo, but somewhere along the line.

The maintenance fee for our village was for years 25 baht /sqw./ month. Last year it was decided to put that to a vote. How much do you want to pay? 25, 27 or 29.

I was laughing. The question should have been, how much does is cost to provide security, gardening, garbage, streetlights etc....

There was a bit of a lack of concept... suspect same is true for your condo.

[trogers]

At our first (one and only) meeting a management company was already in place. They are not the developer, but must have put there by the developer.

In the meeting, everybody was asked to sign a paper, stating that we choose this company as our manager.

The majority of our expenses goes to the management company. Our budget is around Baht 1 Mio/year for a 6 storey building with 78 units.. The management firm is charging us 750K (which all co owners think is too much), that leaves only 250K to pay the daily bills and that is not enough. So they take money from our sinking fund to cover the gap.

Can I asked the JPM to arrange a meeting ?

Your condo is situated in Sukhumvit Soi 50?

[smutcakes]

At our first (one and only) meeting a management company was already in place. They are not the developer, but must have put there by the developer.

In the meeting, everybody was asked to sign a paper, stating that we choose this company as our manager.

The majority of our expenses goes to the management company. Our budget is around Baht 1 Mio/year for a 6 storey building with 78 units.. The management firm is charging us 750K (which all co owners think is too much), that leaves only 250K to pay the daily bills and that is not enough. So they take money from our sinking fund to cover the gap.

Can I asked the JPM to arrange a meeting ?

You say 750K per annum is to much, but if you take that monthly it is 62K per month, which i am presuming includes one, two or perhaps three staff within the payment. Say 20K for a manager (low), and perhaps another 20-25K for another 2 members of staff and there is not a great deal of actual fee the management company is making.

The simple fact is that in central BKK, for a well managed building, and especially a small one of 75 units, 30 baht per sqm per month is simnply no longer sufficient, and some quick calculations on cleaning, secuirty, electric, lift maintenance etc etc should be enough to illustrate that.

It is not supposed to happen like that, but quite simply sometimes Committee's have a simple choice of using the Sinkng fund to subsidise operating expense in the short term, or cut essential services to save costs.

[KittenKong]

At our first (one and only) meeting a management company was already in place. They are not the developer, but must have put there by the developer.

In the meeting, everybody was asked to sign a paper, stating that we choose this company as our manager.

That isnt right. There should have been a proper vote and a proper meeting.

The majority of our expenses goes to the management company. Our budget is around Baht 1 Mio/year for a 6 storey building with 78 units.. The management firm is charging us 750K (which all co owners think is too much), that leaves only 250K to pay the daily bills and that is not enough. So they take money from our sinking fund to cover the gap.

I would be very surprised if you could possibly run such a building properly on just 1MB/year. If you are paying a large proportion to the management company then this probably includes staff costs, security etc as well as management costs. I imagine that the remaining 250kB pays for utilities etc.

At a meeting you could ask for details of the contract with the management company and their quote, which should provide information about how the costs are distributed. Unfortunately once the global payment is made the money no longer forms part of the building budget and so no details will be provided about it in the yearly report or the monthly cash-flow. It is a legal requirement to supply a monthly cash-flow report to co-owners.

Can I asked the JPM to arrange a meeting ?

If you can gain the support of 25% of the co-owners (by voting ratio) you can demand a meeting or even call your own. At such a meeting you can deselect the JPM and the committee, and appoint new ones. Once appointed they can sack the management company. But none of that would be easy and without the help of another management company it may well prove to be impossible. Perhaps you and other concerned co-owners could approach other management companies to see it they are interested in taking on your building?

Either way a meeting every year is a legal requirement. As you haven't had one you could try complaining to the Land Office (take any documentation you may have, and a Thai-speaker) though they probably wont be interested. If that fails you could try complaining to the NCPO.

In Thai building management it is common for people to be in cahoots with each other, and for everyone to be getting a slice of various pies, and so you may get no help at all from the JPM or the committee or indeed some of the co-owners who may be in bed with them.

Many people would be very surprised by the real extent of such corruption here. It is massive and sickening.

[PattayaPhom]

Its also quite common for managers, commitees Foreigners and Thais to pilfer money off for themselves....Accounts should be available if you need to check. Expect next AGM that fees will increase or a one off payment to replenish the sinking fund is called for. The joys of owning a condo

[Beng]

At our first (one and only) meeting a management company was already in place. They are not the developer, but must have put there by the developer.

In the meeting, everybody was asked to sign a paper, stating that we choose this company as our manager.

The majority of our expenses goes to the management company. Our budget is around Baht 1 Mio/year for a 6 storey building with 78 units.. The management firm is charging us 750K (which all co owners think is too much), that leaves only 250K to pay the daily bills and that is not enough. So they take money from our sinking fund to cover the gap.

Can I asked the JPM to arrange a meeting ?

Your condo is situated in Sukhumvit Soi 50?

No, its in Chiang Mai.

[Beng]

Many people would be very surprised by the real extent of such corruption here. It is massive and sickening.

Agreed.

[smutcakes]

Its also quite common for managers, commitees Foreigners and Thais to pilfer money off for themselves....Accounts should be available if you need to check. Expect next AGM that fees will increase or a one off payment to replenish the sinking fund is called for. The joys of owning a condo

It is not Common at all. It happens but the instances are rare. I would summize that 95% of the time when i hear this type of thing, it is more to do with a complete lack of understanding on the operation of the Condominium and Chinese wisper from one clueless co-owner to another which is the start of most of these Common situations.

I am not including instances in this when staff maybe take small inducements to try and give work to particular contractors in this, which is common place throughout Thailand, in most companies.

Why dont you provide some examples of the common instances of managers, Committee members pilfering money?

[hay2u2]

Just to add my pennyworth.....experience in our new condo was that the management (in this case the builder) was indeed raiding the sinking fund and did not hold AGMs at which this could be challenged. After 3 years of this the owners got together and called an EGM themselves, at which the current management refused to attend. We finally voted in a new management structure consisting of unit owners, and successfully sued the builder to get our sinking fund back (about 1.5 million baht),

It can be done..if you ignore the treats of violence etc

[Beng]

Just to add my pennyworth.....experience in our new condo was that the management (in this case the builder) was indeed raiding the sinking fund and did not hold AGMs at which this could be challenged. After 3 years of this the owners got together and called an EGM themselves, at which the current management refused to attend. We finally voted in a new management structure consisting of unit owners, and successfully sued the builder to get our sinking fund back (about 1.5 million baht),

It can be done..if you ignore the treats of violence etc

Wow !! Good to hear. In fact, this sounds similar to my situation.

[lomm]

Maintenance of building have a costs. it's fact.

It's not realy important if you pay monthly 35 baht/sqm, pay any few month any amount for a special expenditure or the money come from the sinking fund.

In the bottom line is the same money.

Go to check the management reports. if they ok you don't have to do nothing, if they not ok, go to the police.

One thing that you can do is to determine a meeting and decide how to do it in a common way from now.

[Delight]

You may have a corruption problem –but that is not your main problem.

The condo that you refer to is on its way to financial hell!

The number of floors and the number of rooms is irrelevant

What matters are the number of chargeable meters..Based on the data supplied you have approx,2778 chargeable meters

The condo where I live has 3658 Meters

The cost to run this condo will be about the same as yours. Approx 1.9M baht per year.

That said your management charge is higher so 2 M baht /year is realistic

This assumes that you have gardens –swimming pool – security etc

Therefore the charge needs to be 60 baht /M

Should you not have any security the cost reduces to 51 Baht /Meter

If the co –owners are generally happy then I simply suggest that the fees are raised as per my earlier post.

Also the management charge is reasonable .You are unlikely to find cheaper. This assumes that the charge covers JPM services and a Building Manager.

I attach an Excel document which gives real live costs of the condo where I live. It covers the 1^st 11 months of 2015. You may wish to compare this with your condo costs.

Note: our Management fees are only 50K /month. This is because of our association with other condos. If we were alone then it would be 65K /month.

Of course you will have to charge more than I have stated if you wish to replenish your now depleted sinking fund

I could well be very wrong with the number of your chargeable meters. The more meters the lower the unit cost.Suspect that the 2 MvBaht/year is about right

Small condos are expensive

DYNAMIC 2015 SPREADSHEET COSTS PER METER.xls

Edited January 4, 2016 by Delight

[sendintheclowns]

Does anyone have experience of owing a 30 year leased unit in an apartment building ? Thanks.

[Beng]

You may have a corruption problem –but that is not your main problem.

The condo that you refer to is on its way to financial hell!

The number of floors and the number of rooms is irrelevant

What matters are the number of chargeable meters..Based on the data supplied you have approx,2778 chargeable meters

The condo where I live has 3658 Meters

The cost to run this condo will be about the same as yours. Approx 1.9M baht per year.

That said your management charge is higher so 2 M baht /year is realistic

This assumes that you have gardens –swimming pool – security etc

Therefore the charge needs to be 60 baht /M

Should you not have any security the cost reduces to 51 Baht /Meter

If the co –owners are generally happy then I simply suggest that the fees are raised as per my earlier post.

Also the management charge is reasonable .You are unlikely to find cheaper. This assumes that the charge covers JPM services and a Building Manager.

I attach an Excel document which gives real live costs of the condo where I live. It covers the 1^st 11 months of 2015. You may wish to compare this with your condo costs.

Note: our Management fees are only 50K /month. This is because of our association with other condos. If we were alone then it would be 65K /month.

Of course you will have to charge more than I have stated if you wish to replenish your now depleted sinking fund

I could well be very wrong with the number of your chargeable meters. The more meters the lower the unit cost.Suspect that the 2 MvBaht/year is about right

Small condos are expensive

Thanks for the spreadsheet, good info.

[bark]

This is normal. They advertise at 30 baht as a marketing angle not at realistic costs. Also if the developer is involved that just adds a further complications. You need to ask for the minutes of the committee as to where it was discussed that the sinking fund needed to be used.

How to deal with it.

1. Read the financials and then send your questions to the managing agent.

2. Request that this be bought up as a topic at the next agm.

3. Ask for a list of committee members and ask them the same exact questions.

4. Request a copy of all the committee meeting to date. Use of the sinking fund should have been discussed and approved.

5. Ask for a list of all major expenditures.

Reduce headcount, stop spending..revisit costs..they cannot increase the 30 baht unless approved at an agm..

This is somewhat normal in a new build. Good luck.

We had only one meeting in early 2014.It lasted around 45 min. We picked the committee members, were introduced to the manager, etc..

I don't think that the sinking fund was discussed at all.

The Sinking fund is not for monthly costs. It is an emergency fund, in case you have a major problem inside or outside the building. New sewer line, fixing large cracks in walls or floors, new elevator, etc. They need to use the funds in the monthly condo payment( 30 bt/sq. meter). If this money is not enough, you need to ..... 1. Increase the fee to balance the monthly budget. OR 2. Reduce the monthly payables. Your condo is the same as most Governments in the world. Spending more then you take in. Also you should make sure to do a one time payment to replace the money which was spent from your Sinking Fund. Good Luck.

[fred Kubasa]

I lease a condo at Laguna Bay 1 in Pratnumak and the owner pays substantial assessments. Some are

for a swimming pool no one will enter as it is filthy with live algae, Wi-Fi advertised as

" Included" does not work and gym 's only 2 automatic exercise machines are broken ! Owner, and I

have been ripped off and I am taking this to the Consumer Complaint Dept. at Pattaya City Hall to resolve.As the developer is "connected" I probably will get short shrift but will try anyway !

[huawei]

1. New build.

2. Developer stays involved to utilise funds for snagging, subsidising cam fee until all units sold.

3. Management company has a relationship with developer. They are there to do the developers bidding not the co- owners

4. The low common fees were unrealistic from the outset..everybody will have known this.

5. The owners are Thais second homes, foreigners some not there most of the time, low occupancy..all favour the management and developer as difficult to organise against them.

This is how " some" work here.

It is upto the co- owners to kick them out..an individual co- owner has no chance. The first step is to get hold of the co- owners emails.

Mis- use of funds can be at levels hard to comprehend.

The older condos therefore tend not to have these problems.

[Suradit69]

This is normal. They advertise at 30 baht as a marketing angle not at realistic costs

I dont think this is normal at all. The fixed common fee (30B/sqm in this instance) should indeed reflect the likely costs of running the building for one year on a day-to-day basis at the time the building is finished. However it does not take into account things like replacing elevators, repainting the building, or fixing major pool leaks. Hopefully these should not be required in a new building, or if they are required the developer should pay for them.

Many older buildings had a common fee of much less than 30B/sqm, and the requirements of the building rules and the condo act often mean that once fixed there may never be a quorum big enough to increase these fees. So many older buildings resort every year to collecting a second (variable) fee for regular costs, though this still doesnt go towards the sinking fund.

I think the condo act also requires that the sinking fund be kept above a specific proportion of its original value - is it 75%? - and yet another special payment may be required for this.

Technically the management in this building should not be taking money from the sinking fund to pay regular bills, but if the developer is still in charge then all sorts of shenanigans are possible. Management companies and managers are also not above misappropriating money from one fund to use in another.

So many crooks here.

Each year at our annual meetings(which last a good deal longer than 45 minutes unfortunately) we have to approve any change to the standard existing assessment or for any additional special purpose assessments, any shifting of funds meant for different purposes ... usually only due to some unanticipated emergency ... and approve the overall budget as well as the auditor's report for the previous year, etc.

As far as I can tell all budget related actions have been transparent, the uses of funds have served the purpose for which they were allocated and the board & management have sought approval for virtually all non-recurring significant financial transactions.

The situation the O/P describes is not, or should not be "normal." Not sure how best to go about restoring accountability, but some steps in that direction really ought to be initiated.

Edited January 4, 2016 by Suradit69

[KittenKong]

Why dont you provide some examples of the common instances of managers, Committee members pilfering money?

Pilfering isnt really a problem, though it shouldn't happen of course. Massive fraud and deception are more of a problem.

There have been many instances of this, some of which I know of from personal experience.

However in Thailand such things tend to be hushed up so as to make those who should have been monitoring look somewhat less incompetent than they really are.

Also it is not always legal or wise to name names in Thailand.

[KittenKong]

Each year at our annual meetings(which last a good deal longer than 45 minutes unfortunately) we have to approve any change to the standard existing assessment or for any additional special purpose assessments, any shifting of funds meant for different purposes ... usually only due to some unanticipated emergency ... and approve the overall budget as well as the auditor's report for the previous year, etc.

As far as I can tell all budget related actions have been transparent, the uses of funds have served the purpose for which they were allocated and the board & management have sought approval for virtually all non-recurring significant financial transactions.

This is what should happen, certainly. You are lucky that it does in your building. In other buildings it does not happen.

[bazza40]

Yawn....... Renting has so much less stress. Jai Yenn.

[joebrown]

Just to add my pennyworth.....experience in our new condo was that the management (in this case the builder) was indeed raiding the sinking fund and did not hold AGMs at which this could be challenged. After 3 years of this the owners got together and called an EGM themselves, at which the current management refused to attend. We finally voted in a new management structure consisting of unit owners, and successfully sued the builder to get our sinking fund back (about 1.5 million baht),

It can be done..if you ignore the treats of violence etc

Wow !! Good to hear. In fact, this sounds similar to my situation.

and mine! I found that I couldn't take any action against the developer without being threatened with a defamation suit. Fortunately I was able to sell and I would never ever consider buying into a 'newbuild' condo again.