Can I refuse to pay this "Sinking Fund" ?

[susanschwaiger]

Hallo there ! Really advice needed!

We've bought a 2nd hand condo (not from the builder of course). And later found out the management here is very very very lousy.

And half a year ago, our monthly bill added a new item: Sinking Fund, 10 baht/sqm/m. The approval of the this "Sinking Fund" was done by the AGM which was not operated properly according to the condo law.

I've read the monthly financial reports (not sure if they are fake or not), and they seem messy. And also head many rumors and complaints that there could be hidden embezzlement.

They already increased the management fee from 35 to 40, can I refuse to pay this nonsense "Sinking Fund"

Thanks a lot !

[beano2274]

not actually sure about that, the same thing happened at my condo, they overspent so raised the maintenance fees, all agreed at the AGM which I could not attend as I live in Europe.

How is the AGM not conforming to the law at your condo?

[susanschwaiger]

They don't operate AGM according to the procedures of law. Most of the owners only come here for winter, so the committee abuses their power. I pay the increased management fee, but don't want to pay the so called Sinking Fund. I've searched a bit on web. We bought the condo from our previous owner.. and the Sinking Fund should be cleared off by the first owner who bought it from the builder.. Do I understand right here ?

[beano2274]

how do they abuse their power, they must have meetings, and if most of the residents do not go to the meetings then that is unlucky as any new rule can be passed with a majority of those in attendance. When i was in Thailand I went to every meeting with my wife to understand and also give my comments, if you and those other do not go then as I said a rule can be

passed and you must abide by it as the AGM was elected by the owners of the condos.

[Basil B]

Lot depends...

But as I understand it, to raise the management fee they need 75% of the owners agreement.

Where I once owned a condo AGM's were never quorate, AGM would be rescheduled (when there was no requirement for a quorum), but often AGM business would be limited as certain business can only be done with certain percentage of owners votes.

Obviously at the time our funds were depleted as the maintenance fee had been set at 3,600B P/A per condo when the condominium had been built, after over decade the Condominium was in need of some plant upgrades and a paint job.

It was agreed at AGM to add a supplementary charge per unit (this was advised as being legal), I see nothing wrong with that as for years the Condominium had been spending more than they were getting in and funds were depleted.

By law the Condominium has to post regular accounts and I would suggest reviewing them, if you wish to take matters further I understand the Land Registry is responsible for enforcing the Condominium regulations and laws.

[Rimmer]

Moved to the real estate forum

[KittenKong]

The "sinking fund" is an amount of money that is put aside when the units are first sold and the building is registered as a condo. The actual amount will be detailed in your building rules and regs. This money is placed on deposit to be used in case of major infrastructure repairs. The fund should normally only be used by decision of the committee (and possibly by the co-owners at a GM).

It sounds as though your building has been spending the sinking fund (either correctly or incorrectly) and so has had to top it up via a one-off levy. Normally this will have been voted at a GM.

If you dont pay then you will be liable to interest payments after a few months.

If you think that the GM or the accounts are in some way incorrect or illegal then you should get together with other co-owners to try and sort that out, but it doesnt remove the need for you to pay the sinking fund charge. To remove that need, co-owners would have to vote to cancel the charge, or it would need to be found illegal by a court (that is unlikely to happen).

Welcome to the world of incompetent, corrupt and deceitful condo management and committees. There's no shortage of these here. In my own building I dont think I've seen a single financial document in two years that didnt have several errors in it, some of them quite major.

[NeverSure]

Mamas, don't let your babies grow up to buy property in Thailand.

Don't let 'em get stuck without rule of law.

Make 'em leave their investments in their home country.

Mamas, don't let your babies grow up to buy property in Thailand.

They'll never understand the rules of another country.

Even with someone they love.

[digbeth]

Rule change needs 75% of all co-owner to cast their votes or gave power of attorney to someone that attended the meeting, normally the juristic person manager will canvass around for power of attorney forms to be filled otherwise the agenda cannot go forward, so no, you can't just have five people turn up and have the majority decision in that meeting be binding

[moonseeker]

Wow Susan, you really are fired up. I think we have plenty of low-class people and crooks of any nationalities here in this lovely town. But we also have some good people. Most on TV and in your particular post so far, seem quite reasonable and friendly.

Read the Condo Act below and sort out what is truth & fiction.

I have been on several committees for many, many years and the kind of accusations we hear all the time of fraud & embezzlement, mostly originating from people who can not even read a budget or basic balance sheet, just blow my mind. They also feel, while allover the world prices raise, Pattaya anything on slae in Tghailand should be frozen at price levels of 20 years ago, incl. Condo-Fees. :-)

Any straightforward questions with factual details & background will certainly find an answer on this forum. Take it easy. MS>

http://www.samuiforsale.com/law-texts/new-thailand-condominium-act-2008.html

[tx22cb]

You say the Sinking Fund is 10 baht/sqm/m.

This seems unusual, as I thought that the Sinking Fund is a one-off lumpsum payment, not a monthly payment.

Is there a specified period for this payment (e.g. 12 months)?

If it's open-ended, it's like a monthly maintenance fee.

"a meeting min should at least show the attendees ?" - the minutes might not specify this level of detail, but the Management will have detailed records of which "rooms" attended, so you can ask for the list.

Your neighbours seem to be on the ball, so if you trust them, you can give them power to vote on your behalf at the AGMs in your absence.

I am curious by "And the meeting language was not in Thai or English" ....?!

[Basil B]

As Thai is the official language of Thailand, The official document will almost certainly have to be in Thai. I assume by law the will have to lodge minutes of meetings and accounts with the land registry...

From my personal experience and cost they did and probably still do work on the brown envelope under the table system down at Pattaya Land Registry.

[lonewolf99]

Glad I don't own. Never will. Imagine if they change the Condo Law ....... Follow China's lead ....after 70 years the land and building go back to the Gov. you are out. This is Chinese Citizens I am talking about not fallangs.

Cant tell you the name - but I know of 2 incidents of humble decent Thais running off with millions of Baht from condo funds.

A new management lot they have now in one of them, humbly divided the petty cash set aside each month for incidental costs, between themselves, even the gardners.

Coz no one saw fit to check what they might have spent it on or looked for receipts.

[theguyfromanotherforum]

Sinking fund or special assessment??

[KittenKong]

As Thai is the official language of Thailand, The official document will almost certainly have to be in Thai. I assume by law the will have to lodge minutes of meetings and accounts with the land registry...

From my personal experience and cost they did and probably still do work on the brown envelope under the table system down at Pattaya Land Registry.

There was a change of staff at Pattaya LO a few months ago but envelopes still speak louder than the law as far as I can see.

[huawei]

They are replenishing the sinking fund. My condo will need to do the same. We will try to do it over 2 years with the duration of the newly elected committee.

[prk888]

lots of sensible replies for you Ms.Susan.

I'm sure you know that there is little in practise that a Committee can effectively do for non- payment of anything other than take you to Court which is a waste of everyone's time and money. The crunch comes when you have sold and then you must settle any & all outstanding debts to get the debt-free letter required for the legal transfer of property at the Land Office.

[smutcakes]

Just to clarify as a couple of people have mentioned it in this thread. Other than dissolving the Condominium, there are no actions within the Condominium Act which require more than 50% of the total Co-owners vote.

the 75% regulation was under the old act, and is no longer valid. Even if your building regulations stated 75% (because the management had not amended them) then a 51% resolution would still pass an increase in common fee, or additional monies to be paid into sinking funds.

Also, in terms of the dates of AGM's, the Commttee are required by law to have the meeting within 120 days of the end of the financial year of the Condominium, they cannot pick and choose to have it at a certain time to fit some peoples schedules.

If they have passed this resolution on the Sinking fund then they must have had more than 50%, or 33% of the total Co-owners vote. If they did not, then you can file a complaint with the LD within 30 days of the meeting.

[smutcakes]

@theCruncher: When we came here 5 years ago, the real estate market was just booming. Much better to invest than putting money in bank. Our first condo was bought at 14M, now the price is 18M.

@kittenKong: Our first condo's common area is about 30 times more than our current one. It is well managed, and the management fee remains 60 baht until now. And our new condo has 70 apts (total 7100 sqm), common area about 700sqm, not even has gym, only a small pool. Election and AGM were not done properly. And the JPM has some own business which is losing money all the time . I don't mind to pay money which is necessary, but hate to be sheep for ripping of wool.

Hi Susan,

Sorry if i missed it, but did you outline why the election and AGM were not done properly?

You need to remember at larger condominiums they benefit from economies of scale with their fee. I know a condo in BKK which common fee is 120 baht sqm per month (they also pay sinking fund per month), and another one directly accross the road and 5 times the size is 65 baht sqm. This is two buildings with the same management company and similar facilities, although the bigger condo's are far superior.

[KittenKong]

Our first condo's common area is about 30 times more than our current one. It is well managed, and the management fee remains 60 baht until now. And our new condo has 70 apts (total 7100 sqm), common area about 700sqm, not even has gym, only a small pool. Election and AGM were not done properly. And the JPM has some own business which is losing money all the time . I don't mind to pay money which is necessary, but hate to be sheep for ripping of wool.

Then that's 7100 * 10 * 36 = 2.5+MB, which is a fair-sized hole but not really huge. Unless there was some major recent expenditure (pool repair, elevator replacement) it sounds like they may have been digging into the sinking fund over time to make up some shortfall in the common fee, rather than impose a supplementary common fee as usually happens. Or maybe there was some misappropriation. The financial statements and proposed budgets of the last few years should make this clear, and you should get information about bank balances in the monthly cash-flow report.

I dont see why the JP should be running businesses at a loss. I suppose you do mean the JP and not the JPM, as what the JPM does in his spare time is his problem and of course this should never impact on building finances.

Unfortunately high fees are the price often paid for living in a building with a fairly small number of units.

[smutcakes]

Yes it does. If you have any outstanding on the management account the JPM will not issue a Debt free cert whether you agree with the charges or not. No debt free cert, no sale.

[ThaiBob]

Yes, it applies to all co-owners. What I don't understand, you are upset but are asking questions now that should have been asked before you bought the condo. Fees like these are not unusual especially in older buildings that cannot get quorums to raise maintenance fees and consequently, legally or illegally spend sinking funds.

[huawei]

So many condos reduce their sinking fund as they don't or can't raise the cam fee.

The questions is do you replenish the sinking fund or not?

Your condo agm agreed to replenish.

As such the voting percentages should be disclosed in the minutes of the agm and lodged at the land office, or better still the vote counted and declared at the meeting.

In my opinion the land office is more an administrative centre and not the enforcer of the laws, and as such will only advise.

Good luck, if you don't get this resolved , their behaviour will just continue as is.

Remove the current committee when the 2 years are up.

[huawei]

The simple answer is yes. The sellers should have advised you of this as they would have been notified of the change.

[KittenKong]

Yes it does. If you have any outstanding on the management account the JPM will not issue a Debt free cert whether you agree with the charges or not. No debt free cert, no sale.

The debt-free letter only applies to debts at the time the letter is written, not future debts, and this may be why it was decided to charge this fee per month for three years rather than as a one-off.

As a proportion of the common fee of 60B/sqm/month this 10B/sqm/month is not really a huge sum.

[Familyaffairs]

A management fee has nithing to donwith anything other than management...., a regular annual maintenance budget and a sinking fund are different animals, the sinking fund is NOT nonsense, if anything msjor breaks down immediate funding is required to remedy it.mThings hat can't wait for an AGM or EGM. If your pool collapses, or other major ticket items such as yr condos transformer or pumps break down, ior a sink hole appears, it needs to be fixed instantly. It not,mit affects the value of each owner's share in the condo. Every condo has owners who don't like, and others who do like their management,

[smutcakes]

A management fee has nithing to donwith anything other than management...., a regular annual maintenance budget and a sinking fund are different animals, the sinking fund is NOT nonsense, if anything msjor breaks down immediate funding is required to remedy it.mThings hat can't wait for an AGM or EGM. If your pool collapses, or other major ticket items such as yr condos transformer or pumps break down, ior a sink hole appears, it needs to be fixed instantly. It not,mit affects the value of each owner's share in the condo. Every condo has owners who don't like, and others who do like their management,

I agree, and without knowing the full details of what happened to the original sinking fund. i.e was it spent by the developer, has it been used to fund regular maintenance because of inability to increase common fees etc it is difficult to tell.

On the face of it, a Committee proposing to increase the Sinking Fund amount would appear to be good Governance if they believe it is under funded for future capital expenditures.

[hawker9000]

'Sort of like holidaying in Phuket. 'Just can't understand why anybody except the stupidly rich (and therefore largely uncaring) or those hidng out would want to buy in Thailand. Not that long-term rentals are without their abuses as well.

[smutcakes]

'Sort of like holidaying in Phuket. 'Just can't understand why anybody except the stupidly rich (and therefore largely uncaring) or those hidng out would want to buy in Thailand. Not that long-term rentals are without their abuses as well.

Umm becuase people live and work here for 20-40 years, and instead of renting for 50-60K a month it makes far more sense to purchase a condominium? Rather than spending 20 million on rent you may as well purchase something which holds its value or appreciates. Not that difficult to understand.

[ironbark]

I cannot comment on the legality or otherwise of any meetings or their decisions because I only have information from one side which by definition is incomplete.

What I can say is that-

1. Having a "Management Levy" for routine management and expenditure such as cleaning, security and gardening and a separate "Sinking Fund" for major repairs or replacements to common property is both common practise and common sense. Both fees are usually collected monthly but accounted for separately. A Sinking Fund is necessary because no one wants a sudden expensive bill because the whole building needs a repaint every 10 years or a water main burst an damaged the driveway and several apartments.

2. As to who is responsible for what? The previous owner is responsible for all levies including the sinking fund up to the day you become the legal owner then you are responsible for the payments from then on. If the previous owner was in arrears on that date then the committee should seek those arrears from the previous owner.