Can I refuse to pay this "Sinking Fund" ?

[Suradit69]

Keep some candles and bottled water on hand.

[kdrayong]

One more thing to mention.

OP, you pay the common fee and the sinking fund for your own asset - your condominium!
This only, if the committee or the management is not wasting money.

You don't want the building to come down and your condominium loses value.

Where I stay, we're living on a ridiculous low common fee, which is not even enough to maintain the building in a proper way.

The developer, who is still the biggest co-owner rejects any attempts to increase the common fee. Without him, we don't even have a quorum to vote on it.

That's why we need to use the sinking fund frequently, when legal possible. In the AGMs the attendant co-owners usually agree to re-balance the sinking fund by an extra payment.

Smutcakes and KittenKong, it's absolutely correct what you have been writing before.

[technologybytes]

Most of the owners only come here for winter.

Of course, MOST of the owners will be Thai (or at least 51% anyway)i.. Where exactly do they go ?

[ThaiBob]

@ThaiBob: We bought this condo in Nov 2014, and the "Sinking Fund" issue was approved on AGM in Feb 2015.

You cant blame the vendor for not informing you then.

And the lesson learned is do due diligence before buying which includes reviewing all financial statements, talking with other co-owners, the juristic manager and committee members. Depletion of sinking funds do not happen overnight.

[chicowoodduck]

And my friends always ask me..."Why don't you buy something here in Los?"

I rest my case....???

[MockingJay]

Ask the Lawyer!!!!!!!!!!

[AlQaholic]

The sinking fund is a legal requirement not included in the Condominium act of Thailand but rather in Safety and health regulations. There is a legal requirement for any Condominium (or any building such as a Hotel or Office building) to have an account for repairs and actions pertaining to Safety and Health, it is fixed at a certain percentage of the total value of the condominium (Can't remember exactly how much right now). For example fire extinguishers replacements, broken tiles around the swimming pool, some equipment damaged due to small fire, slippery entrance need to be replaced with non-slippery tiles, such things falls under the category "safety and Health".

This sinking fund is a win win for all co-owners as long as it is managed properly. Of course if Management and the Committee are corrupt that is not a very good situation. In that case you should sell a.s.a.p. and find a new place (there are an oversupply atm) and before you buy ask to see the accounts, including the sinking fund.

What many condos do is to push the annual fee down to ridiculous levels and then itemize and surcharge every other item on top of that such as pool maintenance, toilet paper, cleaning equipment etc etc., which is not right, they attract buyers on a low annual fee but fail to mention all the extras. However the Sinking fund is a necessary thing and cannot be avoided.

Condo management (and committee chairperson) that fails to maintain the sinking fund will go to jail without passing "go".

As an afterthought I should mention the original developer is responsible for setting up this fund and is included in the "first owner" purchase price. And then what usually happens is the developer takes the fund and runs away when enough profit has been made.

Edited January 11, 2016 by AlQaholic

[RT85]

Wow... my first two years we paid about 58baht/sqm per month... about 45k/year... thankfully in year 3 they have reduced to about 35k/year or about 45b/sqm/month.... even then management isn't too bright here... at least they've lowered fees! At 10baht I wouldn't complain... just imho...

[ggt]

You may refuse to pay the "stinking fund"...but the same crooks that are ripping you off will find a way to make life miserable for you...does the condo manage any utilities? Electric, water, cable tv, internet? Look for reduced services until you pay their extortion money...This is Thailand...They smile a lot here...

[KittenKong]

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.

Topping-up the sinking fund monthly is not common practice in any building I've studied the accounts of. Normally the sinking fund is a bank account holding an amount of money decided when the condo was built. Only if some money is spent from it should it need to be topped-up. Once the fund is at its full value it is not necessary to add more.

Also in many buildings all the fixed fees are collected yearly in advance.

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.

Not at all. In order to sell a unit you must present a debt-free certificate signed by the JPM. Should that certificate turn out to be incorrect then the JPM is responsible. The only exception would be if a fake certificate was used.

[KittenKong]

Each of our committee members owns serval apts in our condominium . They do a lot renting business. The manager also runs the restaurant inside condo and losing money all the time so he changed gym into 2 apts for renting ! And he owns loans from several condo owners too. The committee members have their profit involved with each other so they "cover " each other.

I thought I'd heard it all but that just goes to show that there is always some new scam going on here. An endless stream of crooks, each more bent than the last.

By manager do you mean the building manager or the JPM? There is a big difference. Either way you need to be shot of him.

[KittenKong]

Where I stay, we're living on a ridiculous low common fee, which is not even enough to maintain the building in a proper way.

The developer, who is still the biggest co-owner rejects any attempts to increase the common fee. Without him, we don't even have a quorum to vote on it.

That's why we need to use the sinking fund frequently, when legal possible. In the AGMs the attendant co-owners usually agree to re-balance the sinking fund by an extra payment.

What you should be doing (and what happens in most buildings) is to levy a supplementary fee each year along with the common fee. The supplementary fee should be based on the shortfall of the amount calculated in the budget above the regular common fee. You should never touch the sinking fund except for irregular infrastructure repairs etc.

Many buildings have a common fee that is too small, either because the building is older and the fee has not kept up with inflation or because the amount was deliberately set too low in a newer building by the developer in order to make it appear be a better deal for potential buyers. In either case a supplementary fee is in order.

In my building our supplementary fee is about twice the official common fee.

[kdrayong]

You should never touch the sinking fund except for irregular infrastructure repairs etc.

Correct! That's exactly what we are doing. Using the sinking fund when it's legally possible and balance it up at the next AGM.

Since we always have a few 'emergency' repairs we use the sinking fund. Without that, we could close the building.

The developer would never accept a supplementary fee.

To balance up the sinking fund, he's willing to do somehow.

Edited January 11, 2016 by kdrayong

[smotherb]

Seems just one more reason not to buy Thai.

[theguyfromanotherforum]

I am reading this thread and trying to understand what is so unusual about this "sinking fund" and why it shouldn't be paid.

I am still debating if I should buy a condo in Bangkok (I really don't like a shoddy construction), but in Canada every 10 years or so there will always be a "special assessment" where additional funds will be needed for repairs or whatever. Nothing unusual about this at all.

Also, the low maintenance fees to lure buyers are quite normal in the West too. Not only normal, but it's pretty much a standard on how most developers operate. Again, I am just wondering what is so unusual about this case. I know with my condo in Toronto, there is no "option" not to pay. You always have to pay and then argue irregularities later.

Just curious about this thread as a prospective buyer.

[smutcakes]

You may refuse to pay the "stinking fund"...but the same crooks that are ripping you off will find a way to make life miserable for you...does the condo manage any utilities? Electric, water, cable tv, internet? Look for reduced services until you pay their extortion money...This is Thailand...They smile a lot here...

Generally property management companies are engaged to manage the common areas of the property. Payment of internet, electric, cable tv is the job of the Co-owner not the management companies.

It is another area where Co-owners lack understanding on the scope of the management companies. Often buildings, particulalry in Pattaya push those responsibilitiues onto the management company, but it is not something they like or want to do. If it was up to the management company they would not do them at all, as they dont want to be handling Co-owners funds to pay all these bills when it is out of there scope and opens up the possibility of money issues.

In Bangkok management companies try and facilitate for Co-owners the setting up of electronic banking so they do not need to handle their funds, but it is impossible to get all Co-owners to do it, so handling the funds becomes impossible to avoid.

[KittenKong]

I am reading this thread and trying to understand what is so unusual about this "sinking fund" and why it shouldn't be paid.

There doesnt seem to be anything unusual about it and there doesnt seem to be any reason why it should not be paid. The only debatable issue is what the money was spent on (we dont know) to require it to be topped-up, and why it wasnt topped-up earlier.

The amount and duration of the levy should have been discussed and agreed on by co-owners at their AGM, but from the information given in this thread it isnt clear what happened there.

[KittenKong]

You should never touch the sinking fund except for irregular infrastructure repairs etc.

Correct! That's exactly what we are doing. Using the sinking fund when it's legally possible and balance it up at the next AGM.

Since we always have a few 'emergency' repairs we use the sinking fund. Without that, we could close the building.

The developer would never accept a supplementary fee.

To balance up the sinking fund, he's willing to do somehow.

I see. We do it differently in that we pay small irregular repairs and replacements from the current account, and the yearly supplementary fee covers these and the shortfall in day-to-day running costs.

Strange that the developer will pay for the sinking fund top-up but not for a supplementary fee as in the end they are the same thing. Presumably he also just wants to make it appear that fixed fees are low, to encourage sales.

[Jeffkp]

I bought a condo in CM a year ago. I went to the first owners meeting. We were given the financial documents as we entered.It was obvious there weren't enough attendees to meet a quorum. As the accountant "explained" the financial statement, I noticed he had deducted depreciation from actual income. This produced a million Bhat loss. When I asked why this was done. He claimed that was the way it was done in Thailand.

The management team asked for an 45% increase in Maint. Fees.

All hell broke out. We pointed out there was not a quorum and that we were not given the documents in advance. The accountant was obviously incompetent. The young girl who is the Juristic person broke out in tears.

The meeting was re-scheduled for the next month. The financials were redone.

At the next meeting, the increase in fees was approved.

I don't think it was corruption, but plain incompetence from an inexperienced management team. They have shown much improvement. They have upgraded the security company and cleanliness. Overall, I must say I satisfied.

But I can understand people being concerned. I think things are opaque and if communication were improved life would be much easier for all concerned.

[Pinot]

Reason #633 never to buy property in Thailand

[Rimmer]

Question has been answered, thank you all very much, and at the request of the OP the topic is now

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