Condominium sinking fund - Usage and enforcement of payment

[Srinakarin]

Hi,

I have a few questions about the specific usage of the condo sinking fund and the extent to which the condominium can force payment of it.

I'll try to be as brief as possible.

I attended the condo annual meeting for 2014 and 2015 and have been in support of an increase in service charge for maintenance. However, due to low attendance and non-occupancy, there are never enough people to vote in favour of an increase. Currently the service charge is B20.

At the meeting this year that I couldn't attend, but I was told by other residents that a proposal was made to add a sinking fund fee of B16 sq.m for each resident for two years. This is to cover the cost of repairing or replacing water pipes outside the rooms in the entire building, and a room for staff. My understanding is that the repair of this should be covered by the service charge. In the meeting, it appears that few or no residents opposed the proposal of the sinking fund because the details of it were not explained and were glossed over. There was a lot of talking and nothing appeared to be finalized. However, since then the condo issued a bill on top of the service charge including a sinking fund fee to be paid within 2 years. Myself and other residents are opposed to this and wrote a letter agreeing to cover the cost of this over a 5 year period.

Our letters were not replied to, and the condo have once again issued a bill requesting payment of the sinking fund over the next 2 years with interest to be added for late payment.

Firstly, can the condo management issue an additional bill like this to cover the costs of water pipe repair and new rooms for staff?

Secondly , can they insist on payment over a 2 year period?

Finally, if residents refused to pay over that period, would it affect their ability to sell the condo in the same way that non-payment of service charge would?

Many thanks for any help you can give

Jessie

[ballbreaker]

If meeting had valid quorum and vote taken with 50+ percent of owners approving sinking fund resolution then you must pay. I also think replacing all pipes in common area's a major repair and should be paid out of sinking fund. I generally think the maintenance fee is for minor repairs and maintenance, staff salary and any outside vendor contracts.

[Delight]

The maintenance fee is detailed in the condo Rules & Regs and can only be changed with a 50% vote in favour of change. as just stated by ballbreaker

However at a legally convened general meeting there are 2 methods to increase income to the condo

1) Special assessment . Typically this has a life of 3 years. This request is required just to keep the condo functioning month to month. After 3 years it will have to be renewed

2) Sinking fund. This request covers exceptional expenditure. Typical would be re-painting the building and replacing the lift cable etc.

All that is required at a general meeting is a majority vote of both attendees plus any proxies.

Given that the request is successful then it has to be paid.

Failure to pay these fees will have the same result as non payment of basic maintenance fees and utility bills-i.e a fine will be added and in the extreme case the matter can be taken to a judge.

Freehold condos can only be sold if debt free. Companies that own condo's can be sold with no reference to the JPM. Then it is a case of buyer beware

[Srinakarin]

Thank you both for your replies. It helps me put things in perspective now that I don't feel like we're being shafted. Over time, this will lead to me voting against a service charge increase of course because the sinking fund is effectively doubling the service charge for the next two years. If others feel the same way, then I can never see the service charge increase being approved and the management will forever be needing to introduce sinking fund charges.

Surely, there must be something written into the condominium act that would lead to people who never vote, or never attend the meeting losing their vote so that others can push for an increase?

[ballbreaker]

Srinakarin does your AGM always have minimum of 25% of owners attending meeting?

[smutcakes]

Thank you both for your replies. It helps me put things in perspective now that I don't feel like we're being shafted. Over time, this will lead to me voting against a service charge increase of course because the sinking fund is effectively doubling the service charge for the next two years. If others feel the same way, then I can never see the service charge increase being approved and the management will forever be needing to introduce sinking fund charges.

Surely, there must be something written into the condominium act that would lead to people who never vote, or never attend the meeting losing their vote so that others can push for an increase?

Unfortunately not. if people are in excess of 6 months in arrears on CAM fees they lose their right to vote in a meeting, but can still attend and form part of a quorum.

20 baht is crazily low these days.

[ripley]

I always thought that the Sinking Fund was meant for emergencies, i.e: unexpected and urgent expenditure. Also that every condo building was required to have one.

Not true?

[Srinakarin]

I agree smutcakes, B20 is crazily low. This is why I'd rather vote for an increase. My concern with using a sinking fund for the purpose described is that some non-resident owners who don't give a <deleted> about the building and have other properties elsewhere just dont pay it. Then, there is no action taken against them and those that paid get mugged off.

Ripley, that's exactly what I thought it was for. My point to Management is that if it was to be used to repair structural damage resulting from an earthquake, I wouldn't question it for a minute. Building a room for staff? Repairing lift cables? These are not sudden emergencies. The latter, being important is a foreseeable expense and could have been planned for. There should be a system in place whereby an increase in service charge can be forced every 6,8, or 10 years by a set amount, in my opinion.

[Srinakarin]

Ballbreaker, I think that at least 25% are attending. That said, typically each year a meeting is announced and insufficient people attend to vote. Then a second meeting is announced which is the last chance to vote. Because of this pattern, some don't attend the first one because they know that there wont be enough people. Consequently, a second meeting is inevitable.

Unfortunately, no written communication is given in English and I can't confirm exact details of attendance.

[KittenKong]

I always thought that the Sinking Fund was meant for emergencies, i.e: unexpected and urgent expenditure. Also that every condo building was required to have one.

Not true?

When a building is set up a fee is levied from all co-owners for the sinking fund (ie so many Baht per unit), and this is placed in a separate bank account.

You are correct that this fund should be used for major or unexpected repairs etc. (such as major lift refurbishment, pool re-tiling, pump replacement, roofing work). The common fee should cover all day-to-day expenditure and regular repairs/replacements, and if the common fee is not enough for this (as always happens in older buildings) a supplementary charge should be levied at the AGM. But this charge should go into the current account, not into the sinking fund.

As the sinking fund is depleted a proper committee would ensure that it was topped up to the original level by making special levies at an AGM. With a co-owner vote the fund could also be increased in advance to cover scheduled large expenditure (lift replacement for example).

In my experience Thai condo management companies just dont have a clue about this, but they dont have a clue about accounts generally so nothing new there.

[KittenKong]

Unfortunately, no written communication is given in English and I can't confirm exact details of attendance.

Sounds like you need a new committee/management company. Why dont you stand? What is the proportion of farang co-owners in your building?

You are unlikely to get much sense from Thai co-owners, who mostly will shout for hours to save a few satang on the common fee bills but are blissfully unaware of how they may be losing millions to crooked or incompetent management.

[KittenKong]

Ripley, that's exactly what I thought it was for. My point to Management is that if it was to be used to repair structural damage resulting from an earthquake, I wouldn't question it for a minute. Building a room for staff? Repairing lift cables? These are not sudden emergencies. The latter, being important is a foreseeable expense and could have been planned for. There should be a system in place whereby an increase in service charge can be forced every 6,8, or 10 years by a set amount, in my opinion.

A proper committee and management company would foresee this, but many committees and management companies here have no brains at all. They simply don't plan.

Yes, it would make sense to have a system in place to ensure that all common fees are increased yearly in accordance with inflation. However the condo act (which is extremely badly written and hopelessly vague on many subjects) does not allow for this, nor do any internal condo rules and regulations that I have ever seen. If there was a suitably large attendance at an AGM/EGM then it would be possible to change the building rules and regs to allow for this, but that would never happen in my building. Given the cheap-ass nature of most co-owners, they would not vote for it anyway even if the attendance numbers were high enough.

One advantage of not increasing the common fee automatically every year is that it does limit the amount of money that the management company has available to squander or steal, and that can only be a good thing. They cannot be trusted.

Edited June 19, 2016 by KittenKong

[Srinakarin]

Kittenkong,

What you've written seems to describe the situation perfectly and cleared things up in my mind. Thanks.

When I've attended meetings and heard the reasoning for things, there are questions that come to my mind continuously, and I raise them there and then. What surprises me is that I seem to be the only one who is asking these questions. These questions to my mind seem obvious. I should add that it's not that I'm interrupting the flow of the information being given. A point is made and then the Management move on to another topic. At that point, I stop them and raise my questions. It surprises me that the question I ask wasn't addressed before they decide to move on. On top of this, irrelevances often get thrown in randomly, such as an incident that happened in the car park 15 years ago that has no relevance to the current topic of replacing lift cables. I don't know whether I could stand as a member. I think I lack the necessary patience to do that here.

Thanks again for taking the time to put across your logical take on things.

[Srinakarin]

"One advantage of not increasing the common fee automatically every year is that it does limit the amount of money that the management company has available to squander or steal, and that can only be a good thing. They cannot be trusted."

I love that. It makes me feel a whole lot better about the situation.

Cheers

Jessie

[KittenKong]

When I've attended meetings and heard the reasoning for things, there are questions that come to my mind continuously, and I raise them there and then. What surprises me is that I seem to be the only one who is asking these questions. These questions to my mind seem obvious. I should add that it's not that I'm interrupting the flow of the information being given. A point is made and then the Management move on to another topic. At that point, I stop them and raise my questions. It surprises me that the question I ask wasn't addressed before they decide to move on. On top of this, irrelevances often get thrown in randomly, such as an incident that happened in the car park 15 years ago that has no relevance to the current topic of replacing lift cables.

Welcome to Thailand, land of the non sequitur.

I don't know whether I could stand as a member. I think I lack the necessary patience to do that here.

I know the feeling. I also ask myself why I should waste my valuable time for the benefit of other co-owners who patently dont care about how the building is run? Even if management ran off with all our money, my personal share of the loss would only amount to a few thousand Baht, which really wouldn't pay for my time spent sitting in committee meetings, let alone any time I might spend on actually doing anything constructive for the building.

[Delight]

By Law 15 days into the new month the 'cash flow ' data is produced.for the previous month.

I analyse the numbers

The basic fee is 32 Baht /m/month

We have a 15 baht 'Special assessment.'

So income to the building is 47 Baht/m/month

The average monthly expenditure for 2015 was 43.3 Baht/m/month . The balance contributes to the sinking fund. The sinking fund is quite high already.

Of this 43.3 Baht 13.67 went to the management company

and 6.83 was the cost of security.

These were the 2 'big ticket' items.

The condo has only 39 rooms.

The point of the foregoing is that it costs what it costs.

Also -to my knowlede -nobody complains. The condo however is very well maintained

There seems to be a them and us attitude from the OP (and other contributors to this post) who only pays 20 Baht.

To my mind the co -owners are all in it together.

You get what you pay for.

I can only suggest that you analyse the numbers and see where all the money goes.

Suspect that this approach will make you more sympathetic of the true running costs.of your condo where you live.

Edited June 19, 2016 by Delight

[smutcakes]

When I've attended meetings and heard the reasoning for things, there are questions that come to my mind continuously, and I raise them there and then. What surprises me is that I seem to be the only one who is asking these questions. These questions to my mind seem obvious. I should add that it's not that I'm interrupting the flow of the information being given. A point is made and then the Management move on to another topic. At that point, I stop them and raise my questions. It surprises me that the question I ask wasn't addressed before they decide to move on. On top of this, irrelevances often get thrown in randomly, such as an incident that happened in the car park 15 years ago that has no relevance to the current topic of replacing lift cables.

Welcome to Thailand, land of the non sequitur.

I don't know whether I could stand as a member. I think I lack the necessary patience to do that here.

I know the feeling. I also ask myself why I should waste my valuable time for the benefit of other co-owners who patently dont care about how the building is run? Even if management ran off with all our money, my personal share of the loss would only amount to a few thousand Baht, which really wouldn't pay for my time spent sitting in committee meetings, let alone any time I might spend on actually doing anything constructive for the building.

All you do is criticise and castigate Committee's and Management companies in these threads.

Yet the thought of you ever putting your money where your mouth is, is suddenly met with excuses as to why you cannot do it.

It is a harder and more time consuming job than you probably imagine being on the Committee, and with an attitude like yours where seemingly everything you say is correct and everyone else are corrupt morons, i doubt you would be successful or appreciated as a Committee Member.

In a building with many units it is impossible to please everyone all the time, and some decisions will be unpopular- so before criticising why don't you have a go yourself.

[KittenKong]

All you do is criticise and castigate Committee's and Management companies in these threads.

Yet the thought of you ever putting your money where your mouth is, is suddenly met with excuses as to why you cannot do it.

It is a harder and more time consuming job than you probably imagine being on the Committee, and with an attitude like yours where seemingly everything you say is correct and everyone else are corrupt morons, i doubt you would be successful or appreciated as a Committee Member.

In a building with many units it is impossible to please everyone all the time, and some decisions will be unpopular- so before criticising why don't you have a go yourself.

I have served on my building's committee and I have seen first-hand what a mess it is.

I gave reasons why I would not be inclined to do it again.

As for "some decisions being unpopular", I dont really see who could object to someone trying to get management and staff to actually do their job, apart from perhaps management and staff themselves.

Edited June 20, 2016 by KittenKong

[smutcakes]

All you do is criticise and castigate Committee's and Management companies in these threads.

Yet the thought of you ever putting your money where your mouth is, is suddenly met with excuses as to why you cannot do it.

It is a harder and more time consuming job than you probably imagine being on the Committee, and with an attitude like yours where seemingly everything you say is correct and everyone else are corrupt morons, i doubt you would be successful or appreciated as a Committee Member.

In a building with many units it is impossible to please everyone all the time, and some decisions will be unpopular- so before criticising why don't you have a go yourself.

I have served on my building's committee and I have seen first-hand what a mess it is.

I gave reasons why I would not be inclined to do it again.

As for "some decisions being unpopular", I dont really see who could object to someone trying to get management and staff to actually do their job, apart from perhaps management and staff themselves.

Because maybe what you perceived to be their job is not what other Committee members believe, or you are trying to micro manage and making them unable to do their jobs, or what you perceive is correct is not correct.......

Everyone else is wrong, incompetent and you are always correct i am sure.....

[KittenKong]

By Law 15 days into the new month the 'cash flow ' data is produced.for the previous month.

It may be the law but it doesnt always happen in all buildings, and if the management is incompetent or stealing (as many do) then the figures may not add up anyway.

I analyse the numbers

................

There seems to be a them and us attitude from the OP (and other contributors to this post) who only pays 20 Baht.

To my mind the co -owners are all in it together.

In my experience many co-owners are only interested in keeping fees to a minimum. They seem to be too stupid to understand that units in an improved building that is properly run are worth more. They also dont seem to understand that every Baht that management loses through incompetence is one Baht that could have been saved from the common fee or spent on something useful.

I can only suggest that you analyse the numbers and see where all the money goes.

This may be easier said than done.

Also there is a very big difference in the running of a small building like yours and a large building with 500 or 1000 units. 20B/sqm/month in a large building could easily be enough to cover all costs, depending on what services and facilities the building has.

[Srinakarin]

Kittenkong,

It seems like some sensitive people have taken your / my comments a little too personally. I opened up a topic where I needed a broader perspective on the situation and in doing so received some insight based on personal experiences, thank you.

As to why I don't want to take on the role of committee member, I choose to allocate my time to working, playing sports and spending time with family (And I lack the patience). Everyone is different. Others like to spend their time picking holes in people's comments on a forum. Your comments are based on your personal experience, so I don't know why they would automatically be wrong.

I find it quite amusing that some people choose to get involved in discussion on these forums, and rather than ask for details as to why others feel they way they do, they start criticizing other people's assessment of the situation. Such as:

"There seems to be a them and us attitude from the OP (and other contributors to this post)"

This couldn't be further from the truth. I just want to be clear on the facts of the situation before I accept it. Thankfully, some of the comments have helped with this, yours in particular.

I'm sure, like me, you have more important things to do than respond to comments intended to provoke a reaction.

Thanks again

[KittenKong]

As for "some decisions being unpopular", I dont really see who could object to someone trying to get management and staff to actually do their job, apart from perhaps management and staff themselves.

Because maybe what you perceived to be their job is not what other Committee members believe, or you are trying to micro manage and making them unable to do their jobs, or what you perceive is correct is not correct.......

Everyone else is wrong, incompetent and you are always correct i am sure.....

Micro-manage as in getting management to produce accounts that actually add up? Or stopping managers from claiming false expenses and not even submitting a petty cash report? Or stopping building technicians from pocketing the payment received for jobs done instead of putting them through the front office?

Give me a break.

I may not be always right but I can add up, I know a scam when I see one and I am honest. This is much more than can be said for many people I've come across in building management and on building committees here. YMMV

[KittenKong]

I'm sure, like me, you have more important things to do than respond to comments intended to provoke a reaction.

Actually I find it makes quite a nice break from the little bit of serious keyboard work I still do, and allows me to think more clearly about that.

It's either that or play golf.

[ripley]

Kitten Kong - I don't consider re-tiling the pool or fixing the lifts a Sinking Fund matter unless something catastrophic has happened to them. In the normal way of things, these should be regularly inspected and planned for in a budget, paid for if necessary by Special Assessment. The Sinking Fund should be established at the outset of the corporation and maintained intact except for emergencies - upgraded from time to time to account for inflation

__________________________________________________________________________________________

Re: some of the other comments here, I can't for the life of me understand why a committee should consider a politely phrased question from the owners as an accusation - usually of corruption. All owners have a right to know where the money is going, why certain decisions are made, etc. And how can owners decide what they think of matters when they are not in possession of the true facts?? How can they know how to help out? How do you start to get and understand the facts other than to ask the committee (who should know)?

Perhaps the perception by committees of persecution is responsible for their tendency to evade questions and to obscure issues. But, for my money, if you can't or won't answer a straightforward question straightforwardly, suspicions quite logically arise.

I've served on committees and know how hard it can be. To avoid the suspicion and paranoia I kept scrupulous meeting minutes to be signed by every member of the committee I wrote up issues and expenditures and their reasons which the owners were invited to examine. Our building was going thru exceptionally trying times just then so I can't say this really solved our problems. But it was a start. This practice was instantly abandoned by the succeeding committees, and the minutes of meetings and written explanations of our committee were destroyed or "lost".....

The obvious solution to "Us and Them" is to have things in writing, disseminate information regularly, and invite honest discourse. HAH! What am I saying?? Living in La-La land, right?

Edited June 20, 2016 by ripley

[ripley]

Forgot to mention - Delight - an intelligent post as usual. But once you've followed the money trail and found corruption, or the trail of anything done against condo law, have you ever tried to correct the problem & put things right? Usually leads to a lawsuit or something else equally crazy-making.

[Delight]

Forgot to mention - Delight - an intelligent post as usual. But once you've followed the money trail and found corruption, or the trail of anything done against condo law, have you ever tried to correct the problem & put things right? Usually leads to a lawsuit or something else equally crazy-making.

I am aware of 2 occasions where corruption has occurred.

In both cases the management company dealt with it and sacked the offending building managers

The committee is aware of the classic fiddle where the building manager and 3 external suppliers have conspired to extract money.

The lowest price being 'way over the top' . Obviously the building manager would get a kick back. As too would the 2 un -successful bidders.

A good committee is everything.

The English language is dominant in the condo where I live.

I have sympathy for those co -owners where that is not the case

Edited June 20, 2016 by Delight

[KittenKong]

Kitten Kong - I don't consider re-tiling the pool or fixing the lifts a Sinking Fund matter unless something catastrophic has happened to them. In the normal way of things, these should be regularly inspected and planned for in a budget, paid for if necessary by Special Assessment. The Sinking Fund should be established at the outset of the corporation and maintained intact except for emergencies - upgraded from time to time to account for inflation

Obviously it's a matter for interpretation but I see the sinking fund as being there for irregular and major expenses. Re-tiling the pool or painting the entire building would certainly qualify for this as far as I can see. Simple repairs to a lift would be from the current account budget, as I mentioned, but lift replacement (possibly 2MB or more per lift) would not be.

[KittenKong]

Forgot to mention - Delight - an intelligent post as usual. But once you've followed the money trail and found corruption, or the trail of anything done against condo law, have you ever tried to correct the problem & put things right? Usually leads to a lawsuit or something else equally crazy-making.

I am aware of 2 occasions where corruption has occurred.

In both cases the management company dealt with it and sacked the offending building managers

Great. What happens if the management company is in on all the scams, and indeed when they are the biggest crooks in the building manipulating everything with the compliance of stupid and/or crooked committee members?

This really does happen.

[Delight]

Forgot to mention - Delight - an intelligent post as usual. But once you've followed the money trail and found corruption, or the trail of anything done against condo law, have you ever tried to correct the problem & put things right? Usually leads to a lawsuit or something else equally crazy-making.

I am aware of 2 occasions where corruption has occurred.

In both cases the management company dealt with it and sacked the offending building managers

Great. What happens if the management company is in on all the scams, and indeed when they are the biggest crooks in the building manipulating everything with the compliance of stupid and/or crooked committee members?

This really does happen.

Your f****d

Edited June 20, 2016 by Delight

[Srinakarin]

Hi again everyone,

Having taken on board a lot of the advice and comments posted in response to my original posting, I was all set to make payment of the service charge and the additional sinking fund charge.

However, the rains have just started and water has started coming in through one of the walls of our apartment as happened last year. At the time, I took a look at the Condominium Act to find out who was responsible for covering the cost of repair. It seemed to me that external wall surfaces are classified as common property and internal wall as property of individuals owners. Following the logic that painting external walls is covered by service charge, and damage done by burst pipes in an individual owners room is paid for by the individual owners, the following seems to make sense. Since the water is able to penetrate the external wall surface, this is where the problem originates from. Additionally, my efforts to halt the leaking by applying silicone to the internal wall have failed. I raised this point last year to Management who responded to my wife in Thai that individual owners have usually handled this issue themselves in the past.

At the time, I didn't have the time on my hands to push the issue, but made it clear I would do my best to solve it. I clearly haven't been able to. My concern now is that from past experience, when there's a problem and your solution to that problem has failed, it tends not to resolve itself. It's more likely to get worse. I would rather not leave this to chance and want to get it stopped before it comes too costly.

Can anyone confirm whether the repair of this is my own responsibility, or should be covered by sinking fund or service charge?

I'm also unaware of how damaging it could be too the wall structure if only the internal wall is patched up with silicone. I'm ignorant on this matter.

Thanks for any help you can give