Is it legal to demand condo owners pay more than the annual common Fee

[vision2014]

 

In 2014 and 2015 the owners Common Fee payments were sufficient to cover the operating expenses of the condominium building. However in 2016,  we will incur a deficit equal to approximately 20% of the Common Fee payments. The building management company has advised our condominium Committee that it is legal to send the owners an additional invoice to cover the deficit. The building management company has also stated that the water and electric utilities can be suspended in the event an owner does NOT pay the additional invoice.  My understanding is the Thailand Condominium Act does NOT allow owners to be required to pay an additional invoice (and therefore, suspension of utilities would also be prohibited).  I would appreciate advice from members who can address whether this is legal or not.

As a footnote,  we plan to vote on increasing the Common Fees in 2017 to avoid the reoccurrence of a shortfall.  In 2016 , we have  could you Sinking Funds to fund the deficit if necessary (our entire Sinking Fund is intact) and although we would prefer to preserve the S.F., we do not want to be in conflict with our co-owners by sending an illegal invoice.

[Peterw42]

Is there a reason for the shortfall ? Some condo owners not paying, a one off Major expense ?  The reason behind the shortfall may be why the condo management feel they can issue an additional invoice. 

[Jingthing]

As far as I know it is legal and you'll likely need it annually as it's very hard to change the common fee.

[KittenKong]

3 hours ago, vision2014 said:

In 2014 and 2015 the owners Common Fee payments were sufficient to cover the operating expenses of the condominium building. However in 2016,  we will incur a deficit equal to approximately 20% of the Common Fee payments. The building management company has advised our condominium Committee that it is legal to send the owners an additional invoice to cover the deficit.

 

Absolutely not. Any such special charge would have to be voted for at an AGM/EGM and would have to have the support of the requisite number of co-owners present or assigning proxies (the exact number varies depending on whether it is the first meeting or second meeting, and may be subject to special rules in your building).

 

 

3 hours ago, vision2014 said:

The building management company has also stated that the water and electric utilities can be suspended in the event an owner does NOT pay the additional invoice.

 

Assuming that the electricity is billed directly by the PEA then the building has no right to cut it off. The building can cut off services provided and billed by the building (water is usually one such) and also access to common areas like the pool. Due notice must be given.

 

 

3 hours ago, vision2014 said:

As a footnote,  we plan to vote on increasing the Common Fees in 2017 to avoid the reoccurrence of a shortfall. 

 

That would require a very large majority of all co-owners to vote in favour at an AGM/EGM, not just those attending the meeting or giving proxies. So in many buildings it is unlikely to happen as that many co-owners rarely attend. Your building may be different.

The most common solution is to vote in a special charge (as mentioned in my first answer above) as this requires a much smaller favourable vote. Most buildings seem to do it this way. Such charges are usually assessed for one year, though some buildings like to fix them for two or three years.

 

Your building should not normally use the sinking fund to make up shortfall from common fee revenue, though many badly run ones do.

[KittenKong]

1 hour ago, Peterw42 said:

Is there a reason for the shortfall ? Some condo owners not paying, a one off Major expense ?  The reason behind the shortfall may be why the condo management feel they can issue an additional invoice. 

 

A common reason in older buildings is that the amount of the common fee was decided many years or decades ago and has never been revised upwards to take account of inflation. In newer buildings it may be that the fee decided on originally was never very realistic. And of course fraud, theft and bad management may also be other reasons.

 

Major expense is what the sinking fund is for. Money can be spent from it as needed and paid back in by special assessment following the next AGM/EGM. Either way any general assessment has to be voted and agreed by co-owners.

[lkn]

3 hours ago, KittenKong said:

Absolutely not. Any such special charge would have to be voted for at an AGM/EGM and would have to have the support of the requisite number of co-owners present or assigning proxies (the exact number varies depending on whether it is the first meeting or second meeting, and may be subject to special rules in your building).

 

I know what you are saying is standard, but would it not be subject to the condominium’s bylaws? Although not in Thailand, but I have seen bylaws grant the board the right to do an extraordinary charge of no more than n% of the annual management fee, should circumstances require this.

 

[KittenKong]

3 hours ago, lkn said:

 

I know what you are saying is standard, but would it not be subject to the condominium’s bylaws? Although not in Thailand, but I have seen bylaws grant the board the right to do an extraordinary charge of no more than n% of the annual management fee, should circumstances require this.

 

I think it very unlikely that any condo by-laws would allow that in Thailand. The whole point of the rules is to prevent committees and management from raising large amounts of money without the approval of co-owners.

 

Besides which the condo act supposedly takes precedence over building by-laws and as far as I can see the act is fairly clear about the need for a vote in such situations. So in this instance if it cant wait for an AGM then an EGM should be called for the purpose of voting on the special charge.

Edited September 12, 2016 by KittenKong

[SOTIRIOS]

...well....what you gonna do about it.....nothing.....

 

...why....???

 

...because they very well know there is nothing .....short of spending millions....in futility.....to do anything....

 

...what you gonna do with no water or electricity....???

 

...similar to the marriage situation.....

 

...pay...pay....pay.....go all in......suddenly you have nothing......

 

....what you gonna do....???

 

...pay millions for 'justice'.....???

 

....unless something happens to you meanwhile......???

 

 

 

[stgrhe]

These are the only rights of the Juristic Person

 

Section 36. The manager shall have the following powers and duties:

(1)     To carry out the work according to the objectives under Section 33 or resolution of the Regulations or resolution of the joint-owners General Meeting, however it shall not be contradictory to the law.

(2)     In the case of necessity and urgency, the Manager shall have the power by his own initiative to carry out the business for the safety of the building as a prudent person should do to his own property.

(3)     Providing security operations or taking actions in maintaining peace and order within the condominium.

(4)     Acting as a representative of the condominium corporate.

(5)     Arranging to have a monthly Receipt and Expenditure Account prepared and post it on the Bulletin Board to inform the joint owners within fifteen days from the end of the month and that such relevant Announcement shall be posted at least for a consecutive period of fifteen days.

(6)     Suing for compulsory performance from a joint owner for overdue payment of expenses under Section 18 in excess of six months and over.

(7)     Other duties prescribed under Ministerial Regulation.

And these are the payment duties of the condominium owners:

Section 40. Joint-owners shall pay money to the juristic condominium for the carrying out of the business of juristic condominium as follows:

(1)     Expenses of juristic condominium which the owner of each apartment shall pay in advance.

(2)     Fund upon starting to do anything under the Regulations or under the resolution of the general meeting.

(3)     Other monies for the carrying out of the resolution of the general meeting under the conditions prescribed by the general meeting.

Hence, according to Section 40 (3) ant change to the annual fee must be made through a General Meeting, whether that meeting is the annual meeting or an extra meeting.

Furthermore, the only extra payment the Juristic Person can initiate is for urgent matter related to the safety of the building.

 

To OP, tell you Juristic Office to read the condition of the Condominium Act. But first I suggest to talk to the Chaitman of the Committe (Board).

[nickcar]

Yes it is legal. And if you are satisfied it is genuine then you have no reason not to pay. Nowdays the majority needed to raise the fees is much more reasonable, 50% i think. We did manage to raise ours recently for the first time in 20 years. 

[catman20]

management companies are too expensive i live in a village the management company want to charge us 100,000 baht a month which would see our fees raise dramatically.

we elected to run our village ourselves we employed a manager Thai and she runs it all and we have a committee that holds the money and makes the decisions.

in a condo they are entitled

 to cut water and electric if someone dose not pay in a village we are not allowed to do that by law.

 

[natway09]

External management company cannot increase common expenses without the Juristic Committee approving same.

They can do so at anytime as long as it is reasonable & as an owner you have the right to question.

But if explained properly & increase is justified go with the flow. 

A m2 rate set 6 years ago may no longer balance the books.

Let reason prevail

[Delight]

49 minutes ago, catman20 said:

management companies are too expensive i live in a village the management company want to charge us 100,000 baht a month which would see our fees raise dramatically.

we elected to run our village ourselves we employed a manager Thai and she runs it all and we have a committee that holds the money and makes the decisions.

 

in a condo they are entitled

 

 to cut water and electric if someone dose not pay in a village we are not allowed to do that by law.

 

 

This arrangement is fine providing that you have:

1) An excellent and honest committee

2) An excellent and honest Manager

 

However if either or both of these   2 variables change for the worse -then an external management company will probably be the better option

[Suradit69]

56 minutes ago, catman20 said:

i live in a village the management company want to charge us 100,000 baht a month which would see our fees raise dramatically.

Only 1,200,000 a year? I assume it's quite an exclusive village or you posted after the Happy Hour.

 

 

 

 

[williamgeorgeallen]

sorry this is not going to be helpful but this is another reason why it is better to rent and not get involved in this sort of carry on. can really have a negative impact on your life dealing with these sorts of things. sounds like you need to use the reserve/sinking fund and increase the fees for the coming year with a bit extra to start building the reserve fund back up. i have heard many horror stories where the reserve fund only exists on paper. good luck.

[Jeffkp]

I'm chair of our condo owners committee. We have one owner who has refused to pay his fees for two years. We discussed cutting hos water off and out manager checked with our lawyer. We were told we could not do that. We can levy fines and, of course, sue.

We're lucky, we have a good management team. 

Most of our owners are absentee and give the Juristic person their proxy for the annual meeting. Only four owners actually live in the building.

[KittenKong]

1 hour ago, natway09 said:

External management company cannot increase common expenses without the Juristic Committee approving same.

They can do so at anytime as long as it is reasonable & as an owner you have the right to question.

 

The committee has no power whatsoever to increase common fees or impose a special charge on all owners. Nor has the JPM or the management company.

 

This MUST be decided by vote at an AGM/EGM.

[Jeffkp]

1 minute ago, KittenKong said:

 

The committee has no power whatsoever to increase common fees or impose a special charge on all owners. Nor has the JPM or the management company.

 

This MUST be decided by vote at an AGM/EGM.

 

Absolutely true. My understanding is they can call for a special meeting or access the sinking fund until the next meeting. I'm curious as to what brought this sudden shortfall, though.

[blackcab]

KittenKong absolutely nailed it.

 

No point me stating what he said over again.

 

+1

[Langsuan Man]

Utilities can only be turned off if the condominium provides that utility.  For instance,  I have my own electric meter and get billed directly from the electric company but water is provided by the Condo management at the behest of the legally constituted Condo Committee

 

As far as the annual assessment is concerned I know that at the AGM  we can never get the owners to agree to an increase in the basic maintenance fee so every year we agree to and pass a special assessment.  Otherwise nothing could be done since the annual maintenance fee has not changed in over 15  years

 

There are many legal ways to get condominium owners to pay the common fees and the special assessments since the Condominium Act  covers owner obligations;  the real problem are in moobans that don't have any legal status under the Condominium Act

[KittenKong]

4 hours ago, Jeffkp said:

Absolutely true. My understanding is they can call for a special meeting or access the sinking fund until the next meeting. I'm curious as to what brought this sudden shortfall, though.

 

From what the OP says it seems that the common fee in his building was just set unrealistically low. I suspect that this happens quite a lot in new buildings, as the developer (who is probably the one who decides what the initial fee will be) has every interest to keep the fee low in order to make the building more attractive to buyers and also to reduce his own common fee payments on unsold units. The developer would hope to be long gone before it becomes necessary to raise the fees to something more sensible.
Technically the sinking fund should not be used for regular maintenance and day-to-day expenses but it is easy to see how attractive this might be to some managements/committees, especially if they are provided or controlled by the developer.

When I look at the new developments in Jomtien with their Spanish Galleons and artificial beaches and wave machines, I do wonder how much the owners will be asked to pay in a few years time when they start going wrong.

 

[blackcab]

Someone mentioned to me the common fee for one (old) condo was 11 baht psm. Without income from a Special Assessment that building would end up looking like a ghetto.

[catman20]

13 hours ago, Delight said:

 

This arrangement is fine providing that you have:

1) An excellent and honest committee

2) An excellent and honest Manager

 

However if either or both of these   2 variables change for the worse -then an external management company will probably be the better option

agreed but why wouldn't the committee be honest and it takes 2 people to sign our cheques. committee members all own houses here and lived here for years and its an expensive village no bums here. how can we pay 1.2 million baht a year ??????? fees would go through the roof.

[blackcab]

100k a month. Deduct the full cost of a good manager who speaks decent English (including any holiday and sickness cover). Consider the normal running costs of the office. After that, deduct the tax payable on the business profits and the accountant and auditor fees that arise from taking on the contract.

 

How much would be left? Less than half probably.

 

Or Plan B: Do it yourself.

[AlQaholic]

The Condominium act states that all the expenses should be paid in advance by co-owners. Now there is also a requirement that the ratio with which one pays is stated in the bylaws. The Bylaws can only be changed by an A.G.M. and must be approved by the land office. So there is a bit of a conflict there but Condominium Act takes precedence over the bylaws so if there is a deficit the Act clearly says it must be paid by co-owners.

 

But the right thing to do is of course to take the funding of deficit from sinking fund and then address the problem the next meeting. It is not fair to the co-owners to suddenly send an unexpected invoice mid-year.

 

Edited September 14, 2016 by AlQaholic

[KittenKong]

5 hours ago, catman20 said:

agreed but why wouldn't the committee be honest and it takes 2 people to sign our cheques.

 

Some people just aren't honest. What more can one say? And even if they are 100% honest they may just be very stupid or very credulous. We certainly have more than a couple like that in my building. The end result of all three failings could be a cash shortfall.

[catman20]

58 minutes ago, KittenKong said:

 

Some people just aren't honest. What more can one say? And even if they are 100% honest they may just be very stupid or very credulous. We certainly have more than a couple like that in my building. The end result of all three failings could be a cash shortfall.

i can only speak about the village i live in and it works very well and without a management company and saves us there fees of 1.2 million baht a year.

 i have also herd of managements companies running off with the sinking fund. in all i think it works better if you can manage it in house you see whats going on and your hand on with the finances. it works well at the village i live on.

[remifr]

It seems that the condo you are talking about is Novana, otherwise, you're not alone.