Do developers with unsold units have to pay common facilities fees?

[trogers]

56 minutes ago, KittenKong said:

 

There certainly can if all the farang units are sold leaving only Thai quota units (which is the case in several View Talay buildings such 6, 3 and 5), or indeed if all the desirable units are sold leaving only ones that no one wants because they aren't very nice (which is partially the case in VT7).

 

That said, there being unsold units certainly makes capital appreciation somewhat less likely.

In developed countries, there would not be any unsold stock because developers would be in a rush to free up capital and offer deep discounts to clear the stock, even when these units are less desirable.

 

Holding such unsold stock means expenses on common fees, taxes and depreciation.

[MyFriend You]

7 hours ago, JaiLai said:

 

You lived on 675k baht for 5 years? Wow...

 

Knew I should have edited that, that was spending money, I was also employed, didn't pay rent or utilities, and didn't live in Thailand full time.........

[MyFriend You]

6 hours ago, Henryford said:

I bet every condo in Pattaya has unsold stocks after 5,10, 15 years. The new View Talays must be 50% unsold.

But no one is lowering prices to  sell them - I saw a unit in one that has been empty for five years, they still want 4-5 Million for something worth 2-3 Million.............guess they don't need the money, or they got the unit for free.   Wonder what it looks like being empty for five years now.

[trogers]

2 hours ago, TunnelRat69 said:

But no one is lowering prices to  sell them - I saw a unit in one that has been empty for five years, they still want 4-5 Million for something worth 2-3 Million.............guess they don't need the money, or they got the unit for free.   Wonder what it looks like being empty for five years now.

The first obvious thing would be an overwhelming stench from dried out drainage traps...?

[funandsuninbangkok]

3 hours ago, TunnelRat69 said:

But no one is lowering prices to  sell them - I saw a unit in one that has been empty for five years, they still want 4-5 Million for something worth 2-3 Million.............guess they don't need the money, or they got the unit for free.   Wonder what it looks like being empty for five years now.

All of Thailand has units that have never been occupied. I've had real estate agents take me to them 10 and 20 years empty. Crazy. 

 

Sooner or later prices will come down. 

[funandsuninbangkok]

On 4/30/2017 at 9:33 PM, thairookie said:

 

Was there a verdict from the Court or you are still in the process of obtaining judgment?
 

 

The one lesson here is almost all condo projects in Thailand are totally corrupt and unfunctional due to developer. They are crooks. Why buy?

[smutcakes]

19 hours ago, KittenKong said:

 

Well, yes, hence my comment about corruption. All you can try and do is install a valid committee and JPM and make sure the JPM is aware that everything will be checked. The condo act is slightly in your favour in that it restricts the voting rights of any one person (real or juristic) to less than the total of all other voters. Not very helpful if your developer still owns about half the units and also has a few friends in the building.

I dont believe that clause has any great effect if my understanding of it is correct.

Say the developer has 70% of the total voting rights, come the meeting there voting would be reduced to 30%. However this 30% would then be the new 50%. In effect any savvy developer would always hold a number of units under private individuals so if there voting was reduced to 30%, all they would need would be those "private" individuals would vote for their resolution and in effect it would reach the not less than one half of all Co-owners to pass a resolution.

[trogers]

5 hours ago, smutcakes said:

I dont believe that clause has any great effect if my understanding of it is correct.

Say the developer has 70% of the total voting rights, come the meeting there voting would be reduced to 30%. However this 30% would then be the new 50%. In effect any savvy developer would always hold a number of units under private individuals so if there voting was reduced to 30%, all they would need would be those "private" individuals would vote for their resolution and in effect it would reach the not less than one half of all Co-owners to pass a resolution.

Unsold stock of 70% means a big NPL for the bank and a bankrupt developer... and is probably pointless to sue the developer for missing and unpaid funds .

[smutcakes]

Just now, trogers said:

Unsold stock of 70% means a big NPL for the bank and a bankrupt developer... and is probably pointless to sue the developer for missing and unpaid funds .

Absolute rubbish. Many developers hold initial First General Meetings of Co-owners when they have only transferred limited numbers of units. For starters it makes it easy for them to elect a friendly Committee, secure common fee increases etc. 70% is not unsold stock, it is stock they have not transferred yet to the new Owner.

[trogers]

8 minutes ago, smutcakes said:

Absolute rubbish. Many developers hold initial First General Meetings of Co-owners when they have only transferred limited numbers of units. For starters it makes it easy for them to elect a friendly Committee, secure common fee increases etc. 70% is not unsold stock, it is stock they have not transferred yet to the new Owner.

What time frame would you be looking at between getting those title deeds at the Land office and calling the first AGM?

[smutcakes]

16 minutes ago, trogers said:

What time frame would you be looking at between getting those title deeds at the Land office and calling the first AGM?

Within 180 days of the registration of the Juristic Corporate as stipulated in Section 42 of the Condominium Act.

[trogers]

1 hour ago, smutcakes said:

Within 180 days of the registration of the Juristic Corporate as stipulated in Section 42 of the Condominium Act.

I know of no first AGMs with a request to increase common fees and such. Two years of common fees and a sinking fund is collected prior to title transfer. Order of business is usually appointment of committee and JPM.

 

Accounts and other issues in the 2nd and subsequent AGMs.

[smutcakes]

15 minutes ago, trogers said:

I know of no first AGMs with a request to increase common fees and such. Two years of common fees and a sinking fund is collected prior to title transfer. Order of business is usually appointment of committee and JPM.

 

Accounts and other issues in the 2nd and subsequent AGMs.

I know of Condominium's who did. One year of common fee in advance is standard, however some condos do differently. Sensible developers who perhaps launched a project and sometimes sold units 2-3 years in advance of transfer recognize that costs of managing the building are increasing. Knowing projects particularly in Pattaya struggle to meet the necessary votes going forward to increase fees, they undertake it in the first General meeting where they can push the vote through. Obviously this refers to proper developers of which there are limited numbers in Pattaya who have ongoing reputation to consider and plan to continue developing.

 

I believe in the first AGM they also have to declare the financial position of the Condominium and acknowledge it in the meeting as that is normally the time when developers hand off all costs to the Co-owners.

[lkn]

11 hours ago, smutcakes said:

I know of Condominium's who did […] they undertake it in the first General meeting where they can push the vote through. Obviously this refers to proper developers of which there are limited numbers in Pattaya who have ongoing reputation to consider and plan to continue developing.

 

I would not use the word “proper” to describe a developer who can’t do a budget to calculate a realistic management fee.

 

 

[smutcakes]

4 hours ago, lkn said:

 

I would not use the word “proper” to describe a developer who can’t do a budget to calculate a realistic management fee.

 

 

They are developers, not Condo managers so their specialty is not the operational cost/maintenance cost of a building. We can be talking 2-4 years down the line from when they launch a project to when they transfer. In that times costs rise, Government policy like 300 baht minimum wage come in, insurance costs may rise like after the flood, some of which are impossible to foresee.

 

Could they spend more time assessing it, yes probably, but some aspects are out of their hands. A proper developer recognizes the issue and takes action to protect the building going forward. We are talking about a 10-20% rise in the CAM fee not a double or trebling.

[KittenKong]

4 hours ago, lkn said:

 

I would not use the word “proper” to describe a developer who can’t do a budget to calculate a realistic management fee

 

It's not that they cant: they may just prefer to keep the advertised common fees low to encourage sales of their unit stock. They dont care what the fees or budget will be in 5 or 10 years time as they will be long gone.

[KittenKong]

On 03/05/2017 at 8:12 AM, smutcakes said:

Say the developer has 70% of the total voting rights, come the meeting there voting would be reduced to 30%. However this 30% would then be the new 50%. ....... all they would need would be those "private" individuals would vote for their resolution and in effect it would reach the not less than one half of all Co-owners to pass a resolution.

Well yes, hence my comments.

 

 

On 03/05/2017 at 8:12 AM, smutcakes said:

In effect any savvy developer would always hold a number of units under private individuals

 

Presumably that would not be possible without actually registering a sale and paying the transfer tax.

 

As I mentioned, the simplest procedure would be just to be friendly with (ie bribe) some of the co-owners.

[lkn]

2 hours ago, KittenKong said:

It's not that they cant: they may just prefer to keep the advertised common fees low to encourage sales of their unit stock. They dont care what the fees or budget will be in 5 or 10 years time as they will be long gone.

I understand why they do it, and it happens in the West as well.

 

What I was objecting to was that smutcakes called this behavior “proper” rather than “short sighted”.

[thairookie]

I have just been told that the owner of the project, upon completion of the project and issuance of "chanote" will have transferred the units to a new company set up by the project owner or simply to their relatives.  That is to say, when the project is completed the "developer" will have "retired" and a new company owns all the units.

[thairookie]

On 5/3/2017 at 4:18 PM, trogers said:

I know of no first AGMs with a request to increase common fees and such. Two years of common fees and a sinking fund is collected prior to title transfer. Order of business is usually appointment of committee and JPM.

 

Accounts and other issues in the 2nd and subsequent AGMs.

Now I know why developers need to collect 2 years' worth of common facilities upfront - so that they, the developers, don't have to pay.

 

 

[thairookie]

On 5/2/2017 at 8:47 AM, Henryford said:

I bet every condo in Pattaya has unsold stocks after 5,10, 15 years. The new View Talays must be 50% unsold.

In Pattaya, it's because of the 51% quota for Thais that is stalling the progress.  End of the day, the 51% will be let out by the developers like serviced apartments.

[trogers]

On Wednesday, May 03, 2017 at 3:42 PM, smutcakes said:

I know of Condominium's who did. One year of common fee in advance is standard, however some condos do differently. Sensible developers who perhaps launched a project and sometimes sold units 2-3 years in advance of transfer recognize that costs of managing the building are increasing. Knowing projects particularly in Pattaya struggle to meet the necessary votes going forward to increase fees, they undertake it in the first General meeting where they can push the vote through. Obviously this refers to proper developers of which there are limited numbers in Pattaya who have ongoing reputation to consider and plan to continue developing.

 

I believe in the first AGM they also have to declare the financial position of the Condominium and acknowledge it in the meeting as that is normally the time when developers hand off all costs to the Co-owners.

Sorry to disagree. It would take less than half a year to transfer a few hundred units to the buyers, less those buyers who are not able to raise the money or mortgage.

 

From launch to construction completion would usually not exceed 3 years even for a 30+ storey building, unless sales had been poor, and cash flow for construction very tight. If so, I doubt the developer had been sensible in the first place...

 

No sensible developer would delay the transfer of units to buyers and not free up cash either to discharge interest bearing bank loans, or to transfer working capital to other projects.

[trogers]

2 hours ago, thairookie said:

Now I know why developers need to collect 2 years' worth of common facilities upfront - so that they, the developers, don't have to pay.

 

 

Developers who had priced in the proper amount of common fees in their sales brochure, had substantial number of genuine and capable buyers, and started and completed construction near to planned schedule, would unlikely to cheat on common fees.

 

Those who do so would probably be those who stated low common fees in their sales brochure and required only low down payments. And when it was time to transfer titles, a substantial number of buyers defaulted.

 

Thus the developer ends up with high unsold stock, and only a small amount collected for common fees. They may then try to wrestle a higher common fees charge to buy time to clear unsold stock.