Russians not paying maintenance fees - legal

[aussienam]

Hello readers, 

If you are a condo owner in Thailand like myself you may also be experiencing the disturbing trend for Russian nationals who have also bought condos and are not paying their yearly maintenance fees.  You may be experiencing other nationalities, but in my case and from what I have read on many forums this is rampant.  

 

In a condo complex with the foreign per capita % ownership overwhelmingly Russian, this poses a very significant problem.  This is not another 'Russian bashing' exercise.  It is merely identifying a particular significant problem relating to a specific demographic.  I therefore have set about trying to understand the reasons behind this and what practical and legal solutions can be achieved to provide a positive outcome for the financial health of the juristic maintenance funds. 

 

Reasons for non-payment:

An interesting discussion with juristic management and subsequent researching online has revealed that in Russia there are severe penalties for Russians sending money overseas unless it is through a Russian bank account.  The penalties range from 50% to 75% of the transferred amount and are a result of the government clamping down on the exodus of money from Russia.  

 

One can draw a conclusion that the initial purchase of the condo by the Russian investor was made by improper and/or illegal means in that the money was sent over in an undisclosed account or other money transfer facility, through a third party, via another country or it was brought over in cash or other valuable tangible form.  Tax evasion, money laundering and citizens just wanting a safe haven from the Russian economy come to mind as reasons why Russian citizens would opt for these methods.  

 

Subsequently any maintenance fees required to be paid will be avoided by Russian owners for fear of revealing to Russian authorities of their foreign assets. So bank transfers to juristic office accounts or to personal Thai accounts etc will be avoided.  There would be other ways I suspect to send the money through but because of the lack of compliance it seems that this too may be deemed too risky.  I am not sure if before the Ruble crash that money transfer regulations out of Russia were lax, but afterwards it has been tightened?  An article published online by the BBC News on 13 Feb 2013 "Russia tightens bank account control" was only 4 years ago and detailed the government's actions.  

 

I do understand as well that the Ruble-Baht exchange rate is not as attractive as it was prior to its crash.  This would impact on owners deciding on paying maintenance fees. 

 

Practical avenues:

 

There are several posters on forums claiming that their juristic office cut off the water to the condominiums in question when there is non-payment.  This is a great solution that hopefully also extends to the owner's tenants when rented out.  The laws to this I am not yet clear on and I am hoping for clarification so that if there is actual legal protection and the right to do this then this would be the first step to resolving the problem.  Unfortunately at this time there are juristic offices that will not do this for fear of being sued.  

 

Legal avenues for non payment of maintenance fees:

The juristic have the legal right to sue for non-payment of maintenance fees and charge a percentage interest fee as well.  From what I have been informed by juristic who sought legal advice, they can only recoup the outstanding fees upon the sale of the property. They are then entitled to being compensated first before the proceeds of the sale are given to the owner.  In a situation like a large condominium complex with hundreds of non payers, this becomes problematic.  Legal fees alone make the process on a case per case basis to not be cost effective; unless years of unpaid maintenance has accumulated.  

 

Russian owners may also be adverse to selling off their condos to avoid money trails and issues as to where do they send the proceeds of the sale to?  So it may be the case they just accept the property as unsalable and hold onto it to until it is worthless, avoiding maintenance fees, whilst possibly accumulating rental money (could be deposited into a non OECD country bank account too!).  There are many stories of arrogant Russian owners stating, "I buy property so why I need pay more?" and stubbornly holding that opinion in the face of documentation that outlines their obligations (although it is likely a ruse to disguise the true reasons - avoiding detection and greed other than outright stupidity).  

 

By this time unfortunately the complex has fallen into such a state of disrepair that it is likely to be earmarked for demolition at some point and other owners have walked away.  Foreign owners cannot own land so a demolition would amount to a zero return.  

 

The problem is that for a Russian citizen, the risk of their foreign asset being discovered is a far greater financial risk due to huge penalties (if they cannot prove legitimate foreign transactions) than paying yearly fees.  Some may from time to time return and pay.  Others lease their properties out on the various holiday letting websites and with local Russian agents to accumulate an income most likely collected by an agent in cash or to a third party bank account.  This is also endemic and is a breach of Thai laws relating to holiday letting of condominiums.  

 

Both Thailand and Russia are part of the Global Forum on the Transparency and Exchange of Information for Tax Purposes. Russia has also put a stop to bank accounts that previously could be opened under anonymous names.  So there is a real fear that Russian agencies could request the exchange of information relating to Russian citizens owning properties.  I am not sure how far the extent is for the exchange of information between these two countries as it may only be restricted to banks and other financial institutions.  

 

If however there was a bilateral agreement between these two countries then I pose the following:  If there is an agreement that extends to land ownership records (Chanote - title deeds and company registration records) then juristic could use this legal and bilateral exchange legislation to warn such Russian owners that non payment of maintenance fees by international transfers arouses the suspicion of the Thai government who are actively working to address money laundering and other illegal activities by foreigners in the Kingdom of Thailand.  Therefore non-payments raise a question mark as to why they are not paying which would constitute a cause to query the legitimacy of foreign ownership.  In turn this means that steps would then be initiated to exchange information between the Thai and Russian authorities to ensure that foreign ownership is legitimate.  

 

Of course the proper procedure for purchasing property as a foreign investor is via a bank transfer in order to obtain the FET form (or credit slip) with information to prove that the funds came from another country.  But there may be ways around this.  

 

In the event that it reveals the investor purchased the condominium through illegal, fraudulent means there would be grounds to seize the asset as proceed of crime (if there is a bilateral agreement and legislation in place for the admissibility of foreign evidence).  The Thai government could then sell off the property.  The proceeds of the sale would pay for the maintenance fees.  It would be great of course if the properties forfeited would become a cash pool for all owners.  But of course that would not be the case.  

 

So many condominiums end up totally run down because of a lack of maintenance.  And of course there are other vested interests in this process as well as a way to recycle the land into another condo complex, generate jobs, foreign investors, usual kickbacks, skimming etc and the process repeats

 

But with a strong owner committee and a pro active ethical management (or at least semi ethical!) and with this type of avenue I am hoping that this could be a real solution to threaten non paying owners who put at risk the investments of every other condo owner.  

 

It may also be a solution for distressed owners who have neighbouring condos which are constantly holiday let with usual rowdy, noisy, rude, disrespectful and destructive tourists, often also over-packed into a small unit.  Firstly threaten non-compliance of Thai laws relating to rentals as well as exchange of information to the authorities.  

 

I would appreciate any opinions on any experts or members with experience or knowledge in this area.  Thanks.  

 

Edited August 7, 2017 by aussienam

[tomwct]

I would never buy a condo in Thailand for just these reasons. A house you can control, but 200 units you cannot. It's not

only the Russians who do not pay but Thai's too. We have a few Thai's in our neighborhood who won't pay 600 THB a month for security

and landscaping, so I can imagine it would be like pulling teeth to get 2500 THB per month or more.

[tonray]

Where do they get the money for living expenses if they cannot bring money from overseas ?

[observer90210]

Know thy neighbours before getting into condo purchase....

 

Better of to buy a house, even on leasehold...you have less maintenance issues or surprises..

[KittenKong]

Your management should be applying interest to all unpaid debts as the law allows. There is no reason at all not to do this and no reason to delay.

 

I think that it is entirely legal to cease supplying services to co-owners who have outstanding debts, though some people disagree. I think that this would cover any service provided by and billed directly by the condo, but not any service provided by third parties (ie electricity).

 

Assuming that your management is not dishonest (a big assumption) then all debts can be recovered before a unit is sold as the JPM should not sign the debt-free certificate until such debts are paid.

 

If the debts become large enough to warrant the effort then you can take the co-owners to court and the court may order a sale, in which case the building should get paid as described above. What happens to any money left over and where should it be sent? Who cares? I dont. Put it on deposit somewhere in the co-owner's name, send them a letter telling them about it and let them worry about it or not, as they wish. And bill them for sending the letter and wasting your time. You owe these freeloaders nothing.

 

You say that these Russians are worried about their government finding out about their illegal purchases. In that case the solution is obvious: inform them all that any co-owner with unpaid bills of more than x months will result in an official complaint being made by letter to the authorities in their home country. Such a complaint would, of course, have to be accompanied with full details of their ownership status and ID. It's their problem how legal they are, not yours. That should get them moving like a rocket up the backside.

[KittenKong]

47 minutes ago, aussienam said:

By this time unfortunately the complex has fallen into such a state of disrepair that it is likely to be earmarked for demolition at some point and other owners have walked away.  Foreign owners cannot own land so a demolition would amount to a zero return.  

 

Not so. As a co-owner of the juristic person you own a proportion of the common structure, the assets and the land on which it sits (assuming that the building owns the freehold). So even if the building is demolished then you will still own your share of the land (via your share of the juristic person) and this will undoubtedly be worth something.

[aussienam]

10 minutes ago, KittenKong said:

Your management should be applying interest to all unpaid debts as the law allows. There is no reason at all not to do this and no reason to delay.

 

I think that it is entirely legal to cease supplying services to co-owners who have outstanding debts, though some people disagree. I think that this would cover any service provided by and billed directly by the condo, but not any service provided by third parties (ie electricity).

 

Assuming that your management is not dishonest (a big assumption) then all debts can be recovered before a unit is sold as the JPM should not sign the debt-free certificate until such debts are paid.

 

If the debts become large enough to warrant the effort then you can take the co-owners to court and the court may order a sale, in which case the building should get paid as described above. What happens to any money left over and where should it be sent? Who cares? I dont. Put it on deposit somewhere in the co-owner's name, send them a letter telling them about it and let them worry about it or not, as they wish. And bill them for sending the letter and wasting your time. You owe these freeloaders nothing.

 

You say that these Russians are worried about their government finding out about their illegal purchases. In that case the solution is obvious: inform them all that any co-owner with unpaid bills of more than x months will result in an official complaint being made by letter to the authorities in their home country. Such a complaint would, of course, have to be accompanied with full details of their ownership status and ID. It's their problem how legal they are, not yours. That should get them moving like a rocket up the backside.

Thank you very much for the great advice.  Some very good points to follow up here.  They are as I believe already adding interest to unpaid debts but not chasing it up unless there is a sale.  But now you have detailed how a court can force a sale.  Plus all the other very valid info,  Thanks again.  

[KittenKong]

Just now, aussienam said:

But now you have detailed how a court can force a sale.

 

The court certainly can do this, and it has happened. But it's a very long and tedious process.

 

My money would definitely be on the threat of reporting bad debtors to their own government. Should put the fear of whatever passes for God there into them and will cost you just a few Baht for the stamp.

[aussienam]

2 minutes ago, KittenKong said:

 

The court certainly can do this, and it has happened. But it's a very long and tedious process.

 

My money would definitely be on the threat of reporting bad debtors to their own government. Should put the fear of whatever passes for God there into them and will cost you just a few Baht for the stamp.

Okay.  Good info to give to our owners committee.  Think I am onto a winner with the government reporting threat!  

[johng]

They should just cut water,electric,internet to the units that are more than 2 months in arrears...also all maintenance fees must be paid before selling or transferring ownership.

[aussienam]

2 hours ago, tonray said:

Where do they get the money for living expenses if they cannot bring money from overseas ?

Most just come over for holidays so there is no risk of using a legitimate bank account and ATM or bringing over cash for that purpose

[stevew407]

Good information and a little bit eye opening as I get my  eyes opened more daily.  So now how does one get all this handled quickly and easily without too much time and money invested?   This website like MANY things keeps growing and changing and improving, but the hiccups are frustrating for the old guy. But when I look in the mirror I identify a lot of similar issues too.  So hopefully onward and upward........as the old Beatles song goes........when I'm 64. 

[KittenKong]

14 hours ago, johng said:

They should just cut water,electric,internet to the units that are more than 2 months in arrears.

 

As I mentioned, this is only possible to an extent and some would argue that it isnt legal at all though I would disagree with them.

 

The building can only justify cutting off supplies of services which it supplies and bills itself. In my building that would just be the water as the electricity is supplied and billed by the PEA and units also have their own individual internet supplies from various ISPs. It would not be legal for the building to cut those off, though obviously the suppliers of those services could (and would) if owners were late paying by even just a few days.

 

Cutting off access to common areas and facilities like pools and elevators would be easier for the building to justify, and would be possible in modern buildings that have elevators and doors entirely controlled by key-cards. Written warnings would have to be issued first, with defined cut-off dates for payment.

[KittenKong]

14 hours ago, aussienam said:

Okay.  Good info to give to our owners committee.  Think I am onto a winner with the government reporting threat!  

 

Your management may try and talk you out of it, as may any Thai committee members you may have. Thais generally dont like confrontation and decisive action. Many of them would rather just let things drag on forever, getting progressively worse and worse.

 

The possibility of them losing their employment due to lack of money might encourage them to think again though.

[stevew407]

 
Your management may try and talk you out of it, as may any Thai committee members you may have. Thais generally dont like confrontation and decisive action. Many of them would rather just let things drag on forever, getting progressively worse and worse.
 
The possibility of them losing their employment due to lack of money might encourage them to think again though.

How does one get information from the committee, property manager or management and the Juristic person which I am still confused on person and Juristic manager which seems to be fluid or a moving target?


Sent from my iPhone using Thailand Forum - Thaivisa mobile app

[THAILIBAN]

14 hours ago, KittenKong said:

 

The court certainly can do this, and it has happened. But it's a very long and tedious process.

 

My money would definitely be on the threat of reporting bad debtors to their own government. Should put the fear of whatever passes for God there into them and will cost you just a few Baht for the stamp.

 

I am not aware of any case where this actually happened, but I am aware of many cases where the building went downhill due to unpaid maintenance fees (the Thais aren't a lot better).

Any new Condo development should make it a rule that if maintenance fees are not paid for more than a year, a judicial sale will be initiated (and if the owner eventually ays the fees, he has to cover all legal costs as well).

As others have mentioned, those maintenance fees/issues are the main reason to NOT buy a Condo here

[KittenKong]

12 minutes ago, stevew407 said:

How does one get information from the committee, property manager or management and the Juristic person which I am still confused on person and Juristic manager which seems to be fluid or a moving target?

 

Getting information from Thais can be hard even if they want to provide it, and if they are not inclined to provide it then it can be impossible.

 

The law (the Condo Act) stipulates that the Juristic Person Manager must ensure that cash-flow information and other such information is regularly made available to co-owners but if he decides not to do it there is not a lot you can do apart from complain to the Land Office (who may not be at all interested or helpful). The committee is supposed to oversee the JPM and to ensure that he does his job, but they also may not be doing theirs. Corruption is very widespread here and is just as likely to involve farangs as Thais. Laissez-faire is also widespread.

 

If you want to talk to the committee then you should be able to do so as normally they would be comprised of co-owners and may well be resident in the building. You should also be able to insist on being present at a committee meeting to put any points you may have, if indeed they have meetings at all and announce the times in advance. Talking to the JPM or management may be more difficult.

 

And of by law you should have at least one Annual General Meeting at which management and the committee should present the financial report and other reports, and votes should be held for committee members, JPM and auditor. The timings for these votes vary. At the AGM co-owners can request other information (which they may not get) and can discuss anything related to the building. Assuming of course that they bother to attend.

 

[KittenKong]

11 minutes ago, THAILIBAN said:

Any new Condo development should make it a rule that if maintenance fees are not paid for more than a year, a judicial sale will be initiated (and if the owner eventually ays the fees, he has to cover all legal costs as well).

 

This isnt up to the condo. A court has to decide.

 

Edited August 8, 2017 by KittenKong

[Rancid]

Interesting, I would have thought that the cause of the problem would have been the long known one, Thais not paying. One building I knew of did, after correspondence etc, grab non paying owner units and would sell them at action to recover the outstanding fees. That it was the committee members buying the units dirt cheap at these "quiet" actions was probably just a coincidence.

[stud858]

Land office doesn't help with corruption. They only accept and return  paperwork. Become juristic manager to see any real change. 

 

[tropo]

On 8/7/2017 at 6:43 PM, KittenKong said:

Your management should be applying interest to all unpaid debts as the law allows. There is no reason at all not to do this and no reason to delay.

 

 

 

At the condo where I live, they charge 12% on late fees, called a "fine". That's a great income and incentive NOT to collect.

[inThailand]

To deal with unpaid fees you need to refer to the Condo Act and your condo's bylaws. 

 

There are specific clauses in the Condo Act:

1) Interest at 12% to be charged on unpaid balances. 

2) After 6 months of fees unpaid, the condo can be put up for sale. 

 

Its not uncommon to see these clauses in the bylaws:

1) No voting rights after 6 months of outstanding fees.

2) Termination of condo services after 6 months of unpaid fees.

 

Between charging interest and publishing the name and shame report this virtually solved unpaid fees and late payments at our development. The name and shame report published to all owners twice a year shows each condo's fee balance and interest charged. This also helps shine light on whether your mgmt is doing their job regarding unpaid fees.

[blackcab]

On 07/08/2017 at 5:57 PM, aussienam said:

...it is likely to be earmarked for demolition at some point and other owners have walked away.  Foreign owners cannot own land so a demolition would amount to a zero return.  

 

Demolition cannot occur without 100 per cent of the owners agreeing to pass such a resolution at a General Meeting.

 

Once the resolution is passed the land office must be informed. When the paperwork is deemed to be correct then the matter must be published in the Royal Gazette.

 

With even one absent owner that process will never happen.

[stud858]

Anything is possible. My condo is run by a two person committee who have taken control of bank books by fraudulent documents. I don't think they will demolish the building but grafting money, yes.

[inThailand]

4 minutes ago, stud858 said:

Anything is possible. My condo is run by a two person committee who have taken control of bank books by fraudulent documents. I don't think they will demolish the building but grafting money, yes.

Falsifying documents is treated seriously here. If you have facts and proof consider filing a police report.

[aussienam]

14 hours ago, inThailand said:

To deal with unpaid fees you need to refer to the Condo Act and your condo's bylaws. 

 

There are specific clauses in the Condo Act:

1) Interest at 12% to be charged on unpaid balances. 

2) After 6 months of fees unpaid, the condo can be put up for sale. 

 

Its not uncommon to see these clauses in the bylaws:

1) No voting rights after 6 months of outstanding fees.

2) Termination of condo services after 6 months of unpaid fees.

 

Between charging interest and publishing the name and shame report this virtually solved unpaid fees and late payments at our development. The name and shame report published to all owners twice a year shows each condo's fee balance and interest charged. This also helps shine light on whether your mgmt is doing their job regarding unpaid fees.

Yes our financial report doesn't outline specifically which owners are not paying, just the unpaid amounts.  

And this reveals yet another problem, our AGMs I feel are rigged to represent as few owners as possible.  We have had 3 years of asking the juristic office to properly notify all owners of the AGM so that those who cannot attend can at least appoint a proxy.  Their answer is that every owner is sent a letter of the meeting by post.  

 

The problem is that the letters are sent to their condo address!  We have said that in this day and age emails are used so send them an email as well.  And to send a letter to their other domestic or international address.  They keep on obfuscating around this topic and explain that they do not have everyone's email address etc.  I stood up last time and said I wanted them to give me a promise that they would obtain every email address and send emails in advance for subsequent AGMS.  I received a very non-convincing sheepish agreement. Extremely frustrating.  The juristic management just sit there smug and dismissive about it.  Obviously not willing to do any more.  

 

The less owners who can be represented at the AGMs the better as it means less owners are aware of the issues and there are less complaints on the floor of the meeting.  

 

The first AGM is always suspended due to insufficient numbers being present.  So then it is set down for 2 weeks after that so any owners who did make a special trip to come are much less likely to then attend again due to other commitments.  

Edited August 9, 2017 by aussienam

[inThailand]

13 minutes ago, aussienam said:

Yes our financial report doesn't outline specifically which owners are not paying, just the unpaid amounts.  

And this reveals yet another problem, our AGMs I feel are rigged to represent as few owners as possible.  We have had 3 years of asking the juristic office to properly notify all owners of the AGM so that those who cannot attend can at least appoint a proxy.  Their answer is that every owner is sent a letter of the meeting by post.  

 

The problem is that the letters are sent to their condo address!  We have said that in this day and age emails are used so send them an email as well.  And to send a letter to their other domestic or international address.  They keep on obfuscating around this topic and explain that they do not have everyone's email address etc.  I stood up last time and said I wanted them to give me a promise that they would obtain every email address and send emails in advance for subsequent AGMS.  I received a very non-convincing sheepish agreement. Extremely frustrating.  The juristic management just sit there smug and dismissive about it.  Obviously not willing to do any more.  

 

The less owners who can be represented at the AGMs the better as it means less owners are aware of the issues and there are less complaints on the floor of the meeting.  

 

The first AGM is always suspended due to insufficient numbers being present.  So then it is set down for 2 weeks after that so any owners who did make a special trip to come are much less likely to then attend again due to other commitments.  

Seen this before. Its as you said monkey business.

 

Transparency of your condo mgmt is the key to better and honest mgmt. Many owners now send an email to all owners letting them know of a situation when the condo mgmt will not respond or address it. Its like condo social media. Getting an issue out in the open helps force appropriate action by mgmt. Monkey mgmt thrives by keeping owners in the dark and keeping them from communicating with each other. You have probably only uncovered a fraction of the mismanagement actually going on.

 

[zzaa09]

Damn Foreigners.

[inThailand]

6 minutes ago, zzaa09 said:

Damn Foreigners.

They do get in the way of

 stealing all the condo money.

Edited August 9, 2017 by inThailand
fat fingers

[stud858]

3 hours ago, inThailand said:

Falsifying documents is treated seriously here. If you have facts and proof consider filing a police report.

Thais were reluctant to go to police. I've pushed several times for a police report and the persons who organised the emergency meeting said they would finally. I'll keep you updated. As for proof. I don't think anybody videod the unruly meeting but you'd think 40 witnesses saying the same thing would suffice.