Ahead of the bank

Every Thai condominium charges a common fee — ค่าส่วนกลาง — for the things no owner holds alone: the lifts, the guards, the pumps, the pool, the land under the building. The Condominium Act decides how that bill is split and what happens when it is not paid. On the second question it is strict. On the first, since 2008, it has two answers.

This is a reading of the Act, not legal advice.

How the bill is split

Section 18 sets two charges. Taxes are shared by each owner’s ratio of ownership in the common property. The running costs — services, equipment and facilities for common use, and the upkeep and operation of the common property — are shared either by that same ratio or “by the benefit to each unit”, as the building’s regulation provides. The regulation must state the ratio (section 32).

The ratio comes from section 14. As amended in 2008, it is each unit’s floor area against the floor area of all the units, as at the date the building was registered as a condominium.

Before 2008 it was price: each unit’s price against the total price of all the units at registration, as a Senate legal officer’s commentary on the amendment records. And the old rule did not go away. Section 31 of the 2008 amending Act says the new sections 14, 15 and 18 do not apply to the ownership ratio, the common property or the shared-expense ratio of a building registered as a condominium on or before the day the amendment took effect, which the Senate commentary gives as 4 July 2008. For those buildings the old sections stay in force.

So in law there are two kinds of Thai condominium: those registered on or before 4 July 2008, whose shares the Act tied to registration-day prices, and those registered since, whose shares it tied to floor area. What a particular building’s regulation says, and how the building bills, is a separate question that only its own registered documents answer.

The ratio also sets the vote. Each owner votes by their share (section 45), and one owner holding more than half of all votes is cut back to equal all the other owners combined — the position a developer holding most of the units would be in. Under section 18 as amended in 2008, the developer is a co-owner of every unit it has not yet transferred, and pays the fee on them.

Changing the split takes at least half of all owners’ votes (section 48) — not half of those who turn up. If too few attend, a second meeting within 15 days can do it with at least a third.

When it is not paid

The Act climbs in steps.

• Late at all: a surcharge of up to 12% a year on the amount owed, simple rather than compound, at whatever rate the regulation sets (section 18/1).
• Six months or more: up to 20% a year. The owner loses the vote at general meetings, and “may be suspended” from common services or the use of common property, “as provided in the regulation.” The words are common services and common property. Nothing in the section mentions the water or power supply to the unit itself.
• More than six months: the manager must sue for the debt (section 36).
• Selling: once the building’s juristic person is registered, the land office registers a transfer of ownership only on the building’s latest certificate that the unit is free of common-fee debt (section 29). Once the debt is paid in full, the manager must issue that certificate within 15 days of being asked.
• Ranking: the building has a preferential right over the owner’s unit and over the goods kept in it (section 41). If the manager has filed the debts with the registrar, that right ranks ahead of a mortgage.

By 2015 that last step had barely been used. That year the Department of Lands said it had checked Bangkok’s land offices and found one condominium juristic person that had filed its debts, MGR Online reported. The department also said most buildings were not equipped to go to court.

In 2017 the court-sale side of the system did it for them. Section 335 of the Civil Procedure Code, rewritten that year, sets the rule for a condominium unit sold by the Legal Execution Department:

• before the sale, the enforcement officer tells the building to report what is owed within 30 days;
• after the sale, the officer sets aside from the proceeds the arrears up to the day of the sale and pays them to the building “before the mortgage creditor”;
• the land office registers the buyer without the debt-free certificate — and does the same if the building reports nothing in time, or reports no debt.

The department’s own note on the change gives the reason: auctioned condominium and housing-estate units drew little interest, because they usually carried unpaid common fees that a buyer had to pay on top of the price before the transfer could be registered.

It did not settle everything. A 2017 Chulalongkorn University law study found the problem coming back one step later: when a buyer at auction, such as an asset-management company, resold the unit, the resale needed a certificate again, and buildings could ask for arrears going back years — in some cases, the study says, more than the auction price.

What the building owes the owner

The Act, mostly as amended in 2008, also gives owners rules to hold the building to:

• the debt-free certificate within 15 days, once the debt is paid (section 29);
• a monthly statement of income and spending, posted for owners within 15 days of the month’s end and left up for at least 15 days (section 36);
• a manager who fails either can be fined as much as ฿50,000, and up to ฿500 a day until it is done (section 68);
• an annual general meeting within 120 days of the year-end, to approve the balance sheet and the annual report and to appoint an auditor (section 42/1);
• owners holding a fifth of all votes can demand an extraordinary meeting, and if the committee does not hold it within 15 days, can call it themselves (section 42/2);
• a manager may not be in arrears on the fee (section 35/1), and neither the manager nor a committee member may hold another owner’s proxy (section 47).

And it lowered the bar for using them. The quorum for a general meeting fell from a third of all votes to a quarter, and a second meeting called within 15 days needs no quorum at all (section 43). Appointing or removing the manager fell from at least half to at least a quarter of all votes (section 49). The Senate commentary gives the reason for the first plainly: a third was hard to reach.

The same commentary lists the complaints, made to the Department of Lands, that the amendment set out to answer: managers who would not issue the debt-free certificate, who did not chase some owners’ debts because of personal ties, or who spent common funds on private matters.

The English text

The English version of the Act that the Department of Lands published on its website is an unofficial translation carrying the Office of the Council of State’s disclaimer that only the Thai text has legal force. On four points it differs from the Thai.

The first is the one that matters. For a building registered on or before 4 July 2008, the English happens to describe the rule that still applies. For one registered since, it describes a rule that does not.

What this adds up to

Thai law makes the common fee very hard to leave behind. A private sale cannot be registered until it is paid. Since 2017 a court sale pays it before the mortgage lender. Under the 2008 wording, the developer pays it on units it has not sold.

The checks on how it is spent run through the general meeting. The 2008 amendment lowered the quorum, because meetings were not reaching it, and the vote needed to replace a manager, to make that easier.

And the share each owner carries was fixed on the day the building was registered — by floor area if that day came after 4 July 2008, and by price if it did not. The building’s registered regulation states it (section 32).

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Common misconceptions

“Thai condo fees are charged per square metre by law.” For a building registered after 4 July 2008 the share is by floor area. For one registered on or before that date, the Act ties it to the units’ prices at registration. Either way, the regulation may split running costs by benefit instead.

“A buyer takes over the seller’s unpaid fees.” The land office will not register a transfer of ownership without the building’s latest debt-free certificate, so in a private sale the arrears are settled first.

“A building can cut off your water for unpaid fees.” After six months the Act allows suspension of common services or of the use of common property, as the regulation provides, and removes the vote. It does not mention the unit’s own supply.

“Buying at a court auction means paying the last owner’s fees.” Since 2017 the arrears up to the sale date are paid from the proceeds, before the mortgage lender, and the buyer registers without a certificate. A later resale needs a certificate again.

“The English Condominium Act is the law.” Only the Thai text has legal force, as the English translation itself says.