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The Condominium Act (no.4) : Greater protection for condominium owners in Thailand

Greater protection for condominium owners in Thailand
by
Stephen Frost, Bangkok International Associates

 

Background: The Condominium Act (no.4) was passed on 27 February 2008 and came into force on 4 July 2008. The Act makes a large number of changes to the way in which condominiums are managed through the Condominium Juristic Person, and gives greater protection to the rights of condominium unit owners.

New definitions: The following definitions of new terms used in the Act are given:
 

General Meeting” means an ordinary or extraordinary general meeting of unit owners.

Committee” means the committee of the Condominium Juristic Person.

Member of the Committee” means the members of the committee of the Condominium Juristic Person.

Manager” means the manager of the Condominium Juristic Person.
 

Registration of a condominium: To register a building as a condominium, the following documents must be submitted:

1.     The title deeds.

2.    Building map, including the roads for entry and exit to public roads.

3.   Description of the condominium units, personal property, and common property including its area, its features, and other details in accordance with regulations.

4.    The ownership ratio of the common property.

5.   Evidence to show that the building sought to be registered is not mortgaged, except where such mortgage was made on the building jointly with the land.

6.     The draft Condominium Juristic Person regulations.

7.    Other evidence as prescribed by Regulations.



Advertising and photos, etc deemed to be part of sale agreement: When the owner of the land and building had advertisements made to sell the condominium units, he must keep copies of the articles, pictures or prospectus advertised to the public, in the operations office, until the condominium units have been sold, and must deliver copies to the Condominium Juristic Person for retention.


In sales advertising relating to the matters that have to be registered, the articles or photos must be the same as those submitted for registration and must specify the common property clearly.


It will be deemed that the articles, advertising photos or prospectus are part of the conditional sale agreement or sale agreement, and if there are any conflicts between the articles or photos in those agreements, then such conflict will be interpreted in favour of the buyer.



Saleagreement must conform with regulations: The conditional sale agreement or sale agreement must be in the form prescribed in regulations. Any part of the agreement which does not comply with regulations, and which does not benefit the buyer, will not be enforceable.


Ratio of unit ownership: The ratio of unit ownership in the common property of must follow the ratio between the area of each condominium unit and the total area of the units in that condominium



Extension of definition of common property: The list of items defined as common property is extended; the new full list is below:


1.      Land on which the building is constructed

2.      Land provided for common use

3.      The structure and construction of the building to protect the condominium against damage

4.      The building or part of the building and equipment provided for common use

5.      Machinery and tools provided for common use

6.      Facilities and services provided for common use

7.      Other property provided for common use or for common interest

8.      The operations office of the Condominium Juristic Person.

9.      Immovable property purchased or received by the CJP

10.   Building constructions or systems built to give security or to protect the internal environment of the condominium, e.g. the fire alarm system, lighting system, ventilation system, air conditioning system, water distribution and treatment system and waste processing system.

11.    Property paid for by common area contributions.



Separate entrances and commercial activities: Where areas are used for commercial purposes, there must be a system to enter and exit the premises separately, in order to maintain the unit owners’ normal life style. No one may conduct commercial activity in the condominium, except in the commercial areas allocated.


Contribution to common expenditure: Unit owners must share payment for taxes in the ratio of each person’s ownership in the common property. They must also share expenditure in relation to communal services and tools or equipment, including all communal facilities there for use and which give communal benefit, and share the cost of maintenance and management of the communal property, in the ratio that each unit owner has in the communal property, or by using the ratio of its benefit to the unit, in accordance with regulations.


Owner must pay contributions for unsold units: The owner of the land/ buildings is deemed to be the owner of the units that have not had title transferred, and must share the costs under the paragraphs above.


Penalty for non payment of contributions: Where unit owners do not pay for the costs within the due date, they are liable to pay a penalty not exceeding 12% per year, but this may not be compounded. Unit owners who owe money for more than 6 months must pay an additional amount at a rate not exceeding 20% per year and may not use communal property, or their communal services may be discontinued, and they may not be permitted to vote at the annual general meeting.


Permitted level of foreign ownership of condominiums: Ownership by aliens or alien juristic persons in each condominium, must not exceed 49% of the total area of such registered condominium.


Evidence of foreign ownership: After evidence and required documents to establish the status of a foreign owner has been submitted and accepted as correct, and provided that the ownership ratio held or to be held by aliens or alien juristic persons does not exceed the percentage permitted, the transfer must be registered.



Registration of transfer and expenditure for common property: In registering transfer of unit ownership, the applicant must submit a Certificate of Expenditure issued by the CJP manager for expenditure incurred, and certify that the condominium unit being transferred is free from outstanding debt. Transfer of the condominium unit will be made only when the unit has no outstanding debt. The CJP manager must issue the Certificate of Expenditure to the unit owner within 15 days from receiving the application and the unit owner has paid all the expenditure due. These provisions do not apply to a transfer made before registration of the CJP.


Contents of condominium regulations: Condominiumregulations must contain at least the following information:


1.    The name of the condominium with the words “condominium juristic person” in it.

2.    The objects of the CJP approved by the unit owners.

3.    The location of the CJP’s operating office, which must be in the condominium.

4.    The amount of money that the unit owners must pay for advance expenditure.

5.    Management of communal property.

6.    Use of individual and communal property.

7.    Ownership ratio of each unit owner in the communal property, in accordance with the condominium registration.

8.    The ratio for sharing expenditure of unit owners.

9.    Any other matters, as prescribed in regulations.


Amendment or additions may be made by a resolution of a general meeting of unit owners, which the CJP manager must register within 30 days from the date of passing the resolution.


Additional requirements for the manager of a condominium: There are additional requirements imposed for the manager of a condominium. He must be at least 25 years old, has not been dismissed from employment for dishonesty, or have been dismissed from employment as a manager for dishonesty, misconduct or immoral behaviour, nor may he have debts for communal property expenditure.  Where the manager is a juristic person, the person who acts on its behalf must be qualified and not have prohibited characteristics as referred to in the previous sentence.



Appointment of manager: Appointment of the manager must be approved by a resolution at a general meeting of unit owners by a 25% vote. The appointed manager must deliver his employment agreement for registration within 30 days after the date of the resolution.


Where manager ceases to hold office: The manager ceases to hold office on the happening of the following events;


1.    Death, or ceasing to be a juristic person.

2.      Resignation

3.      The employment agreement has expired.

4.      He is disqualified or has a characteristic prohibited under the Act.

5.      He does not act in accordance with the Act or regulations issued under the Act, or in accordance with conditions in the employment agreement, and the unit owners at a general meeting resolveto approve his removal.



Powers and duties of the manager: The manager must have the following powers and duties:


1.    To act in the interests of the condominium by following the provisions or resolutions of the unit owners’ general meeting or the committee.

2.     In a case of emergency and necessity, to give orders or do any thing relating to safety of the building, as any reasonable person would take care of his own property.

3.    To organise the security system or provide for the well being of the condominium.

4.    To be the representative of the CJP.

5.    To provide monthly accounts for income and expenditure and notify the accounts to the unit owners within 15 days from the end of each month, and such monthly accounts must be notified for at least 15 consecutive days.

6.    To take legal action against a unit owner for expenditure which has been owed for more than 6 months.

7.    To undertake any other duties, according to regulations.


The manager must perform his duties by himself, except for activities in compliance with resolutions of the unit owners’ general meeting, or may delegate such duties and must perform his duties in accordance with the time prescribed in his agreement.


The CJP committee: The CJP committee must consist of not less than three but not exceeding nine members appointed at a unit owners’ meeting.


The committee will hold office for two years. Where a committee member ceases to hold office before his term has expired, or there are additional committee members appointed whilst the old committee still hold their term of office, the newly appointed member will hold office only for the time that the previous committee member had to serve. When the term of office has expired, if no one was appointed to be a new committee member, the previous committee members whose term of office has expired will continue to perform their duties, until new committee members are appointed to serve. Committee members whose term of office have expired may be re-appointed provided they may not hold office for more than two consecutive terms, except where no-one else can be found to perform such duties. The manager must register details of committee members with the competent official within 30 days from the date of the unit owners’ resolution.



Persons eligible to be committee members: The following are eligible to be appointed as committee members:


1.    A unit owner or his/her spouse

2.   A representative or guardian of a unit owner who is a minor, incompetent or quasi incompetent person.

3.    A representative of a juristic person, where the unit owner is a juristic person.


Where a unit has multiple owners, only one person is entitled to be a committee member.



Persons ineligible to be committee members: A person appointed to be a committee member must not be:


1.    A minor, incompetent or a quasi-incompetent person.

2.   A person who was dismissed by a resolution at the unit owners’ general meeting, or was dismissed as manager for dishonesty, misconduct or immoral behaviour.

3.    A person who was dismissed as a civil servant or employee for dishonesty.

4.  A person imprisoned under a court judgment, except for offences of negligence or petty offences.



Termination of office of a committee member: A committee member’s term of office ends after expiry or upon the occurrence of the following events:


1.    Death

2.    Resignation

3.    He is no longer eligible or is ineligible to hold office, as above.

4.    By a resolution passed at the unit owner’s general meeting.



Appointment and duties of chairman: The committee may select one of its members to be the chairman and another to be the vice chairman. The chairman must call meetings. If there are more than two committee members who want to call a committee meeting, the chairman must determine the date for the meeting within seven days of a request.


Quorum and voting at committee meetings: At committee meetings, at least half of the committee members must be present to form a quorum. If the chairman is absent or not available at the meeting, the vice chairman must act as chairman. If there is no vice chairman or he is not available, the committee members who are present must choose one of their members to be chairman only for that meeting.


Consideration of any matter at a committee meeting must be by taking a majority vote on a resolution. One member must have one vote. If the vote is tied, the chairman must have a casting vote.



Powers and duties of committee members: Committee members have the following powers and duties:


1.      To control the management of the CJP.

2.      To appoint one committee member to be manager, where there is no manager or the manager is not available for more than seven days.

3.     To hold a committee meeting at least every 6 months.

4.     To act for any other purposes, as specified in regulations.



Accounting requirements for the CJP: The CJP must prepare a balance sheet at least once every 12 months and determine the financial year for the CJP. The balance sheet must show the asset and liabilities of the CJP and account for income and expenditure. There must be an auditor to audit it and deliver a copy to unit owners at the unit owners’ general meeting for their approval, within 120 days from the end of the financial year.


The CJP must prepare an annual report showing the performance of its business for the unit owners’ general meeting, including a balance sheet, and prepare copies for each unit owner in advance, at least 7 days before the general meeting date.


The CJP must maintain a set of annual reports showing the performance of the business and a balance sheet, including the regulations, at the operations office of the CJP, to enable officials and unit owners to view and inspect them.


The CJP must keep copies of the annual report and balance sheet for at least 10 years from the date of approval at the unit owners’ general meeting.



First general meeting of unit owners: Themanager must organise the first ordinary general meeting within six months from the date of registration as a CJP, for appointing the committee, approving the regulations and the manager. Where the meeting disagrees with the regulations or the manager appointed, the meeting must reconsider or amend the regulations, or remove and appoint a manager.


Subsequent general meetings of unit owners: The committee must organise an ordinary general meeting annually within 120 days from the end of the financial year of the CJP, to deal with the following matters:


1.    Considering the balance sheet.

2.    Considering the annual report.

3.    Appointing an auditor.

4.    Any other business.



Rights of others to call a general meeting: In the case of necessity, the following may call an ordinary general meeting, at any time:


1.    The manager.
2.    The Committee, provided not less than half of its members so resolve.
3.    Unit owners having not less than 20% of the votes who make a signed request to the committee. In this case, the committee must organise a meeting within 15 days from the date of the request. If they do not, the 20% unit owners may organise the meeting themselves, appointing one of them to issue a letter to call for the meeting.

 

Contents of notice for general meetings: In calling a general meeting, there must be issued a letter calling the meeting that indicates the place, date, time, and agenda for the meeting, and any other business, including reasonable details, and this must be delivered to the unit owners not less than 7 days before the meeting.


Quorum at general meetings: At a general meeting, to constitute a quorum there must be persons attending who hold not less than one quarter of all the votes. Where no such quorum is established, the meeting must be adjourned to another date within 15 days, and at this later meeting it is not necessary to constitute a quorum.


The manager or his/her spouse, is not permitted to be chairman at a general meeting.



Appointing a proxy: A unit owner may authorize someone in writing to vote on his behalf, but such proxy is not permitted to vote at any single meeting for more than three condominium units. The following persons are not permitted to be a proxy to vote on the unit owner’s behalf:

1.    A committee member and his/ her spouse.
2.    The manager and his/her spouse.
3.    An employee of the CJP or someone employed by the CJP.
4.    An employee of the manager, where the manager is a juristic person.

 

Matters requiring a majority vote by unit owners: A resolution regarding the following matters must be passed by not less than half of the total votes of unit owners;


1.     Purchasing or accepting immovable property that is related to communal property.

2.     Selling communal immovable property.

3.    Permitting a unit owner to do construction work, decoration, improving, changing or extending his/her condominium unit at his/her own expense, which affects the communal property or the exterior of the condominium.

4.    Amending or changing the regulations of the condominium in relation to the use or management of the communal property.

5.    Amending or changing the expenditure sharing ratio.

6.    Construction work that changes, extends, or improves the communal property.

7.    Causing the communal property to gain benefit.


Where the unit owners attend a meeting but a quorum was not constituted, the meeting must be adjourned and reconvened within 15 days from the date of the previous meeting. At the new meeting a resolution concerning any of the matters above must be approved by not less than one third of the total votes of the unit owners.



Matters requiring not less than 25% of the votes of unit owners: A resolution regarding the following matters must be approved by not less than one quarter of the total votes of unit owners:


1.     Appointing or removing the manager.

2.    Prescribing activities that a manager can delegate.



Enforcement and punishment: The Act contains detailed provisions granting powers or entry and investigation to officials, and a scheme of fines and imprisonment for breach of duties imposed by the Act. These administrative punishments apply to managers and others, and should therefore be studied very carefully.

Comment: The practical problems of ensuring good management of buildings in multiple occupation causes difficulties in many countries. It is to Thailand’s credit that these changes have been made in the interests of ensuring good management, by imposing duties not only on the manager of a condominium and the Condominium Juristic Person, but also on individual unit owners to govern their relations between themselves.

©       Stephen Frost, Bangkok International Associates 2008

__________________________

BangkokInternational Associates is a general corporate and commercial law firm. For further information, please contact Stephen Frost by email at อีเมลนี้จะถูกป้องกันจากสแปมบอท แต่คุณต้องเปิดการใช้งานจาวาสคริปก่อน                      

link  http://www.bia.co.th/legalupdates.html