Pattaya / Thai Condominium Law

Why Thai Condominium Law can be more harmful than good
Thai law allows a maximum of 49% foreign ownership in a condominium. So prior to agreeing to buy, it is necessary to check with the building management regarding the current rate.

It is never easy to manage a condominium — you will never please all of the people all of the time. But things get particularly difficult when you consider the implications of Thai Condominium law: a general a mix of dark grey and light grey, with little snippets of black and white.

I am not a qualified lawyer but I do have extensive experience in managing condominiums here in Thailand, and I am going to share with you some of my frustrations:

The Thai Condominium Act was written in 2522 (26 years ago) and, since its inception, has been modified only once by the Thai Condominium Act 2534. This Act basically covered rules only relating to foreign ownership.

However, instead of making positive amendments to the Act when a problematic situation arose; instead of learning from experience; instead of improving the Act and making it more user-friendly and more beneficial for condominium owners in Bangkok (there are of course a whole lot more condominiums now than there were 26 years ago), what has been done? You've guessed it...nothing.

What are the consequences of this neglect? The fact is that many condominiums in Thailand are forced to break the law just to avoid going bankrupt. And, as time goes by, inflationary pressure will mean that a condominium will eventually be spending more than it receives in Common Area Management (CAM) fees. Then there will then not be enough money available for even for the most basic necessities, such as repairs, repainting, cleaning, etc.

It is obvious that to avoid finances going belly-up, CAM fees have to be increased. However, although the Condominium Act itself is a bit vague, the Land Department has confirmed that in order to register a CAM fee increase with them and make it legal, there needs to be 75% or more of all condominium co-owners present in a general meeting to approve it.

This is just practically impossible for most condominiums: the chances of having 75% of all co-owners in the same place at the same time, for them all to forfeit their social arrangements and attend a general meeting on CAM fees, is nigh on impossible.

So, either the condominium doesn't increase its CAM fees and the building slowly falls into dereliction, or the CAM fees are increased anyway, ignoring the 75% rule and thereby illegally circumventing the registration requirements of the Land Department.

What if the co-owner refuses to pay the increase in CAM fees? Well, this is where Thai Law really makes things difficult: there is nothing the condominium can do. Luckily for most condominiums, people generally want what is best for them and they pay up. But in others, co-owners refuse to allow a CAM fee increase without the 75% voting rule. That is when the financial troubles really start. The law was drafted to protect the majority co-owners but in reality it hurts them all.

Typically you need 33% of all co-owners to attend a general meeting and make up a quorum. But the Condominium Act states that if you want to make any changes to the Condominium Articles of Association, or increase CAM fees, you need 75% of all co-owners to approve. So you can hold a general meeting, but you just cannot vote on anything. Where is the common sense in that?"

So remember, if you've seen a condominium unit you like, don't just buy it without doing your homework first. Here's some pointers to bear in mind:

Check that the condominium income is sufficient to pay for its expenditure. Ask to see the financial statements;
Check that all co-owners are paying their CAM fees. It's not worth buying a unit if half the co-owners aren't paying or aren't able to pay;
Find out if there are any ongoing legal disputes, any likely to happen in the future, or if the banks have seized any units.