Condominium residents and owners are legally obliged to pay common-area fees each year.
A model of a high-end condominium project is exhibited at the 'Bangkok Post' Luxury Living fair last September. Condo owners must know from the start that they have a duty to pay the common-area fees for the upkeep and security of the building. SOMCHAI POOMLARD
Some call the charges a financial burden, but most acknowledge that the money helps make condo living safer and preserves the building's condition and value.
Of common-area fees, typically 40% goes for security guards and maids; 30% for utilities and facilities maintenance; and the rest for administration, property management and staff.
Every five years, the expense balloons for big maintenance jobs such as water pumps and elevators.
"Condo owners should learn on the first day that they have a duty to pay common-area fees every year," said Somsri Techakraisri, managing director of Lumpini Property Management Co. "Their expense is converted into quality of life, security and better quality of services."
The building itself will retain its looks, which will raise the condo unit's value eventually. But if one unit owner refuses to pay common-area fees, some expenses cannot be met.
While necessary expenses like those related to security, water and electricity in common areas cannot be cut, other expenses such as maintenance of gardens and swimming pools can be, which could make the property look bad.
The cabinet has approved a draft bill that would exempt buyers of condos sold at auction by the Legal Execution Department from shouldering outstanding common-area charges owed by the old owners.
According to Ms Somsri, most property management companies worry that such a law could prompt condo owners to refuse payment of common-area fees.
"The draft bill [which allows condo non-performing assets (NPAs) to transfer to buyers before common-area expenses are settled] should be limited to existing NPAs," she said.
"The bill should not cover future cases, as this may encourage dishonest condo owners to avoid common-area fee payment."
Filing a case to recover unpaid common-area fees takes time and money.
"Condo juristic persons should speed up the time limit for unpaid common-area fees from the usual six months that a unit owner refuses to pay to three months, otherwise it will affect that condo's cash flow," Ms Somsri said.
According to the Legal Execution Department, there were 14,287 condo NPAs worth more than 62 billion baht at the end of July 2014.
Department director-general Ruenvadee Suwanmongkol said many condo NPAs fail to sell because buyers refuse to get a unit transferred after learning of an additional expense to be paid.
Poomipak Julmanichoti, managing director of Plus Property Co, said the draft bill could increase the number of condo speculators and irresponsible condo owners.
"We actually agree with the draft bill, as it helps borrowers who get in trouble," he said. "But on the other hand it may raise new problems. The draft bill should be applied only to bankrupt borrowers, not general borrowers. This can prevent new NPAs."
In the past, when condos were less popular, many unit owners were reluctant to pay common-area fees out of a lack of understanding.
"It is a rule of living together," Mr Poomipak said.
"Unit owners who get this concept will pay, but speculators may not. If a condo building is not well maintained, the resale price of a condo unit may fall."
Plus Property manages 135 residential projects with a total of 33,000 units or 2.6 million square metres. Of this number, 95 projects are condominiums with 26,800 units and 2.3 million sq m.
In Mr Poomipak's view, a suitable rate for common-area fees is 60 baht per sq m per month for a building with a net saleable area of at least 20,000 sq m. Fees will rise to about 80 baht for a building with a smaller net saleable area, due to economies of scale.
Suphin Mechuchep, managing director of property consultant Jones Lang LaSalle (Thailand), estimates monthly expense as a fixed cost for common-area management at between 800,000 and 1 million baht.
To best balance expenses, common-area fees should be 40 baht per sq m for a building with a net saleable area of more than 25,000 sq m and 50 baht for an area of at least 20,000 sq m.
"A condo project can be well maintained if at least 90% of unit owners pay common-area fees," Mrs Suphin said.
"Condo juristic persons should also understand and pay attention to juristic management."
To prevent unpaid common-area fees, condo juristic persons should be alerted to follow those refusing to pay and apply penalties such as fines and interest.
"Regulations for condo owners should be clearer," she said. "There may be other penalties like service suspensions for those refusing to pay common-area fees."