Thailand's new condominium law
focuses on protection for buyers
By Jon Fernquest |
Thailand's new Condominium Act BE 2551 (2008) came into effect in July with many new protections for condominium buyers.
Standard agreement protects buyers
The new law introduces a standard sale and purchase agreement (SPA) for a condominium unit:
"...all developers must now use the standard agreement prescribed by the Interior Ministry. Any part of an agreement that is not in line with the standard form, and not beneficial to the buyer, is not only unenforceable, but the developer may even face criminal charges, potentially resulting in hefty fines."
The new SPA still has some deficiencies that need to be improved upon before condominium developers can actually start using it. First, there is almost no protection for sellers. Second, some parts suffer from "vague language" and "lack of detail." Guidelines will have to be provided on "how to add other terms and conditions on top of the standard agreement, in ways that do not conflict with the law."
Advertising now part of the contract: What you see is what you get
Truth in advertising is another important buyer protection in the new law:
To further protect buyers, condominium advertisements are now also strictly regulated. The advertising material must correspond to the facts listed in the condominium registration documents. Advertising material is also now considered part of the terms and conditions of the condominium SPA. Failure to provide the items presented in an advertisement may constitute a breach of agreement. In addition, the new Act clearly states that if advertising material is contradictory to, or inconsistent with the details in the relevant condominium SPA, it will be interpreted in a way that benefits the buyer.As a result, developers have to review their marketing schemes and materials, and ensure that, among other things, computer-generated images of condominium features are not "too good to be true".
Zoning the use of space within condominiums
Space must be set aside for all future commercial activity in the formal plan submitted during condo registration.
In addition to retail store space located within condo buildings, condo units are often rented out as hotel rooms (condotels) for limited periods of time and people often use condos as offices. It is not yet clear whether this less formal commercial use of condo units will also be restricted.
Changes to condo governance and management
Several new provisions make condo governance more transparent.
Many provisions that were already commonly used in well-written condo Articles of Association (AOA) will now become law. Many AOAs will have to be revised.
The voting power of condo owners (co-owners) will now be based on the amount of space owned, not the price of the condo. This change in voting rights only applies to new condo registrations.
Annual reports like corporate annual reports will now be required and "details such as balance sheets, expenses and auditor's reports must be presented at the annual general meeting for approval."
Co-owners will now have the right to call for an extraordinary meeting to address problems that need a quick solution.
(Source: Bangkok Post, business, 12-10-08, Sorachon Boonsong and Rachoj Tawintermsup, link)
Vocabulary:
came into effect - when a law becomes active and can be enforced
sale and purchase agreement (SPA) - legal language for the contract that a buyer signs with a seller when buying a condo
X prescribed by Y - Y states that X must be carried out
in line with - follows, agrees with, matches
face criminal charges - be formally accused of committing a crime (followed by a trial to determine guilt)
hefty fines - large fines, must pay a lot of money for breakign a law
vague - exact meaning not clear
terms and conditions - the standard legal way of saying: rights and obligations in an agreement
What you see is what you get (WYSIWYG) - appearance matches reality, usually considered a desirable characteristic
X contradictory to Y - X states the opposite of Y
X is inconsistent with Y - X and Y cannnot both be true at the same time
review - check carefully to find faults and improve
zoning - formally setting aside an area for a specific purpose, laws that say that an area can only be used for limited purposes (for example, a residential district with only houses, a commercial district with only shops and offices)
a condotel - a condominium that also functions as a hotel
governance - setting high level policies for the management of an organization so that it can meet its goals and satisfy its owners and other stakeholders
transparent - all parts visible to the public
Condominium Articles of Association (AOA) - the official rules chosen for governing a condo
corporate annual reports - a document a company presents at an annual general meeting for approval by its shareholders (See Wikipedia)
