Investing in property overseas should be a simple matter, you pay the purchase price and and fees applicable and that is the end of it. However, in Thailand problems can come about after if you are not careful.
You can buy property leasehold or freehold in Thailand as in most countries, but whichever you do there could be a management arrangement involved and this needs to be studied carefully or problems could arise later.
One such issue was brought to the attention of Panuwat Somrit, a Phuket lawyer specialising in property, which is related here.
In March this year, ten foreign tenants from the Aspasia Phuket Resort, led by Dutch national Jan Cornelis van Zuilekom, complained to Phuket Governor Chamroen Tipayapongtada that he and other tenants had been locked out of their rooms and had their electricity and water cut off.
The tenants wanted the management to provide them with financial reports, but their request was refused. They then stopped paying the maintenance fee, which resulted in their electricity and water being cut off. The management team claimed that the tenants had no right to see the reports according to their contract, which is why they were punished by having their electricity and water cut off. All of this, the company said, was written clearly in the management agreement.
The problem with this arrangement was the ignorance of both parties – the buyer and the project owner – about the management plan or management agreement, after buying or investing in the property.
Buyers or investors mostly focus on the buying and selling agreement, but nobody pays much attention to the management plan. Most buyers and investors are unaware of what else that they have to pay, or what terms and conditions apply for when they live in that property after becoming the owner of it.
In many cases, and usually the case in condos, owners have the right to vote on how much in maintenance fees they are willing to pay per year. They also have the right to see the financial documents showing the usage of the maintenance fee, as well as to examine how the juristic persons work.
In other types of property however, the project owner or management team has the right to decide on how they will utilize the maintenance fee. They can even set their own price for water and electricity. The tenants or owners have no right to be involved with management. They just have to pay the maintenance fees as required.
So everything depends on the management agreement between the buyer and project owner. Before purchasing property it is essential that you carefully examine the management agreement proposed to ensure that you are aware of what you can and cannot do, and also the responsibility of the management company.
Read the small print and make sure that not just the purchase, but the ongoing ownership experience of property investment in Thailand is a happy one.