What can the juristic person do if people don't pay their common area fees?

What actions can a homeowners' association take if they don't pay their common area fees? How does this compare to the situation in condominiums?

This article examines the situation in housing estates, focusing on the legal aspects of non-payment or late payment of common area fees. What laws are violated, what are the penalties, and what actions can the homeowners' association take?

__________________________________________

Which laws are violated by not paying common area fees?

First, it's important to understand that condominium associations operate under the Condominium Act, while housing estate associations operate under the Land Allocation Act.

Regarding non-payment or late payment of common area fees, Section 50, first paragraph, of the Land Allocation Act states:

“Section 50. Any person obligated to pay maintenance and management fees for public utilities as specified in Section 49, second paragraph, who pays such fees later than the due date, shall pay a fine for the late payment at the rate determined by the committee.”

From the above law, it's clear that late payment of common area fees in housing estates also involves fines. However, these fines must be determined by the "committee," which consists of the Bangkok Metropolitan Land Allocation Committee and the provincial land allocation committees.

Currently... The Bangkok Land Allocation Committee has announced that late payment penalties for common area fees will be determined by a resolution passed by the village committee at the general meeting of members when the village juristic person was established, but must not exceed 10% of the outstanding amount. This differs from the case of condominium juristic persons, which can collect a 12% annual surcharge, and a 20% annual surcharge if payments are overdue for more than 6 months.

__________________________________________

What can the juristic person do if someone fails to pay common area fees or is in arrears?

In the case of condominium juristic persons, the law allows for higher surcharges for payments overdue for more than 6 months, loss of voting rights at general meetings, suspension of common services or use of common property, and suspension of registration of rights and legal transactions in that unit. However, in the case of village juristic persons, Section 50, paragraph 2 states:

“…..Those who are in arrears on maintenance and public utility management fees for 3 months or more may have their services or rights to use public utilities suspended.” "And in cases of overdue payments of 6 months or more, the authorized officer has the power to suspend the registration of rights and legal transactions in the subdivided land of the defaulting party until full payment is made. This shall be in accordance with the criteria and methods determined by the Central Land Subdivision Committee..."

It can be seen that overdue payments can be divided into 2 cases:

– Case one: Failure to pay village common area fees, with overdue payments of 3 months or more, may result in the suspension of services or the use of public utilities.

– Case two: Failure to pay village common area fees, with overdue payments of 6 months or more, will result in the suspension of the registration of rights and legal transactions in the land, without increasing the penalty rate like in condominium juristic persons.

In the case of suspension of registration of rights and legal transactions, it is similar to condominiums, but with some differences. In the case of condominium registration, the law requires a certificate of no debt. If there are still outstanding common area fees, the condominium juristic person manager will not issue such a certificate, and therefore, the registration of rights and legal transactions of the condominium unit cannot be completed.

__________________________________________

However, in the case of subdivided houses, a certificate of no debt is not required. It is the responsibility of the subdivided house juristic person to send a letter to the relevant land office informing them that the subdivided house in question has not paid village common area fees and has outstanding fees exceeding 6 months, and to suspend the registration.

In this case, it could be problematic if the homeowners' association doesn't notify the land office of non-payment of common area fees, resulting in outstanding debts exceeding six months. The land officer might still register the rights and transactions as normal.

There is a Supreme Court judgment (3188/2561) that ruled that the law doesn't require a debt-free certificate for the transfer of ownership. When common area fees are unpaid and outstanding debts remain, the homeowners' association must sue the original owner, who is considered the user of the common property, not the new owner.

Regarding the suspension of services or public utilities, I believe a comparable Supreme Court judgment concerning condominium associations is suitable, as the law is not significantly different.

__________________________________________

Thank you for the valuable information from DD Property.