Approach to a shareholder company, acting as common property board, owners committee and lawmaker on behalf of cohabitation rules „
Sunrise Ocean Resort Jan 8th 2015
Not existing common property in a resort with common used utility infrastructure
The Sunrise Ocean Resort consists of 15 houses, using water, electricity, access road and waste removal through a piece of land ( the access street ) , that is owned by one person X and managed by Khun Adam and Montha. As long as these persons are in charge, there won’t be any problems. But we have to prepare for a long term solution.
Since foreigners or foreign companies are not allowed to own land, they can’t own the “common property” land. But it in a long term view it is inevitable for the wellbeing and survival of the resort, that the owners themselves are able to make decisions about the so called common property and the rules of cohabitation. Interestingly it is regulated for condominiums in the condominium act, but there are no rules for resorts, that are not submitted to the condominium act.
So the access road and the resort utility infrastructure ( drainage system, well and water supply, water discharges, electricity lines and others ) is – different to the legal approach in western countries – not a common property of the different homeowners. Usually it is owned exclusively by the developer and the owners of the villas don’t have any rights, just the obligation to pay. They have to finance the maintenance, the repairs, new developments and fulfill new requirements when the legal situation changes. Therefore it is in their own interest, to create a legal construction, where they are the decision maker not only the money wirer.
Good examples are the the actual problem with the well, the installation and construction of a second one, the common garbage disposal outside of the resort and eventually a solution for glasfiber internet connection of the whole resort .
How do we make decisions ? how do we execute them ? How do we finance it ?
Others are : who pays for the maintenance of the land in front of the resort ( although it belongs to a third party ), who pays for keeping the roofs of the front row villas in a decent condition or finance the covering with artificial grass. How do we cope with the new well, being built in the northern part of the resort and not lying on the access road, that could be common property ?
Existing contracts on behalf of management, owners committee and cohabitation rules
Actually two of the owners have signed an agreement about maintenance, owners committee and rules of cohabitation ( see attachment 1 ), where most of the questions, arising in condominium complexes - on behalf of the common property and the way of cohabitation – are addressed. There must have been a lot of troubles in Thailand, in order to force them to legislate on condominiums. And the legislation in details shows quite a lot of these troubles.
The condominium law was one of the guidelines to create the existing contracts about the “common property”. Most of the known problems are addressed with these contracts in our resort, although in Sunrise Ocean Resort common property doesn’t exist. This contracts were not only signed with the developer Thongsong Enterprise Company Ltd but also with Khun Montha as the natural person and the manager in charge.
If a shareholder company could own or at least lease the common property, there would be just one contracting partner, represented by the board of the company and that means more or less land- or homeowners.
Actually all the other owners have other bilateral contracts with the developer ( Thongsong Enterprise Company Ltd ) , although the owner of the “ common property “ is a different person. Right now in view of the legal situation there are quite a lot of open legal questions, that have to be addressed and if possible molded into a legal construction, that is unseparatly connected with the ownership of the land and ownership of the different villas in the resort. That means the ownership of the common property has to be linked with the actual land- and/or homeowners; not to forget, that due to the impossibility of owning land for foreigners usually the land- and homeownership are split .
51% threshold for a shareholder company
A Thai company, owning the “common property “ land ( in short: an owning shareholder company ) , has to have at least 51% of Thai owners. This shouldn’t be a problem in Sunrise Ocean Resort, considering the ownership of Khun Montha of several villas, several Thai natural persons owning the land and the houses or just owning the land. Assuming that the company will hold 150 shares each villa/land is shareholder of 10 shares we should at this time get more than 75 shares in Thai possession.
Due to another legal problem ( owner committes executives are considered to be working in Thailand and need a working permit ) eventually the shareholder company should only lease the land from one Thai owner, but in this case we can create a foreign shareholder company and are therefore not limited by Thai laws.
The landregister and new solutions
If the Thai shareholder company is favored then we have to consider, that the problems are probably quite new for Thailand and therefore the question is surfacing, if the landregister officer is able to understand the solution and register the owner of the common property, that means a shareholder company. The board of this company would at the same time represent the land- and homeowners, that means it would be an owners committee on a board level. In countries with a stable legal system it would be easy, since this solution makes sense and is comparable to the management of condominiums according to the Thai condominium act. But ….
What does it mean on behalf of ownership of the shares ?
The shares should belong to the actual owner of the land and at the same time to the actual owner of the villa, with an obligation to transfer the shares at the moment of transferring ownership. With the signing of a sale contract for the land or the longterm lease, or even if another solution – usufruit – is chosen , the power emanating out of the shares have to be transferred to the new possessor.
Owners Committee and working permits ?
There is still a pitfall on behalf of the owners committe : due to the very strange legal opinion, that a member of the board, executing decisions have to have a working permit in Thailand could force us to circumvent this problem in just creating a leasing shareholder company –just leasing the common property – and with doing so there are no limits. It could be a foreign one and then all the decisions and the executing of these decisions could be made in a way, that there won’t be any working activity in Thailand. For the first 30 years we would be legally safe ; enough time to create facts so no one would be economically interested in this “ common property “ land.
Decision making of the Villa Owners on December 24th 2014
At a meeting on the 13th of December 2014 the owners of Sunrise Ocean Resort homes voted unanimously to create a legal solution, that gives them the power to make decisions about the “ common property “, the financing of common task, the financing of future investments for repairs or developments and the rules of cohabitation. They gave power of authority to the undersigned person to hire a Thai lawyer of his choice in order to prepare in details this legal construction.
This paper serves as a brief description of the legal problems and the idea of solutions and is transferred to the chosen lawyer. The undersigned will work closly with the Thai lawyer to present a first draft at the beginning of March 2015 supplemented with solutions for all the cohered legal problems