Whether in a condominium building, or in a private villa development, the property is not only made of a number of private units, it also features a vast common area and several common facilities such as security gates, reception areas, fitness centers, parking lots, lifts, and more! In both cases, these areas and facilities made available in common to all owners must be maintained so everyone can keep enjoying them, and also to keep the value of the property as high as possible. The cost for this maintenance is shared by all the owners to the proportion of their ownership size, and that's where the CAM Fees and Sinking Funds come from. But what do they mean exactly, and how much should it represent? Read on to find out.
The Common Area Maintenance Fees
The Common Area Maintenance Fees, usually abbreviated to "CAM Fees", represent the monthly operating cost of all the common facilities and areas. This is usually the electricity for the lights in the corridors and gardens, common swimming pool, fitness and lifts maintenance, the cost of hiring security guards and the maintenance of CCTV cameras, and more, depending on the facilities available. Since these are recurring costs, they are charged every month and are usually collected 1 or 2 years in advance, to avoid shortage of funds due to late payments. The CAM fees are usually calculated per square meter per month, and for condominiums will usually be in the range of 40-80 THB per square meter. The amount paid can be changed according to the changes in the real costs of the maintenance, and therefore can increase or decrease in the future, which is usually decided in the owner meetings.
The Sinking Fund
Other than the CAM Fees, you will also be asked to pay for a "Sinking Fund" on the purchase of the villa or the condominium of your choice. The Sinking Fund is used for major maintenance operations such as large repairs, repainting, replacement of outdated equipment, and other large expenses that only occur once in a while. Therefore your contribution to the Sinking Fund isn't collected on a regular basis, but only one time on the purchase, and maybe later again depending on the common decision of the owners on the necessity of making a large maintenance expense. This contribution to the Sinking fund tends to be around 400-800 THB per square meter.
How is it managed?
For private villas, the management of the CAM Fees and Sinking Fund largely depends on the developer, who will usually appoint a management company to handle these matters. For condominiums however, the law is much more precise regarding the management of these common fees. Until most of the sale of the private units have been sold, the developer is still in charge of the common area maintenance, and once a large majority of the units' ownership has been transferred to the buyers, a "Condominium Juristic Person" will have to be established. The Condominium Juristic Person is then responsible for managing the CAM Fees and Sinking Fund contributions, and has to make an owners assembly on major decisions such as changing the CAM Fees, the purchase of new material or other matters in relation with the common property of the development. Since the private villa developments aren't governed by the same specific laws as the condominium developments, it's important to inquire with the seller in advance on how the common property will be managed and if necessary to include it in the sale and purchase agreement.