Category Archives: Condo Management

From the chairman of the committee in charge of his Pattaya Condominium building the author of “Welcome to the Fun House” comes the kind of advice condo owners need.

What a $400 oil change tells you about Pattaya condo repair ripoffs

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It is a sad fact that most condo owners in Pattaya are being being cheated out of their hard earned money by unscrupulous Thai managers  and other highly trusted condo personnel,  Embezzlement is to be expected more than it is to be unexpected.  But I’ve already dealt with that in Part 1. of — How most Pattaya condominiums cheat their owners.   Pattaya condo repair ripoffs are even harder to detect, than embezzlement but very noticeable if you being asked for a $400 oil change.  Here’s a tall tale  that’s based on a true story that I’ve changed to protect the guilty.   Unfortunately for all of you Pattaya condo owners out there this tale is all too true.  Welcome to Part II.

Most of the 174,000 baht repair bid was for a $400 oil change to a Cummins diesel engine, several valves, a pressure gauge, and several bearings and seals. The bid was sanctioned by the highly paid condo engineer overseeing the condominium electrical, internet, television, telephone, and security systems, who the condo owners were paying a monthly retainer to handle any technical problems affecting their building.  But both the engineer and the company offering the bid had made two fatal errors:  First, both had assumed that the committee representing the condo owners had the intelligence level of Australian wombats, and second, that committee members would not go to the trouble of analyzing the outrageous bid.  The most glaring tip off was “Cummins 15W-40/18″ that had been typed on the bid, specifying that the Cummins Diesel motor needed 18 liters of plain ordinary 15W-40 weight oil that was being sold in gas stations world wide for only $3.00 to $4.00 a liter. Not only was the price per liter of oil ridiculous, one of the committeemen also figured that this particular Cummins diesel engine called for 7.5 liters for an oil change similar to what a small diesel car needed.  18 liters might work for a 18,000 pound farm tractor, but the crankcase of the condo’s Cummins Diesel could never hold nearly that much oil.

The entire sorry episode started when one of the condo committee members started to worry that his condo building’s insurance policy might not cover damages from a fire should the condo building’s fire control systems fail. The committee member had been assuming that once the building’s fire alarm was triggered a water pump would automatically switch on to pressurize the fire hoses throughout the building.  But when it was decided to call in a Bangkok based company that specialized in such issues, another committee member started to smell a rat.  When the condo manager presented him with the 174,000 baht bid ($5500) and he saw the price for the oil change, bearings and bearing seals, he laughed and reminded himself “This is Thailand” (TIT) where it is expected that Thais earning $1.56 an hour actually expected to get $100 an hour provided the money was coming from stupid falang.”

The condo had a fire extinguisher on each floor and a fire hose that ran off a water line connected to a valve.  One might assume that pressurized water would squirt out of the hose as soon as the valve was opened.   However, a necessary first step must be taken to pressurize the water line. There are several water pumps on the first floor. The first pump’s purpose is to prime a larger pump which fills the water line that is used for the fire hoses on each of the condo’s 10 floors.   This second pump is run by the Cummins diesel engine.   It takes at least three minutes for enough pressure to build up in the water line for the fire hoses to work property.

Now comes the sales job. The condo engineer tells the condo manager and two committee members that there is a leak in the system which causes insufficient pressure to build up in the water line. A myth is created by the Bangkok company  that the entire system must work automatically and that it is difficult to find the leak that is causing the pressure to fall off. Finally the locations of several leaks are found, and the Bangkok company submits its 174,000 baht bid for stopping the leaks in water lines, pumps, etc that are keeping the system from working automatically.

There’s a leak alright but the water is leaking only as an insignificant trickle.   And who cares about such a small leak anyway so long as the system is turned on only for brief periods such as when there actually is a fire or when one wants to merely test the system?  Two committee members order the condo engineer and its maintenance employee to run the system. The first step is to turn on an electronic switch that starts the small pump that primes the main pump which fills the water line that runs up each floor to the condo fire hoses. The second step is to start the Cummins diesel engine that pressurizes the fire control system’s water line. This amounts to turning a second switch that runs from the diesel’s two batteries to a starter motor. The Cummins engine takes three minutes to build up enough pressure from the main pump into the fire control water line. All of this amounts to turning two switches, then watching a pressure gauge until sufficient pressure is registered. All of the condo fire hoses are now ready for action. The last step is to go to the floor where there’s a fire, uncoiling the fire hose, opening the valve next to the fire hose, and turning on the hose.

The whole thing is a complete farce. It makes no sense to make the system function automatically because of the strong likelihood of new leaks in the fire control water line, a pump, or the various valves throughout the system. If a leak should suddenly appear the Cummins diesel engine is going to be running all the time and water is going to start building up near the leak. So the only sensible solution is to run the system manually, which amounts to the security guards, condo employees and key condo residents learning how to run the system. And as for the leak that’s already been found off the main pump next to the Cummins diesel, an insignificant amount of water is leaking out and this will happen only when the Cummins diesel is started when a fire actually breaks out or the system is being checked out.

The two condo committee members aren’t biting and neither is the condo manager.  One of the two technicians from the Bangkok company tells the manager that  he can do the entire repair job for only 100,000 baht so long as he works directly with her.    The condo engineer asks one of the committee members, “If I can get all this repair work done for 100,000 baht will you let me handle this job for you?”

Ripping off condo owners for both unnecessary and excessively high repair costs is a way of life here in Pattaya. As Doctor Phillaneous Beckstein once put it: “Getting hired on as a Thai manager or other key employee  for just 20,000 baht a month is a big deal because that 20,000 represents only part of what a manager or other key employees can make given all the opportunities there are for ripping off the owners. Those condo owners have a right to expect trusted key personnel to look after their financial interests by keeping repair costs down. That’s what they are being paid to do.   Unfortunately the time dishonored Pattaya custom of getting excessive commissions for everyone had once again reared its ugly head. All condo owners in Pattaya need to beware that they are more likely to be ripped off than not being ripped off on repairs and act accordingly. Committee members need to be very vigilant and to get very involved when it comes to repair issues while the rest of the condo owners need to be fully supportive of their elected committee members. Nothing less will stave off the near inevitability of being cheated at every turn.

How most Pattaya condominiums cheat their owners Part 1

I have heard from those in the know that up to 99 percent of Pattaya condominiums cheat their owners. Personally I don’t think the figure is quite that high, but I do know many condominiums in my area have successfully ripped off their owners by embezzlement, by charging outrageous amounts of repairs or both. I need to oversee the interests of our condominium owners. This is my job. Therefore it is my business to know how condo owners get ripped off and to do my utmost to see that this does not happen here. This is part 1–embezzlement.

How to Avoid Embezzlement

Lesson 1: Let me start off by asking all of you a single question? In your home country, whether it’s in the United States, Germany, the United Kingdom, Australia or wherever, would you leave $50,000 lying around in your home in full view of a new girlfriend you had just picked up in a bar, at Walmart or whiile shopping for groceries at the supermarket? If you are a rational adult you certainly wouldn’t for several reasons. First, you haven’t known the woman for a long enough period to be able to make an informed opinion as to her character. Second–fifty thousand dollars is a large enough sum to tempt a large amount of people you would meet in such casual circumstances to cross the line. Third, even if your new live in girlfriend was fundamentally honest with small amounts of money, fifty-thousand dollars is a large enough sum to make her reconsider the right price at which she will sell her integrity. The bottom line is you simply wouldn’t leave $50,000 lying around your place for the easy taking. So if this is true back in your home countries, then why would you ever allow your condo office employees such easy opportunity in Pattaya, especially when Pattaya has the seedy reputation it so richly deserves? With the huge discrepancies between what your typical office employee makes in a country such as the United States and Thailand allowing the condo manager or secretary to collect  even 300,000 baht amounts to the same thing as leaving $50,000 lying around your home in the West.

The solution is to completely remove the temptation by making it impossible for your office personnel to collect large sums of money  from your condo owners. You simply require all condo owners to pay their maintenance fees and utility bills through direct payment to your condominium bank account. As the old saying goes, there’s nothing like putting and keeping the money in the bank. The condo owners can then be required to pay direct deposit to the  condo bank account either in person , through internet banking or by ATM. Paying by ATM Is easy because all your owners have to do is to key in the condo bank account and the amount of the invoice one is paying. A confirmation then appears on the ATM screen that indicates that it is the condo bank account after all. Once the transaction is completed, the ATM produces a receipt which can then be handed over to the condo office girl as proof of payment.

Not only does this stop embezzlement at the source, it also can make a vast improvement in your condo’s cash flow.   We did it here at my condo under my direction and it worked like gang busters.  Try it, and if someone doesn’t like it tell him to stick it where the sun doesn’t shine.

Lesson 2. Do not trust a Thai “professional auditor” or CPA to uncover the embezzlement in your condo. . Thai law requires that certain procedures are carried out in such an audit. From my understanding of Thai law such audits are geared around profit and loss. From what I’ve seen the condo’s own balance sheet is of no consequence so long as all the bank deposits have been accurately recorded and the invoices have been accounted for. My own condo uses the accrual accounting system which means that if a condo owner is invoiced a 20,000 baht maintenance fee this counts as 20,000 income even if the condo owner’s deposit at the office is never made at the bank. The balance sheet never shows the 20,000 baht deposit simply because the 20,000 baht never made it to the bank in the first place. But it most certainly does appear in the condo profit and loss statement simply because the basic assumption is that the condo owner will pay. But suppose the condo manager or office girl pockets the 20,000 baht and then records it as having been paid. She then gives the condo owner a receipt. He’s satisfied now that he’s been given a receipt for paying his bill, and as for the receipt, it might even be the same kind of receipt he was given at the grocery bill or at McDonalds.

So accounting wise what happens to this 20,000 payment? It belongs into an account that is called Undeposited funds. On the condo books it has been collected from the condo owner, and one might think that it now resides in the condo safe to be later deposited at the bank. The reality, however is that oftentimes the money is being used by the condo office girl or manager for a month, two months or even for a much longer period of time. I have personally examined the books of a nearby condominium community which showed 441,000 in undeposited funds. No one knew where the undeposited money went. But it sure didn’t land in the condo’s bank account. As for the professional audit, I doubt if the auditor even as much as looked at the condo’s own balance sheet because the audited balance sheet showed exactly 441,000 baht less what it actually was. Lesson to be learned here is Thai auditor’s ignoring of undeposited funds and the internal balance sheets produced by a condo’s accounting software is an open invitation to embezzlers.

Lesson 3. Get a good accounting software program like Quickbooks and use it. Especially Quickbooks. It might be difficult to buy a fully licensed copy of the software here in Thailand as foreign credit cards are usually not accepted by Intuit, the company that offers Quickbooks. I bought a licensed copy of Quickbooks for my own condo using my U.S. credit card and then I simply made sure that I was reimbursed by our condo office. And…Quickbooks is in English so it might be difficult for your office personnel to learn how to use it. The solution is if your office personnel cannot learn how to deal with Quickbooks in English to fire them and hire people who can successfully deal with it in English.

Lesson 4. Make sure that at least one member of your condo committee understands how to use the software and that he can teach your office personnel how to use it. Our manager and office girl have been highly successful at learning how to use the software which has paid for itself many times over.

Lesson 5. The condo owners must be supportive of the committee and the manager unless of course one or the other is not doing their job properly. Owners must realize that their condo community is not a Democracy. It is a Republic and as such the condo owners elect those owners they want to serve on the committee and then they must let their duly elected committee do its job. If it is not doing its job properly it can then elect a new committee at the next general election. My study of History tells me that true Democracy came to us from Athens in Greece over 2,000 years ago and ultimately it did not work when a couple thousand citizens all started interrupting each other and shouting and carrying on until pandemonium reigned. More recently I learned from a condo owner who lives not far from me that his condo community has just gone through five committees due to condo owners thinking they were more important than committee members. Lawsuits were threatened by selfish owners and a well qualified manager was even beaten up by the girlfriend of an arrogant owner who felt his girlfriend was the condo queen bee.

Lesson 6–Condo Committee members need to pay attention. They need to actually work at doing a good job, at checking the accounting for the condo’s finances, and getting to know their fellow condo owners. They should know who is likely to be paying his bills on time and who isn’t and if those who do have been properly credited in the condo’s accounting system and so on.

Lesson 7–Here in Pattaya it oftentimes pays to be an embezzler. When is the last time you ever heard of a Pattaya condo manager or office girl who has stolen a condo’s money actually having to do jail time for her crime? Probably never. For one thing if an embezzler runs off with the condo owners’ money she’s likely to disappear to Bangkok or to Rural Such a Toni. Her family and fellow Thais are likely to cover for her since embezzlement is not typically viewed as a serious crime here. And if anyone does not believe me consider this

A. Even if the office manager is caught stealing, is apprehended by the police, convicted of a crime and then does some serious jail time and one of the condo owners publicizes the fact that she is a thief while giving out her name she can then sue him and win for defamation due to his causing her to lose face even though she’s a criminal by Western standards.

B. The police will usually not arrest her anyway. Instead she will be offered the chance to pay back what she has stolen, she will then say that she will try and in the end the condo owners will wind up not being able to force her to pay anyway.

C. The high cost of litigation. I have recently been told by a reliable Pattaya law firm that to initiate criminal court action against an embezzler that this law firm would have to be paid 160,000 baht just to start and that it would then take at least one year just to get the case underway and that there would be little chance for success given the fact that many witnesses would have to be called into court but would not be available due to their having to be back in their home countries, etc. The same law firm told me that it would cost 120,000 baht just to start a Civil Court case against the embezzler.

In a nutshell here in Pattaya you get to steal and collect the rewards of your theft but you don’t have to suffer any of the consequences. You can even get an office job similar to the one you have just left because so many Thai companies never ask for references or enquire of a prospective employee, “What have you been doing with the last few years of your life?” You don’t even have to suffer from embarrassment or being publicly recognized as the criminal you really are. Here it’s all smoke and mirrors. It’s the land of make believe and a real Disneyland for adults. Nevertheless it is possible to get good employees but this is highly unlikely unless you pay very close attention to the fact that this isn’t the West and that Western values are for the most part not valued here.