Sinking Fund
A mandatory capital reserve fund for Thai condominiums, paid once at unit transfer and used for major building repairs and capital expenditure.
Thailand's Condominium Act (Section 18) requires condominium juristic persons to maintain a sinking fund, a capital reserve account separate from the regular common area maintenance fees. The sinking fund is intended to cover major, non-recurring expenditures such as roof replacement, elevator overhaul, major facade repairs, swimming pool resurfacing, and other significant infrastructure works that go beyond routine maintenance. Under the Act, the initial sinking fund contribution is typically paid by the buyer as a one-off lump sum at the time of unit transfer. The amount is set by the developer and varies by project, commonly ranging from THB 400 to THB 700 per square meter of unit area, though premium projects may set higher rates. Once the juristic person is established, the general meeting of co-owners can vote to adjust the sinking fund contribution rate. In addition to the initial lump sum, some condominium projects structure ongoing monthly sinking fund contributions alongside the regular common area maintenance fee. This is managed by the condominium juristic person and should be disclosed in the project's financial statements, which co-owners are entitled to review at annual general meetings. An underfunded sinking fund is a significant risk indicator for older buildings, it signals deferred maintenance and potential special assessments in the future.
What it means for buyersWhy this matters when you buy in Phuket.
Before purchasing a resale condominium, buyers should request the current sinking fund balance from the juristic person and compare it to the building's age and condition. A building that is ten years old with a depleted sinking fund and no major works completed is a warning sign. For new-build purchases, the initial sinking fund amount is a known cost at transfer, buyers should factor it into their total acquisition budget alongside transfer fees and legal costs.
Mario includes the sinking fund rate and current balance in the project information pack for every condominium recommendation. For resale units, he requests the juristic person's latest financial statements and checks whether any special assessments have been levied in recent years. Projects with chronically underfunded sinking funds do not make it onto his recommended list.