Maintenance fund disputes at apartment buildings have been the hottest issue at the recent inspections conducted by the Ministry of Construction at some condominiums in Hanoi.

Pham Thanh Liem, a Hanoian living in FLC Landmark Tower building in Nam Tu Liem district, said that the Ministry of Construction’s inspection at 15 apartment buildings was aimed at settling concerns at residential complexes, disputes over the ownership of residence’s maintenance fund remains unsolved.

“Not only my apartment building, but maintenance fund in more than half of Hanoi apartments has not been handed over to their management boards in accordance with the regulations yet,” Liem told Hanoitimes.

Specifically, developers have not transferred maintenance funds in 254 out of 492 apartment buildings, accounting for 52%, and 33 out of 82 resettlement apartments, making up 40%, to the management boards. Notably, thirty-nine apartment buildings have experienced disputes related to maintenance funds, according to the Ministry of Construction.

Thirty-nine apartment buildings in Hanoi have experienced disputes related to the maintenance funds. Photo: Doan Thanh

“Besides failing to hand over the funds, developers avoid organizing a meeting for apartment owners to elect the management either. Therefore, residents are very frustrated,” Liem stressed.

Regulations covering apartment maintenance fund

Under the regulations, developers of the apartment buildings are responsible for collecting the fees for the maintenance fund, equivalent to 2% of the value of apartments, from apartment owners and tenants.

They are also in charge of the payment of the maintenance fund for unsold apartments.

The maintenance fund must be deposited at banks and transferred to the building management board which is elected by people living in the apartments.

However, the appetizing interest earned from the savings led to disputes between management boards and investors.

The Ministry of Construction is drafting a proposal to amend the regulation of building maintenance fund which provides that maintenance fund would be collected by management boards of apartment buildings, and the amount would be determined by the people who reside in the apartments.

This provision is intended to avoid disputes at some apartment buildings where residents are not consulted on the maintenance fund.

Time for local authorities to step in

The use of maintenance funds at 15 apartment projects in Hanoi was inspected by the Inspector of the Ministry of Construction In April.

The inspection team detected a record of administrative violation and issued a penalty decision of VND15 million (US$652.44) for each investor as they have obstructed the election of the apartment buildings' management board and have not transferred the maintenance fund to dwellers in accordance with regulations.

Lawyer Bui Quang Thu from the Hanoi Association of Lawyers. Photo: Trung Kien

However, Lawyer Bui Quang Thu from the Hanoi Association of Lawyers told Hanoitimes that the penalties are too lenient to deter violators.

“They appropriate billions of dong from apartment maintenance, but only get fined a few million to tens of millions of Vietnam dong. If the law allows stricter measures such as blocking of their accounts, the story might be different,” Thu said.

Hanoi People’s Committee and Ministry of Construction need to enact coercive regulations to ensure apartment developers promptly hand over maintenance funds to apartment managements, the lawyer suggested.

The city's Real Estate Association has written to relevant departments and agencies asking them to stop developers from collecting 2% of the apartment value from buyers as maintenance fund, saying it is “unnecessary and unreasonable,” and creates an additional financial burden on the latter, Thu stated.

It should not be the developers but the management board who would be made responsible for collecting the apartment maintenance fund, he said.

“Forceful measures are required to ensure developers hand over the funds to managements, but since the maintenance fund is deposited in the same saving account of someone, it is impossible to freeze it by law,” Thu suggested

Besides, apartment management only represents the residents and have no legal status, they should form limited liability company to get such status, according to the lawyer.

Amendments to current laws are needed to tackle these problems, ensure proper management and keep close watch on the use of apartment maintenance funds, Thu noted.