The Vietnamese version is available here.

One year after the Land Law 2024, the Real Estate Business Law 2023, and the Housing Law 2023 came into effect, Vietnam’s real estate legal framework has begun to show both its reform momentum and the challenges of implementation.

Vilasia, in collaboration with The Saigon Times, is pleased to present a series of analytical articles by Vilasia’s Nhung Nguyen, offering a one-year review of how these landmark laws are being implemented in practice. Through real cases and regulatory analysis, the series highlights key issues emerging in areas such as land financial obligations, project transfers, delayed projects, commercial housing development, and project implementation models. The series will aim to provide practitioners, investors, and policymakers with a clearer picture of where the new legal framework is working as intended and where further clarification and adjustment may be needed.

The series focus on five main topics:

(i) Land-Related Financial Obligations: The Strain of Balancing Interests;
(ii) Transfers of Real Estate Projects: Practical Bottlenecks in Implementation;
(iii) Delayed (“Suspended”) Projects: Responsibility Cannot Be Placed Solely on Investors;
(iv) Development and Management of Commercial Housing: Bright Spots and Persistent Bottlenecks; and
(v) Apartment Building Governance: Maintenance Funds Remain a “Hot Spot”.

Below is the last in the series entitled “Apartment Building Governance: Maintenance Funds Remain a “Hot Spot””, originally published in Vietnamese in The Saigon Times on September 6, 2025. The digital version is available here.

Apartment Building Management: Maintenance Funds Remain a “Hot Spot”

By Lawyer Nguyễn Thị Nhung (*)

(The Saigon Times) – After a year in force, the new Land Law 2024, Real Estate Business Law 2023, and Housing Law 2023 have gradually come into practice. Yet, reality still reveals many emerging obstacles stemming both from inconsistencies in the laws themselves and from divergent interpretations and applications among competent authorities. The Saigon Times presents a series of articles analyzing key issues in the implementation of these legal documents.

Housing Law 2023 – Progress in Maintenance Fund Management

During the implementation of the Housing Law 2014, apartment building management revealed many shortcomings, particularly regarding the management and use of maintenance funds. In reality, many investors delayed the handover or lacked transparency in using this fund, leading to prolonged disputes between residents and the Management Board, and even negative incidents such as abuse or misappropriation of maintenance funds.

The Housing Law 2023 introduces important amendments to address these issues, especially regulations related to revenue sources and methods of maintenance fund management, contributing to ensuring the stable operation of apartment buildings.

First, the new law supplements revenue sources for the maintenance fund. Previously, the sole source of maintenance funding was the contribution from residents (initially 2% of the Apartment building value or the area sold/leased-purchased, including the area retained or unsold by the investor), which was temporarily managed by the investor before being handed over to the Management Board. The Housing Law 2023 adds a new, stable, and regular revenue source for this fund: revenue from common ownership areas, typically collected from residents or other organizations and individuals using the common areas of the apartment building (common area revenue).  This revenue source is quite diverse, potentially including elevator advertising, lobby displays, resident parking fees, or standee placement fees.

Regarding the mechanism for managing and handing over maintenance funds, the new law also stipulates strict regulations to protect residents’ rights. Previously, this amount was paid by homebuyers to the investor along with the house purchase price, from which the investor would deduct and deposit it into the maintenance fund account. Now, the Housing Law 2023 requires that the maintenance fund account be opened before the signing of the sale contract or lease-purchase contract, and buyers will pay directly into this account (which bears the investor’s name but is clearly stated in the contract and must be notified to the provincial housing management authority). This new method ensures cash flows directly into the fund account, avoids investor manipulation, ensures transparency, facilitates inspection, and allows for easier enforcement if necessary.

Furthermore, the new law also decentralizes the authority to enforce the handover of maintenance funds from the provincial People’s Committee down to the district level, aiming to create more favorable conditions for implementation. Enforcement cases are clearly defined: enforcement from the general account, maintenance fund account, or business account of the investor, or enforcement through asset seizure and auction. The detailed processes and procedures for each enforcement case create an important legal basis for local authorities and the Management Board to protect the legitimate rights of residents.

Although the mechanism for managing and handing over maintenance funds is prescribed in detail and specifically, the legal status of the body managing this fund, the Management Board, is not clearly regulated by the Housing Law 2023. The Housing Law 2023 no longer defines this board as a legal entity as stipulated in the Housing Law 2014, yet it also does not affirm that this board lacks legal entity status[1]. This lack of clarity contributes to ironic situations during the Management Board’s management and use of maintenance funds, as illustrated in the story below.

Common Area Revenue – Invoicing and Tax Dilemmas

Unlike the traditional contribution of 2% of the Apartment building value (the construction area portion that residents and the investor self-pay into the maintenance fund account to maintain their own daily operations), revenue from common areas is collected from service exploitation activities in the common areas of the Apartment building, which can be considered business activities. Consequently, many apartment buildings have faced significant challenges with invoices and tax obligations.

Specifically, in early May 2025, the Management Board of Conic Dong Nam A apartment building was fined over VND 119 billion by the (former) Binh Chanh District Tax Department for failing to issue invoices when collecting money from residents. Regarding the tax field, tax authorities determined  that the Management Board had evaded over VND 453 million in taxes from leasing telecommunication stations and other operational services, and subsequently transferred the case file to the investigation authority due to signs of criminal violation[2]. To date, the case continues to shock public opinion not only because of the unimaginably large fine amount but also because not only at Conic but at most apartment buildings, Management Boards in practice do not issue invoices nor declare and pay taxes.

Where, then, will the Management Board find the funds to pay the fine?

First, It is necessary to distinguish between the Management Board and the Management Company of the apartment building. While the Management Company is an independent enterprise providing professional Apartment building management and operation services, the Management Board is a representative of the residents, is not an enterprise, and does not operate for profit. After the Management Board is established, it will sign a contract with the Management Company to carry out the management and operation of the apartment building. Only in cases where the apartment building does not have an elevator can the Management Board collect and spend management service fees without needing to hire a Management Company.

The Management Board has a stamp and bank account for operation. However, the Management Board is not independent when participating in legal relations, and most importantly, the Management Board has no assets of its own. Specifically, it is a collection of representatives of residents and the investor. All activities of the Management Board must be reported to residents at the apartment building Meeting or must be carried out according to the operational regulations and financial revenue/expenditure regulations approved by the apartment building Meeting. The Management Board is named as the holder of the maintenance fund and certain other amounts, such as the Management Board’s operating fund or management service fees for small-scale apartment buildings (without elevators). However, any expenditure from these accounts must be reported at the apartment building Meeting for residents to decide[3].

In contrast to the extremely limited capacity of the Management Board under housing and civil laws, tax management laws have an overly broad scope of application by stipulating that an organization that is not an enterprise and does not need to have legal entity status must still issue invoices when collecting money and must pay corporate income tax when having income if it supplies services[4].

When the Management Board violates legal regulations, the assignment of responsibility can be assessed as follows:

Regarding the personal responsibility of the Management Board’s members, Article 148.3 of the Housing Law 2023  and Article 19.5 of the Regulation on Management and Use of apartment buildings (issued with Circular 05/2024/TT-BXD), stipulate that responsibility lies with Board members if the Board or members make decisions exceeding their authority and statutory responsibilities. In this case, if the Board’s collection and expenditure are based on residents’ decisions at the apartment building Meeting and are consistent with operational and financial regulations, Board members cannot be held personally liable. Furthermore, the fact that Management Boards do not issue invoices nor declare and pay VAT and corporate income tax is a fairly common reality in apartment buildings, making it very difficult to assign personal responsibility to any specific member of the Board.

Regarding collective liability, the Board cannot unilaterally decide to use money in the accounts under its name to pay fines because the expenditure of any amount from these accounts must be reported to and decided by the apartment building Meeting.

In terms of the nature of the representation relationship, since the Management Board is the representative body of the residents and operates for the residents’ benefit, it can be said that fining the Board is effectively fining the residents. In reality, residents already have a substantial asset, specifically the maintenance fund. However, residents cannot use this money to pay fines due to regulations restricting the maintenance fund’s usage purposes, including revenue from common areas (an amount that can be considered as derived from business activities)[5]. The amount available in the Board’s operating fund and collected management service fees is not significant, yet its usage must still be reported at the apartment building Meeting.

Therefore, to pay this large fine, it would require resident consensus to use current funds (excluding the maintenance fund) or to make additional contributions if current funds are insufficient. However, achieving a majority consensus from a large number of residents (such as the 242 households in the Conic Dong Nam A case) to voluntarily contribute a fine amounting to hundreds of billions of dong is nearly impossible.

Thus, although there is a penalty decision and a specific deadline, the probability of the Management Board paying this huge fine is virtually zero, making the purpose of administrative sanction difficult to achieve.

Conclusion

Although the Housing Law 2023 has focused on detailing and concretizing regulations related to apartment building governance and maintenance fund management, due to the specific and complex nature of the Apartment building model, many obstacles still arise in practical application.

From the case at Conic Dong Nam A apartment building, it is evident that the Management Board, state management authorities, and the current legal system all need appropriate adjustments. Regarding the Management Board, although it is merely a representative body and lacks specialized departments for finance and accounting, in reality, it manages large sums of money and conducts many collection and expenditure activities on behalf of residents. Therefore, the Management Board needs to gradually improve its operational capacity towards professionalism, ensuring compliance with legal regulations and internal regulations.

Housing and tax laws also need to add specific regulations guiding invoicing, as well as the declaration and payment of Value Added Tax and Corporate Income Tax for maintenance funds in general and common area revenue in particular. At the same time, tax authorities need to proactively disseminate and provide full and timely guidance to Management Boards, Management Companies, and residents regarding relevant obligations before conducting administrative sanctions. This will not only help improve law compliance efficiency but also ensure feasibility, transparency, and reasonableness in applying penalty sanctions.

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(*) Vilasia Law Firm

[1] Article 103.3, the Housing Law 2014; Article 146.3, the Housing Law 2023.

[2] “Management Board of Conic Dong Nam A apartment building in HCMC fined over VND 119 billion,” dantri.com.vn, https://dantri.com.vn/bat-dong-san/ban-quan-tri-chung-cu-conic-dong-nam-a-o-tphcm-bi-phat-hon-119-ty-dong-20250514110144410.htm (last accessed August 3, 2025).

[3] Article 148.1, the Housing Law 2023 and Article 19.7, Regulation on Management and Use of Apartment buildings.

[4] Article 4, the Law on Value Added Tax 2024; Article 3(e) Decree 181/2025/ND-CP; Article 2.1(dd), the Law on Corporate Income Tax 2008.

[5] Articles 153.4 and Article 155.1, the Housing Law 2023.