Investor’s failure to hand over maintenance funds: How is compulsory enforcement applied?

An investor’s failure to hand over apartment building maintenance funds is a dispute that arises frequently in the practice of managing and operating condominium buildings in Vietnam. In reality, many investors delay or fail to fulfill their obligation to transfer the maintenance fund, directly infringing upon the rights of apartment owners to manage and use the common areas of the building. The article below, published by TNTP, analyzes the current legal regulations governing compulsory enforcement measures for the handover of maintenance funds from investors.

1.Who manages apartment maintenance funds?

The maintenance fund for the common ownership portions of a condominium building is from mandatory contributions made by apartment owners. Pursuant to Clause 1, Article 152 of the Law on Housing 2023, the investor (“Investor”) is responsible for collecting and managing the maintenance fund for the common areas during the initial stage. This maintenance fund is calculated as 2% of the value of the apartment or other sold or lease-purchased areas, or the areas retained by the Investor, in accordance with Article 152 of the Law on Housing 2023.

After the Condominium Management Board (“Management Board”) is established, under Clause 2, Article 153 of the Law on Housing 2023, the Investor is obligated to hand over the entire maintenance fund to the Management Board. From that point onward, the Management Board officially becomes the entity responsible for managing and using the maintenance fund to carry out maintenance and repair activities for the building’s common areas.

If the Investor fails to transfer the maintenance fund within the prescribed time limit, the Management Board has the right to request the competent authority to apply compulsory enforcement measures. Under Clause 3, Article 12 of Decree No. 140/2025/NĐ-CP (“Decree 140”), responsibility for organizing the compulsory enforcement of the handover of maintenance funds for condominium common areas currently lies with the People’s Committee at the commune level (“Commune People’s Committee”).

2.Compulsory enforcement from the investor’s common account

Compulsory enforcement from the Investor’s common account applies in cases where apartment purchasers, lease-purchasers, and the Investor deposited the maintenance funds for common ownership portions into the same account of the Investor before the effective date of the Law on Housing 2023.

Based on Article 88 of Decree No. 95/2024/NĐ-CP dated July 24, 2024, guiding the Law on Housing (“Decree 95”), and Clause 3, Article 12 of Decree 140, the Management Board submits a written request to the Commune People’s Committee where the condominium is located, requesting that the Investor hand over the maintenance fund. Within a maximum of 15 days from receipt of the request, the Commune People’s Committee will conduct a review and issue a written request requiring the Investor to transfer the maintenance fund to the Management Board.

If the Investor still fails to hand over the maintenance fund after this period, the Management Board may submit a written request asking the Commune People’s Committee to issue a decision on compulsory recovery of the maintenance fund for transfer to the Management Board. This decision is sent to the credit institution where the Investor’s common account is opened, requiring the direct transfer of funds to the Management Board’s account.

3.Compulsory enforcement from a maintenance fund account established by the investor

Compulsory enforcement from a separate maintenance fund account applies where apartment purchasers, lease-purchasers, and the Investor deposited maintenance funds into a payment account other than the common account prescribed in Clause 1, Article 87 of the Law on Housing 2023.

Pursuant to Article 89 of Decree 95 and Clause 3, Article 12 of Decree 140, if the Investor fails to hand over the condominium maintenance fund after receiving a written request from the Commune People’s Committee, compulsory enforcement will be carried out through the relevant credit institution. Within 15 days from receipt of the enforcement decision, the credit institution managing the Investor’s account is required to transfer the entire balance of that account to the account established by the Management Board for management and use in accordance with the law.

After the transfer is completed, the credit institution must provide written notice to the Commune People’s Committee, the Management Board, and the provincial-level housing management authority, and simultaneously close the maintenance fund account opened by the Investor to prevent any unauthorized transactions.

4.Compulsory enforcement from the investor’s business operation account 

Compulsory enforcement from the Investor’s business operation account applies where the Investor’s common account has no funds, or the remaining balance is insufficient to be handed over to the Management Board.

Based on Article 90 of Decree 95 and Clause 3, Article 12 of Decree 140, the enforcement process begins with the Management Board requesting that the competent authority impose administrative penalties on the Investor in accordance with the laws governing the handling of administrative violations in the fields of construction, housing, and real estate business.

If, within a maximum of 10 days from the issuance of the penalty decision, the Investor still fails to hand over the maintenance fund, the Management Board has the right to request the Commune People’s Committee to conduct an inspection and require the credit institution to provide information on the Investor’s business operation accounts and the balances therein.

Based on the information provided by the credit institution, the Commune People’s Committee issues a written request requiring the credit institution to transfer the maintenance fund amount that the Investor is obligated to hand over from the business operation account to the Management Board’s account, thereby safeguarding the lawful management rights over the condominium’s common ownership.

If the Investor has not paid, or has paid an insufficient amount of, the maintenance fund, the competent authority may continue to apply coercive measures such as seizure and auction of assets.

5.Compulsory seizure and auction of the investor’s assets

Compulsory seizure and auction of the Investor’s assets is the final measure applied when all the compulsory enforcement methods has been implemented but the Management Board still has not received the full amount required under Article 153 of the Law on Housing.

Pursuant to Article 91 of Decree 95 and Clause 3, Article 12 of Decree 140, the seizure and auction of the Investor’s assets are carried out as follows:

• The Management Board submits a written request to the Commune People’s Committee for the compulsory seizure and auction of the Investor’s assets to recover the maintenance fund for the common ownership portions.
• The enforcement of fund handover or asset seizure is conducted in accordance with laws on enforcement of administrative penalty decisions and laws on asset seizure.
• The Commune People’s Committee may only seize housing areas, land, or other assets with a value equivalent to the maintenance fund amount to be recovered plus the costs of organizing enforcement and auction activities.
• The auction of assets to recover the maintenance fund is carried out in accordance with the laws on asset auction.

The proceeds from the auction are prioritized for transfer to the Management Board as the maintenance fund for the condominium’s common ownership. Any remaining balance, if any, is returned to the Investor in accordance with legal procedures.

In summary, an Investor’s failure to hand over condominium maintenance funds may result in the application of compulsory enforcement measures ranging from recovery from common accounts, maintenance fund accounts, and business operation accounts to the seizure and auction of assets. Seizure and auction of the Investor’s assets represent the most severe enforcement measure and is only applied when monetary enforcement through the Investor’s accounts at credit institutions is insufficient to recover the full maintenance fund as required by law.

The above is TNTP’s article on the topic “Investor’s Failure to Hand Over Maintenance Funds: How Is Compulsory Enforcement Applied?” We hope this article is helpful to our valued readers. Should you require any assistance, please do not hesitate to contact TNTP.

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