When residents disagree with a service fee increase: Who has the right to adjust the apartment building’s service fees?

In the practical management and operation of apartment buildings, disputes related to increases in management and operation service fees are one of the most common conflicts between residents, the management board, and the management company. Many cases involve residents strongly opposing fee increases, arguing that the adjustments are arbitrary, lack transparency, or were made without consensus. The question arises: Who has the right to determine the apartment building service fee? What legal principles and procedures must be followed when adjusting the fee? In this article, TNTP will analyze current legal regulations to clarify the authority to decide and the mechanism for adjusting apartment building service fees, thereby helping the parties correctly identify their rights and obligations and minimize disputes in practice.

1.The concept of apartment service fees

• Apartment building service fees are the fees for the management and operation of apartment buildings, paid by owners and occupants of apartments or other areas within the building to control, maintenance, and regular inspection of common building amenities such as fire safety equipment, generators, cleaning, security, elevator operation, common area lighting, landscaping, technical management, and other related services to ensure the normal functioning of the apartment building.

According to Clause 2, Article 151 of the Law on Housing 2023, apartment service fees do not include: fire and explosion insurance; maintenance and parking fees; energy and water costs; information and television services; management board fees; and other service fees for the private use of apartment owners and users.

• According to Article 30 of Circular No. 05/2024/TT-BXD, the fee for the management of apartment buildings is paid monthly or periodically to the management and operation unit to perform the work as agreed upon by the parties in the contract.

The fee is calculated based on the unit price of management and operation services per square meter (m²), whereby the amount payable is determined by multiplying the unit price per m² by the usable area of ​​the apartment or other area within the apartment building. For apartment buildings that are public assets, the service fee framework is regulated by the Provincial People’s Committee.

Apartment building service fees are a source of funding that ensures the continuous, safe, and stable management and operation of the apartment building.

2.Who has the authority to determine the service fees for the apartment building?

According to Article 145 of the Law on Housing 2023, for apartment buildings with multiple owners, the Apartment Building Conference has the authority to decide on important issues related to the management and use of the apartment building, including the management and operation service fee. However, there are many cases where the Apartment Building Conference has not been held or does not meet the conditions for holding it; therefore, the determination of the service fee will comply with the provisions of Clause 3, Article 151 of the Law on Housing 2023 as follows:

• For apartment buildings that have not yet held the first Apartment Building Conference: Service fees are determined according to the agreement in the apartment purchase or lease-purchase contract between the developer and the residents.
• For apartment buildings that have already held an Apartment Building Conference: Service fees are determined according to the agreement and consensus between the Apartment Building Conference and the management and operation unit.

Therefore, based on the above regulations, the Apartment Building Conference has the right to negotiate and decide on the service fees. After reaching an agreement, the management board will represent the owners in signing a management and operation service contract with the management and operation service provider.

3.Is resident consent required for any increase in service fees?

• Since service fees are determined by agreement between the management company and the apartment building conference, any increase in service fees will also be determined by agreement. This agreement may be included in the initial service contract or supplemented during the contract’s performance, based on a valid resolution of the apartment building conference.

Any increase or adjustment of service fees must be approved by residents through the apartment building conference in accordance with the procedure. An increase in service fees can be included in the management service contract from the outset or considered and approved during the contract’s performance when adjustment.

Therefore, during the negotiation and conclusion of the management service contract, residents should pay particular attention to the clauses regarding fee levels, fee adjustment principles, timing and conditions of adjustments, as well as the procedure and authority for approving fee increases.

In conclusion, any increase in service fees must be made by agreement between the parties or approved by the apartment building conference in accordance with proper procedures.

4.What should residents do when their apartment building increases service fees?

• If the parties have not agreed on fee adjustments but the management unit or the Management Board arbitrarily increases service fees, this action may be considered a breach of the service agreement or an overstepping of the Management Board’s authority. In such cases, residents have the right to request apartment building conference, file a complaint with a state agency, or initiate legal action to protect their legitimate rights and interests.
• However, if the fee increase plan or adjustment mechanism has been duly approved by the condominium owners’ meeting and has been recorded in the service contract, then the subsequent disagreement or opposition of some residents to the application of the agreed-upon fee level does not invalidate the resolution or contract that was properly approved. In that case, failure to fulfill the obligation to pay service fees may be considered a breach of agreement. Residents who continue to obstruct or hinder management and operation activities based on unfounded objections may also be subject to penalties for violations and compensation for damages (if any).

Therefore, residents need to use appropriate measures to protect their legitimate rights and interests. At the same time, they must respect the resolutions and agreements that have been duly passed.

5.Some legal considerations to minimize disputes

To minimize disputes arising from apartment service fees, adjustments to these fees must be made transparently, in accordance with legal regulations and agreements between the parties. First and foremost, any proposed fee increase must be publicly disclosed, and based on actual work performed, allowing for mutual agreement and consensus among all parties.

Furthermore, the Management Board must consult with residents, organize apartment building conferences according to the authority, procedures, and conditions stipulated by law, ensuring that any service fee increase is legally approved before implementation.

Adjustments to apartment service fees cannot be made unilaterally but must be based on an agreement between the parties and the consensus of the resident community. Therefore, to minimize disputes, all parties must ensure transparency, adhere to proper procedures, and respect the decision-making role of the apartment building conference to ensure stable management and operation of the apartment building.

The above is the article “When residents disagree with service fee increases: Who has the right to adjust apartment service fees?” that TNTP has sent to our readers. We hope this article is useful for those interested in this issue.

Sincerely,