Will new rule eliminate "chaos" of maintenance fee disputes?

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Controversy about investors voluntarily using the maintenance fee and late handing over the maintenance fee of the building to the Management Board has caused more disputes in apartment projects. Photo: ST

Terminate arbitrary use of maintenance fee

To prevent investors from arbitrary use of the maintenance fee in apartment projects, the Ministry of Construction is revising Decree 99/2015/ND-CP detailing and guiding the implementation of some articles of the Housing Law.

According to the Ministry of Construction, based on the provisions of Decree 99, investors must set up an account for apartment buyers and tenants to pay 2% of the maintenance of the apartment building. However, in reality, there are some cases in which investors voluntarily used this account before handing it over to the Management Board, leading to difficulties in the settlement and recovery of this fund to hand it to the Management Board.

Moreover, according to the current regulations, apartment buyers have to directly pay the maintenance fee to the account stated in the contract or submit it to the investor for the investor to transfer it into the maintenance budget account. However, the regulation of the two forms of payment above also leads to the fact that the investor has used this fund before handing it over to the Management Board, leading to difficulties in handover.

To end this situation, according to the Ministry of Construction, it is necessary to remove the regulation on the form of direct payment to investors. Furthermore, some localities suggested that in the revised Decree, it is necessary to specify the maintenance budget account as a "closed" account, the investor is not allowed to use it until it is handed over to the Management Board. Accordingly, the Ministry of Construction proposed investors set up a specialized capital account for buyers, tenants, and investors to pay 2% of the maintenance fee into this account. This modification ensures that the specialized capital account is implemented as a "closed" account, investors cannot arbitrarily use it for other purposes. At the same time, the Ministry of Construction proposed to provide a way for apartment buyers to pay directly into the account for the maintenance of shared portions of the apartment building and remove the regulation to pay directly to investors.

The amendment is expected to remedy the situation in which investors have full control over the maintenance budget, leading to abuse of this fund, causing fierce disputes in many apartment projects.

According to Nguyen The Diep, Hanoi Real Estate Club, if the proposal to set up a closed account for residents to pay 2% of the maintenance fund, then hand over the maintenance fund to residents is implemented, it will be a good solution to ensure interests of buyers, a good step in building an apartment management process, reducing complaints and disputes over the maintenance fund of the apartment building as in the past.

Regarding this issue, Nguyen Minh Tuan, Chairman and General Director of VietBuildings Co., Ltd., said up to now, apartment buyers have paid the maintenance fee directly to investors. Meanwhile, the maintenance fund of large projects can be up to several hundred billion VND, for example, Times City project (VND600 billion) and Royal City (more than VND400 billion). For small projects, the maintenance fee can be from VND5-10 billion. Therefore, it will be difficult to avoid the desire to appropriate the capital, causing disputes in the management process.

“The positive part of the draft amendment is forcing investors to set up a separate account for the maintenance fee, bank designation and no cash payment regulations. In the detailed guidance circular, it is necessary to clearly stipulate the sanctions for blocking that account to avoid appropriation as before,” said Tuan.

Drastic measures for slow handover of the fund

Regarding the shortcomings in the handover of the maintenance fee, the Ministry of Construction also mentioned problems related to the case of the investor's property disposal to recover the maintenance cost for the Management Board. The Ministry of Construction said that according to current regulations, in the decision to enforce the withdrawal, the provincial People's Committee must clearly state the measures to handle the property. However, during implementation, localities encountered problems because they did not know how to handle the property, which made it difficult to force the handover of the maintenance fund to the Management Board.

Accordingly, within three days from the date of receiving the decision on enforcement from the provincial People's Committee, the credit institution that is managing the deposit account for apartment building maintenance or other investor's accounts under the enforcement decision will transfer the fund to the account established by the Management Board to manage and use it in accordance with the law on housing and the enforcement decision. In case the investor's property must be handled to recover the maintenance cost for the Management Board, the provincial People's Committee will sanction the administrative violation for the investor's failure to hand over the maintenance fee according to the regulation. In the decision to sanction the administrative violation, it must clearly state the investor's measure of distraining the property for auction in accordance with the law on property auction to recover the maintenance fund to the Management Board.

According to experts, this proposal is a drastic measure by the Ministry of Construction to effectively deal with the fact that investors are slow to return the maintenance fund to the Management Board. Nguyen The Diep stated that property auctions are a tough, drastic and necessary solution to ensure interests of apartment buyers, creating a healthy real estate market and ensuring the integrity of the law. However, this expert also noted that the property enforcement and property auction was just a temporary solution, the implementation would not be simple. Account blockade was a more viable solution.

According to Truong Anh Tu, Chairman of TAT Law firm, this measure is new, demonstrating the determination of lawmakers to recover the maintenance fee of apartment buildings from investors who violated the law. However, practical application can face difficulties. Because, in fact, the implementation of this content has not been effective in the past. The reason is that credit institutions or tax authorities do not provide information and cannot determine whether the investor's account has money or not. This results in an enforcement decision being irrevocable or a very small amount recovered.

“The strong handling related to the enforcement of this property may cause a reaction from investors. However, this is a necessary regulation to prevent and solve the investor's violations against the people in the management of apartment buildings,” said Tu.