By Lawyer Nguyen Nhu Hai – UniLaw LLC

ATTORNEY FOR HOA DISPUTES: A PRACTICAL GUIDE

In the rapidly developing urban landscape of Vietnam, living in apartment complexes has become the norm for millions of residents. However, this transition from traditional landed houses to multi-family dwellings has brought about a complex web of legal issues. Disputes between residents, the Board of Management (HOA), and Developers (Investors) are increasingly frequent, ranging from the mismanagement of maintenance funds to conflicts over common ownership areas. Understanding the legal framework is crucial for any resident or investor navigating these turbulent waters. This guide provides a comprehensive legal analysis based on current Vietnamese regulations and real-world case studies to help parties resolve HOA-related conflicts effectively.

Real-World Conflict: The Golden Palm Apartment Dispute

A prominent example of the complexities involved in HOA disputes is the case of the Golden Palm Apartment in Hanoi, where residents faced a multi-front conflict with the developer, Hanoi Sunrise Investment Joint Stock Company. The dispute erupted in 2019, centered on several critical issues: the developer’s failure to disclose the status of the 2% maintenance fund, delays in granting Ownership Certificates (Sổ hồng), and the unilateral appointment of a management unit without resident consent.

Specifically, the residents discovered that the developer had collected approximately 20.5 billion VND in maintenance fees but had not publically disclosed the bank account details or the management status of these funds, as required by Decree 99/2015/NĐ-CP. Furthermore, nearly a year after moving in, many apartments suffered from severe wall cracks, yet the developer’s response—offering to extend the warranty period to 10 years—was deemed insufficient by the residents who demanded immediate repairs or compensation. Conflict also arose over the use of common areas; the residents alleged that the developer was using two community rooms on the 6th floor as private offices, which is a direct violation of Article 80 of Decree 99/2015/NĐ-CP.

The residents engaged legal counsel from UNILAW to represent them in negotiations. Through a series of formal meetings and the threat of administrative and civil litigation, the developer was forced to provide bank statements for the maintenance fund and committed to a roadmap for the first Homeowners’ Meeting to establish a legitimate Board of Management. This case illustrates that without a legally recognized Board of Management (HOA), residents are often left vulnerable to a developer’s unilateral decisions, and professional legal intervention is frequently required to force compliance with housing laws.

The Foundations of Apartment Management and Use

The primary legal instrument governing these dwellings is the Regulation on Management and Use of Apartment Buildings, issued under Circular 05/2024/TT-BXD. This regulation applies to commercial apartments, social housing, and even multi-story houses with multiple units.

Article 4. Regulation on Management and Use of Apartment Buildings (Circular 05/2024/TT-BXD):

“Apartment buildings must be used according to their designed functions and approved project contents. The management and use of apartment buildings shall be carried out based on voluntary commitments and agreements between the parties but must not violate the law on housing, related laws, and social ethics”.

Layman Explanation: This rule means that you cannot turn your residential apartment into a factory or a noisy shop if it wasn’t designed for it, and while neighbors can make their own rules, those rules can’t break national laws.

Article 4. Clause 3 (Circular 05/2024/TT-BXD):

“Owners and users of apartment buildings must pay maintenance funds, operation management fees, and operational funds for the Board of Management… and other fees to serve the process of using the apartment building according to the provisions of the Law on Housing, this Regulation, and related laws”.

Layman Explanation: Living in a building requires everyone to chip in for the “shared bills” like cleaning, security, and long-term repairs; you cannot simply opt-out of these payments because they are required by law.

Distinguishing Between Private and Common Ownership

A recurring source of HOA disputes is the confusion over what belongs to an individual resident versus what belongs to the building as a whole. This is defined clearly in the sale contracts and the Law on Housing.

Clause 8. Sample Contract Ia (Decree 96/2024/NĐ-CP):

“‘Private ownership of the Buyer’ is the area inside the apartment, the area inside other parts of the apartment building (if any), and technical equipment for private use attached to the apartment or other areas… recognized as the private ownership of the Buyer according to the provisions of the law on housing”.

Layman Explanation: This is everything inside your four walls and the specific pipes or wires that only serve your flat. You own this part exclusively.

Clause 10. Sample Contract Ia (Decree 96/2024/NĐ-CP):

“‘Common ownership of the apartment building’ is the remaining area of the apartment building outside the areas under the private ownership of the owners… including areas, equipment systems, technical infrastructure systems, and public works”.

Layman Explanation: This covers the elevators, hallways, roof, and structural columns. Since everyone owns them together, no single person (or the developer) can claim them for private use without the group’s permission.

Disputes often arise regarding parking areas. Under Article 13 of the Management Regulation, parking for bicycles and motorbikes generally belongs to the common ownership of the residents. However, parking spaces for cars are treated differently: the developer may choose to sell or lease these spaces to residents. If the developer does not sell them, they remain under the developer’s management, but the costs to build these spaces cannot be included in the sale price of the individual apartments.

The Crucial Role of the Maintenance Fund (2%)

The “2% fund” is perhaps the most litigated topic in Vietnamese real estate. Every buyer pays 2% of the apartment value (before VAT) into this fund for long-term maintenance of common areas.

Article 36. Lập, bàn giao và quản lý kinh phí bảo trì (Circular 05/2024/TT-BXD):

“The Board of Management of the apartment building shall open an account at a credit institution… to manage and use the maintenance fund for the common ownership of the entire apartment building”.

Layman Explanation: Once the residents elect their own “government” (the Board), the developer must hand over the big pot of repair money to a special bank account that the Board controls.

Problems occur when the developer refuses to hand over this fund. In such cases, the law provides for a strict enforcement mechanism. Under Article 88 of Decree 95/2024/NĐ-CP, if a developer fails to transfer the fund within the required time, the District People’s Committee has the power to issue a “coercive decision”. The authorities can instruct the bank to freeze the developer’s business accounts and forcibly transfer the money to the HOA’s account. If there is no money in those accounts, the authorities can even seize and auction the developer’s assets to recover the maintenance fund.

Governance: The Homeowners’ Meeting and the Board

The Homeowners’ Meeting (Hội nghị nhà chung cư) is the “parliament” of the building. For buildings with multiple owners and more than 20 apartments, the developer is responsible for organizing the first meeting to elect a Board of Management (BOM).

Article 15. Homeowners’ Meeting for the First Time (Circular 05/2024/TT-BXD):

“The first meeting of the apartment building shall be organized when there are at least 50% of the apartments delivered (including apartments the developer keeps for itself)… In case the developer has delivered over 50% of the apartments but fails to organize the meeting within 12 months, the Commune People’s Committee shall organize it”.

Layman Explanation: The developer has a one-year deadline to set up the resident board once half the building is occupied. If they drag their feet, the local government can step in and run the meeting for the residents.

Voting power at these meetings is not “one person, one vote.” Instead, it is based on the size of the apartment. Article 18, Clause 3 states: “The right to vote… is calculated based on the area of private ownership… 1 square meter of private ownership area is equivalent to 01 vote”.

Layman Explanation: This means if you have a 100sqm flat, your vote is twice as powerful as someone in a 50sqm flat, because you contributed more to the building’s funds.

The Board of Management itself has significant responsibilities, including signing contracts with management units, supervising maintenance work, and managing the 2% fund. Members of the Board are required to participate in legal and professional training courses within three months of being recognized.

Management Units and Service Fees

The day-to-day operation of a building—cleaning, security, and technician services—is handled by a Management Unit (Đơn vị quản lý vận hành). The HOA Board selects this unit and signs a service contract.

Article 30. Kinh phí quản lý vận hành (Circular 05/2024/TT-BXD):

“Management fees are calculated by the service price multiplied by the usable area of the apartment… even in cases where the owner has received the apartment but has not yet used it”.

Layman Explanation: You have to pay the monthly service fee based on your flat’s size from the moment you get the keys, even if the flat is sitting empty or you haven’t moved in yet.

Conflict often arises when residents feel the service quality does not match the price. Article 43 allows the HOA to periodically report on the management unit’s performance and, if necessary, the Homeowners’ Meeting can decide to replace the unit or adjust the fees.

Common Causes of Legal Action in HOA Disputes

Based on the sources, several “hot zones” frequently lead to lawsuits:

1. Warranty Breaches: Developers are obligated to repair structural defects (beams, columns, floors, roofs) for a specific period (minimum 24 months for general houses, but often longer for apartment structures). If a developer ignores a resident’s notice of damage, they must compensate for any actual losses incurred.
2. Handover Delays: If a developer is late in handing over an apartment, they usually must pay a penalty based on a percentage of the amount the buyer has already paid.
3. Infrastructure Discrepancies: Like the Golden Palm case, developers sometimes promise parks or gyms that never materialize. Residents have the right to refuse handover if essential infrastructure is not completed as per the approved project.
4. Misuse of Common Areas: Renting out the lobby for kiosks or using community rooms as developer offices is illegal.

The Practical Roadmap to Resolution

When a dispute arises, residents should follow this legal hierarchy:

1. Negotiation and Internal Mediation:

Parties should first attempt to resolve the issue through the Board of Management or by requesting a meeting with the Developer. Decisions of the HOA board that exceed their authority are legally void, and members may be liable for damages.

2. Administrative Petitions:

If the developer is violating safety codes or refusing to hold meetings, residents can petition the Commune or District People’s Committee. These bodies have the authority to organize meetings or enforce maintenance fund transfers.

3. Civil or Commercial Lawsuits:

For financial claims, such as the return of a deposit or compensation for construction damage, the matter is brought to the People’s Court.

Article 44. Clause 1 (Circular 05/2024/TT-BXD):

“Disputes over operation management fees, and the handover, management, and use of the maintenance fund shall be settled by the District People’s Committee where the apartment is located, or by the Court or Commercial Arbitration according to the law”.

Layman Explanation: If the fight is over money or who gets to hold the big repair fund, you can go to the local district government for help, or you can sue in court or go to a private business arbitrator.

Why You Need a Specialist HOA Attorney

Navigating these regulations requires technical and legal precision. For example, calculating the “usable area” (thông thủy) for fee purposes must follow specific standards: measuring from the inner surface of the walls and excluding columns or technical boxes. A lawyer helps by:

• Auditing the 2% Fund: Ensuring every penny collected is accounted for and hasn’t been “borrowed” by the developer for other projects.
• Reviewing Management Contracts: Preventing the Board from signing “sweetheart deals” with low-quality management companies.
• Representing HOA in Court: HOA Boards are often sued by developers for allegedly interfering with business; a lawyer provides a robust defense.
• Managing Dismissal Procedures: If a Board member is corrupt or inactive, a lawyer ensures the dismissal follows Article 26 (dismissal for non-performance or financial violations) to avoid a countersuit.

In conclusion, while living in a modern apartment offers many benefits, it requires active participation in the building’s governance. By understanding your rights regarding ownership, the maintenance fund, and the power of the Homeowners’ Meeting, you can protect your investment. When disputes become too complex for informal resolution, seeking professional legal counsel is the most effective way to ensure that the rule of law prevails over corporate or individual interests.