New regulations on management and use of apartment buildings

Circular no. 06/2019/TT-BXD (“Circular 06”), which was promulgated by Ministry of Constructions and will enter into force on 1st of January, 2020, has amended and supplemented several regulations in the Regulation on management and use of apartment buildings (“Regulation”) under Circular no. 02/2016/TT-BXD (“Circular 02”) dated on 15th of February, 2016.

New regulations on management and use of apartment buildings

Accordingly, Circular 06 has clarified the regulating scope of the Regulation under Circular 02 to include apartments, condominium & hotel (condotel) and office & hotel (officetel).

1. Apartment Maintenance Fund transparency

Regarding Law on Housing 2014, the buyers, the hire purchase buyers shall pay 2% of apartment value for the maintenance expenditures of the shared areas of apartments (before tax) at the handover. Therefore, Apartment Maintenance Funds are usually high in value. That situation causes to the event of irrecoverable misappropriation of maintenance expenditures.

Circular 06 has also set forth the solutions to reorganize the consumption of apartment maintenance expenditures in a publicity and transparency manner, specifically:

  1. Deposit account for expenditures on maintenance of mixed-use apartment buildings is co-owned by the minimum of 03 members of Management Board of apartment building (“Management Board”) and the maximum number of members shall be approved by the apartment building meeting;
  2. Members to co-own this deposit account includes at least: 01 owner of apartment building area; 01 owner of the other functional area (if any); 01 representative of apartment building investor (if any); and other members as per apartment building meeting’s decision (if any);
  3. The Management Board shall publicly notify at the apartment building meeting on the information about the established deposit account for expenditures on maintenance, which must remain unchanged, and the notices regarding the consumption of the expenditures on maintenance must be published on the notice board every 06 months (if any);

Decisions on maintenance of shared area of apartment block/apartment complex made by Management Board of the apartment block/apartment complex shall be approved by at least 75% of the total number of members of the Management Board (current regulation being 100%).

2. First apartment building meeting

  1. Requirements for number of people attending the first apartment building meeting regulated under Circular 06 is at least 50% of apartments/representatives of owners of hand-over apartments to attend, instead of 75% as regulated per current Regulation;
  2. If the attendance for the meeting remains insufficient according to the law, within 07 working days from the date of meeting recorded on the notified invitations, the investor or representative of apartment owners shall suggest in writing to the People’s Committee in ward levels, where the apartment building is located (hereinafter referred as the People’s Committee of ward), instead of the second summoning as regulated under Circular 02;
  3. The People’s Committee of ward will bear responsibilities to organize the first apartment building meeting, if the investor terminated its operation due to the event of liquidation or bankruptcy in accordance with the law;
  4. Rights to vote at apartment building meetings are based on the areas of individual ownership of apartment owners, owners of other individual-owned areas in the apartment buildings regarding the rule of 1m2 of individual-owned area equivalent to 1 vote.