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Case study: a five-year condominium management fee dispute — limitation, fee levels and reconciliation lessons

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Case study: a five-year condominium management fee dispute

Management fees go up, residents disagree, arrears accumulate over years and end up in court — one of the "classic" disputes in Vietnamese condominiums. This guide sets out the legal framework for condominium management fees: who sets the fee level, how limitation periods apply to multi-year debts, and how parties should handle disputes — illustrated with a hypothetical scenario.

The illustrative scenario in this article is hypothetical, constructed to clarify the legal issues — it does not describe any real case and states no real names, amounts or outcomes.

Contents

Condominium management and use now follows:

  • Housing Law 2023 (No. 27/2023/QH15, effective 01/08/2024): rules on condominium management and use; management and operation funding; the condominium conference.
  • Decree 95/2024/ND-CP: detailing the Housing Law.
  • Circular 05/2024/TT-BXD (effective 01/08/2024): guiding the Housing Law, repealing Circular 02/2016/TT-BXD.

A common error to avoid: citing Circular 02/2016/TT-BXD in legal arguments today — that instrument has expired.

2. Who sets the management fee level?

The principle: the service price for condominium management and operation is decided by the condominium conference based on the parties' proposals and recorded in the management contract (Article 151 of the Housing Law 2023). The condominium conference is the community's highest authority over the building's common matters.

Specifically, Article 151 of the Housing Law 2023 provides: before the first condominium conference convenes, the management service price follows the sale/hire-purchase contract; after the conference has been held, the price is agreed and jointly decided by the management operator and the condominium conference. The provincial People's Committee issues the service price framework under Clause 3, Article 59 of Decree 95/2024/ND-CP.

Practical consequences:

  • The management company may not unilaterally raise fees by internal notice. Fee increases lacking a valid conference resolution give residents grounds to challenge.
  • Conversely, a conference resolution adopted through a valid convening and voting procedure binds all residents — including absentees and dissenters.
  • During the developer-managed phase before the management board is established, the fee level follows the sale contract; once the condominium conference convenes, decision-making authority passes to the conference.

3. Multi-year arrears: how limitation periods work

Article 429 of the Civil Code 2015 sets a three-year limitation for filing contract disputes, running from when the claimant knew or should have known of the infringement.

For fee obligations arising monthly, each instalment is an independent obligation with its own due date — so limitation is assessed per instalment. Practical consequences when suing over five years of arrears:

  • Instalments due more than three years before filing risk being time-barred if the defendant invokes limitation.
  • Limitation can restart in the cases Article 157 of the Civil Code 2015 provides: the obligor acknowledges part or all of the obligation (e.g. a resident's repayment commitment), performs part of it, or the parties settle with each other. Note: a unilateral reminder letter from the management company — without any acknowledgment or performance by the resident — does not automatically restart limitation.
  • The precise computation (per-instalment vs whole-debt) needs counsel's case-by-case assessment.

The lesson for management companies: don't let arrears exceed three years before acting. Periodic written reminders, reconciliations and timely filing (when negotiation fails) are essential. The lesson for residents: don't assume "five years of debt simply vanishes" — instalments within limitation remain fully claimable.

4. May residents refuse to pay over poor service?

Not automatically. The law does not allow residents to unilaterally stop paying merely because they consider service poor — the payment obligation arises from the contract and conference resolutions. But substandard service supports:

  • (i) demands for remediation and corresponding fee reductions;
  • (ii) a conference decision to terminate the manager and appoint another;
  • (iii) damages claims.

All of these require evidence: signed incident minutes, photos, written complaints — not mere verbal grievances. Unilateral non-payment only weakens residents' position when sued.

5. A path for resolving fee disputes

Step 1: Full reconciliation. Collect: all condominium conference resolutions over the years, the management contract and appendices, fee-increase notices, operating-fund financial statements, handover minutes between boards. Build a month-by-month schedule across the arrears period: which fee level applied in each month, under which resolution; flag instalments at limitation risk.

Step 2: Negotiate on real figures. With classified figures, the parties negotiate on facts rather than feelings: remove increase portions lacking valid resolutions and instalments at limitation risk; residents commit to a payment plan for the grounded remainder; both sides agree on service monitoring and periodic financial disclosure.

Step 3: Mediation. Grassroots mediation may be sought. Successful mediation agreements should be put in writing with clear instalment terms.

Step 4: Litigation. Where negotiation and mediation fail: the management company sues for arrears; residents sue to invalidate unlawful fee increases or remove non-performing boards. Watch limitation periods and the burden of proof.

6. Illustrative hypothetical scenario

Suppose a condominium where: the conference once set the management fee level; years later the manager raised charges citing cost increases but without conference approval; some residents disagreed and stopped paying, with arrears running five years; the manager sued. Applying the framework above:

  • Issue 1: is the increase valid? Without a valid conference resolution, the increased portion is hard to defend; but residents still owe the base fee under the earlier resolution.
  • Issue 2: how much of five years' arrears is recoverable? Instalments due more than three years back risk being time-barred if limitation is invoked; whether any resident acknowledgment or partial payment restarted limitation under Article 157 of the Civil Code 2015 needs review document by document.
  • Issue 3: residents cite poor service? Minutes, photos and written complaints are needed; verbal complaints alone don't ground fee reductions or set-offs.

This illustrates the method of analysis; each real case has its own evidence and circumstances.

7. Recommendations for residents

  • Disagree with the fee level: express it through the condominium conference; don't unilaterally stop paying everything — the valid portion keeps accruing and may attract late-payment interest.
  • Attend conferences and vote; seek legal remedies promptly against procedurally flawed resolutions.
  • Keep payment receipts and the manager's fee notices.
  • When sued for arrears: review limitation defences, reconcile each instalment and consult counsel.
  • Convert service frustration into proper legal action: written complaints, incident minutes, extraordinary meetings, voting to replace the manager.

8. Recommendations for management companies

  • Every fee adjustment must go through condominium conference procedure; keep complete meeting notices, attendance sheets and voting records.
  • Build a periodic written reminder process to interrupt limitation.
  • Act legally once arrears pass a threshold — don't wait five years to file once.
  • Publish fee schedules and service content transparently — the "vaccine" against disputes.
  • Keep the arrears ledger clean, separating principal, late-payment interest and penalties — sloppy accounting undermines credibility in negotiation and in court alike.

sloppy accounting undermines credibility in negotiation and in court alike.

Management companies should also diarise limitation deadlines: a simple quarterly report flagging instalments approaching the three-year mark, with escalation to counsel before they expire, costs almost nothing and preserves the most valuable part of the arrears book.

9. The management board's role and liability

Between the condominium conference (which meets periodically) and the management company (which operates daily) stands the management board (Ban quản trị) — the body that makes or breaks condominium governance.

Election and standing. The board is elected by the condominium conference and represents the owners in dealings with the management company and third parties. It holds and manages the operation and maintenance fund, signs the management contract and supervises its performance.

Core duties. Convening conferences (ordinary and extraordinary); supervising the management company's service quality; disclosing fund income and expenditure; maintaining common property; and enforcing conference resolutions. A board that never meets, never discloses and never inspects is failing its legal function regardless of good intentions.

Liability for mismanagement. Misuse or embezzlement of the operation fund can trigger civil liability and, in serious cases, criminal liability. Owners who suspect misconduct should first demand written explanations and financial records; if refused, they may call an extraordinary conference to remove the board and may report to competent authorities. Courts and authorities expect owners to have attempted internal remedies before escalating.

Practical safeguards. Boards should adopt internal financial rules: dual signatories for fund disbursements above a threshold, competitive selection for major repair contracts, periodic independent audits of the fund, and public posting of quarterly statements. Transparency is the board's best defence — most "fund abuse" scandals begin with opaque bookkeeping rather than proven theft.

10. FAQs

Who decides the condominium management fee level? The service price for condominium management is decided by the condominium conference based on the parties' proposals and recorded in the management contract (Article 151 of the Housing Law 2023; the provincial fee framework under Clause 3, Article 59 of Decree 95/2024/ND-CP). The manager may not unilaterally raise fees outside the contract.

Can five years of unpaid management fees still be claimed? It depends on the limitation period for each fee instalment. Article 429 of the Civil Code 2015 sets a three-year limitation for contract disputes; how it applies to monthly recurring fee obligations needs case-by-case assessment by counsel.

May residents refuse to pay because of poor service? Poor service supports claims for fee reduction, contract termination or damages — but does not automatically erase the payment obligation. Residents should document issues in writing rather than unilaterally stop paying.

Which regulation currently governs condominium management? Circular 02/2016/TT-BXD was repealed by Circular 05/2024/TT-BXD (effective 01/08/2024). Condominium management now follows the Housing Law 2023, Decree 95/2024/ND-CP and Circular 05/2024/TT-BXD.

Facing a similar situation?

Condominium fee disputes always turn on specifics: which resolution, which instalment, which reminder — each detail affects the outcome. FLAT Law Firm advises and represents residents, management boards and management companies in fee disputes: from reviewing conference procedures and reconciling accounts to negotiation and litigation. Call our hotline 0988424851 for advice on your specific situation.

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References

  • Housing Law 2023 (No. 27/2023/QH15).
  • Civil Code 2015 (No. 91/2015/QH13), Article 429.
  • Decree 95/2024/ND-CP.
  • Circular 05/2024/TT-BXD.