How to Distinguish Owners' Committees from Management Boards

According to Clause 3, Article 3 of the Law on Housing 2014: "An apartment building is a property of two or more levels with multiple apartments, public stairways and hallways, private and common areas and a common infrastructure system for households, individuals and organisations. Apartment buildings can be purely residential or mixed-use with residential and commercial aspects."

1. Management Board:

This is the agent selected by the developer and/or owners’ committee to run daily operations at an apartment building.

According to the Law on Housing 2014, projects with more than 20 apartments must have a management board with the appropriate legal standing and business seal. Members of the Board must have multi-disciplinary expertise in fields such as human resources, technical systems, security or environmental sanitation to ensure the correct services and procedures are being carried out. Usually, these teams will comprise key members like a property manager (PM), assistant property manager (APM) and chief engineer (CE).

The rights and responsibilities of the Management Board are specified in Article 42 of Decree 05/VBHN-BXD, dated 07 September 2021. Management boards must:

• Deliver management and operational services according to the regulations and property management service contract signed with the respective owners’ committee or representatives (for apartment buildings without a committee).
• Perform maintenance on the common areas of the apartment building according to the maintenance contract.
• Source and manage any third-party contractors and service providers such as cleaning companies or security guards.
• Collect and document the collection and payment of relevant funds. These records must be transparent and all stakeholders should receive relevant receipts and financial reports.
• Keep residents informed on how to respond to emergencies such as natural disasters, epidemics, and fires,
• Manage the installation of equipment.
• Collect fees for management services and keep relevant records.
• Deliver public reports at least every six months or at the request of the authorities on the management of the apartment building. They must also provide management reports at owners’ committee meetings and collect feedback from residents.
• Coordinate with the owners’ committee to solve any operational issues.
• Abide by and implement relevant laws and regulations.

For issues that the management board does not have the authority to solve, they will play a supporting role in finding a resolution.

2. Owners’ Committee:

According to the Law on Housing 2014, an owners’ committee is a self-governing model. Owners’ committees in apartment buildings operate like the board of directors of a joint-stock company or a cooperative; they have legal status and a seal and must exercise certain rights and responsibilities specified in the law.

These groups have a three-year term and elections are held in the last year of the term if there are circumstances that require a reelection before the term is over. Owners’ committees have operating funds that are specified in the regulations and are managed through an active account. They must use funds appropriately and for the upliftment of the community at large. Revenue and expenditure must be reported at the AGM.

For single apartment blocks, committees usually comprise three to five people. For apartment complexes with many blocks such as NAME A FEW THAT WE ACTUALLY MANAGE, committees are between 6 and 25 people. For the first owners’ committee meeting, at least 70% of the households must attend the election. In the second meeting, more than 50% of households must attend if committee members are elected or dismissed.

Owners’ committees must hold meetings for owners and residents. The first meeting is the opportunity to decide on the role and responsibilities of all relevant parties. According to the law, this meeting must establish:

• Meeting regulations.
• Regulations on electing committee members, the names and the committee, heads, and deputies.
• Plans to train members of the committee.
• Any amendment recommendations for the rules and use of the apartment building (if any).
• Operating funds according to the law and building regulations. The fund structure must also be approved by the management board.
• Funds that owners and residents must contribute when using the apartment building.

The owners’ committee meeting must be organised carefully and inexperienced developers may find it difficult to host the first meeting. Savills helps developers hold successful ownership committee meetings that ensure smooth long-term operations and community cohesion.

According to the law, owners’ committees have the following rights and responsibilities:

• To receive, store and manage records.
• Prepare the contents and organise the meeting minutes according to regulations, get them signed by the management board, and make them publicly available.
• Report on their operations, revenues and expenditures.
• To act on behalf of the owners to execute the rights to the common areas of the apartment building under the Law on Housing.
• To take responsibility for assigned tasks and to do so in strict compliance with operations, revenue and expenditure regulations.
• To review and hold necessary votes should the existing ownership committee be found to be underqualified to conduct their duties.
• To request the authorities to solve problems should the developer withhold relevant documents and financial records.
• Should there be a new committee, the previous committee must provide all relevant documents, books, and procedures to the new committee.
• If a member of the committee violates this regulation and laws, depending on the seriousness of the violation, they could be sanctioned or prosecuted. If their violation caused any damages, they must compensate the aggrieved party.

Management boards directly manage all daily activities. However, owners’ committees are mechanisms that represent the owners and ensure all procedures are carried out in the best interest of the residents.

Explore: How to Organise the First Owners Committee Meeting?

Developers and owners’ committees must select management boards with comprehensive expertise and the capacity to ensure high-end services and operational efficiency. Savills is the leading property management and consultancy provider in Viet Nam, with more than 27 years of experience and a team of multi-disciplinary experts committed to providing quality services that uphold international standards and deliver what customers are looking for.

Learn more about Savills Property Management here.