02 Sep 2011
It is regrettable, but true, that the trustees elected to the bodies corporate often do not understand the relationship that they should have with the members they represent and/or the managing agents they appoint.
So says says Michael Bauer of the property management company, IHFM, and adds that this in turn is often because they have not studied and assimilated certain documents, which are “the handbooks on which all their decisions should be based”.
Any person accepting a position as a trustee, said Bauer, should ensure that as soon as possible they obtain copies of the scheme’s registered Management Rules, its registered Conduct Rules and the Sectional Title Act. They should also get hold of the scheme’s sectional title plan and study it.
Bauer stressed that every sectional title scheme will at the outset have had to lodge its documents with the Deeds Office – indeed, it will not have been given the go ahead until this is done. It is these registered papers, he said, that trustees have to get hold of. They should very definitely not rely on standard documents such as standard Conduct or Management rules of the type proposed in the Sectional Title Act.
“If the trustee finds that the body corporate does not have these documents in their possession, he must get copies from the Deeds Office. Schemes’ documents will differ from each other - it is important, therefore, to have the right documents when making decisions and enforcing rules.”
Once appointed, said Bauer, the trustee must accept that he and his colleagues carry full responsibility for the welfare - especially the financial welfare - of the scheme and its members.
“The trustees are entrusted with the scheme’s assets. It is their fiduciary duty to see that levies do not fall into arrears, that the security system works and that conduct rules are obeyed.”
It is also, he said, their duty to ensure that no one trustee benefits financially or is allowed to have an interest in the scheme that may conflict with his role as a trustee.
“If a trustee or his company wishes to tender for some aspect of the scheme, e.g. the insurance, the security, the waterproofing or the repainting, he must step down as a trustee. No dual loyalties on a scheme are ever acceptable.”
This, added Bauer, is a crucial message because far too often a body corporate member will accept his election as a trustee with the clear intention of promoting his own interests.
This, said Bauer, is a very real danger. “However, equally dangerous is the all too common attitude which says, ‘I am not paid for this irksome task. I have only accepted it to help them out. I will, therefore, be as little involved as possible."
Bodies corporate, said Bauer, where two or three trustees have this view of their roles tend to rely far too much on the managing agent. “They will even cut short meetings, leaving important matters to be handled by the agent.”
Managing agents, he said, have to be managed. “They have to be checked on regularly and supervised by the trustees.”
They and their staff do make mistakes, he added. “If a trustee is not willing or able to check regularly every item of expenditure incurred by the managing agent he should not accept the job.”
Summing up his comments, Bauer outlined the trustees’ most important duties as being:
- the timeous collection of levies and the chasing up of those who fall behind.
- the insurance of all building and improvements.
- the maintenance of common property.
- the keeping of minutes of all members meetings, including the AGM.
- the keeping of a record of all body corporate transactions, including, most importantly, the financial accounts - and the signing, where required to do so, of all expenditure chits (each financial payment or instruction is by law required the signature of two of the trustees or a trustee and the managing agent).
- the arranging of the AGM and other special meetings to be held, and ensuring that the documentation for these is ready on time and is accurate.
“The trustee’s role is, therefore, far more onerous than many trustees are prepared to admit and it is because this is not recognised that so many schemes get into trouble.
“However, there have been signs recently of improvements across the board because (in light of the recent liquidation of managing agents like Constantia Sectional Title Management) there is now a far greater awareness of the dangers of neglecting these matters,” said Bauer.
Readers' Comments Have a comment about this article? Email us now.
I live in a sectional title in randburg and the trustees and chairman don’t even keep to quarter of the listed items that they are tasked with. Rather unfortunately all of them are investors and do not live at the complex and only respond to issues regarding their units. It takes a tremendous amount of effort and patience to get any responses from them when common property or breaches of code of conduct is concerned. In fact in my first meeting with them I highlighted certain sections of the code that were being breached daily and one trustee responded that he didn’t know the complex had a code of conduct.
Thank you for this article as I will be highlighting these points when I issue my vote of no confidence in the trustees. - Y Adam
More and more of the sectional title complexes are the homes of young people who has no interested in the complex. I have been living in a 27unit complex for 20 years and being a trustee for 16 years and part time care taker for 4 years. All these things that you talk of like rules, getting the levies in etc are not so easy!! We have an insolvent flat and the bank has had the flat on auction twice and in the meantime 3 years the levies have not been paid. In the meantime we have to go on without that R52 000. To enforce the rules are basically impossible. This goes for over-crowding, sub-letting or share sleeping, washing over garden walls, no maintenance of private gardens, noise by children, working on vehicles in parking bays and many more. And most of the people just ignore you anyway and in many cases are foreigners that make as if they don’t understand you or they become aggressive. They told me in my face that this is old government rules and it’s outdated and they will live 10 in a 2 bedroom unit. Most units also have their own electricity and water meters now and therefore you can’t even control that. We have tried with the house rules, sectional title rules, fines and I am sorry to say nothing works. Most owners rent out their places and only care about the rent coming in. Of our 27 units only 5 owners live in their units. And four of us have been trustees forever. If we have an agm only the 4 of us pitch. We had no quorum the last 7 years. I wonder what will happen if no-one want to be a trustee anymore?? It’s clearly on the route to happen. - Mr A Oberholzer
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