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Dos and don’ts for trustees managing sectional title schemes

01 Aug 2017

Being elected as a trustee of a body corporate is often not welcomed by those nominated as it is seen as an onerous and time-consuming job.

All actions of trustees in sectional title schemes are governed by the Sectional Titles Schemes Management Act and the Prescribed Management Rules, and trustees should familiarise themselves with these and maintain their position of trust, says Hanekom.

This is according to Mandi Hanekom, operations manager of the sectional title finance company Propell, who says the few who do take up these positions should be commended as they are taking on the management of something that could be seen as a multimillion-rand business and a huge responsibility.

“The members of the body corporate have confidence in the trustees’ integrity and ability to manage their scheme in order to have elected them to the position of trustee, but what has to be remembered is that the same members who elected the trustees can also dismiss them, by way of an ordinary resolution by members taken at a general meeting, if the job is not done properly,” says Hanekom.

All actions of trustees in sectional title schemes are governed by the Sectional Titles Schemes Management Act and the Prescribed Management Rules, and trustees should familiarise themselves with these and maintain their position of trust, she says.

In addition to the obligations and responsibilities of trustees prescribed by legislation, Hanekom says owners and trustees remember the following basic tips:

1. Budget correctly

Correct budgeting is an important aspect of financial management and the scheme’s ability to pay all of its accounts every month. If this is done correctly there should be no need to raise special levies for unforeseen projects as there will be a healthy and positive cash flow, and perhaps even a reserve fund.

2. Play an active role in the running of the scheme

Don’t pay any contractors without first checking their invoices and the actual work completed. Know what the job at hand was and what is being paid for.

It is very important to know what is happening within the scheme and what maintenance or repairs are being undertaken, as well as by whom. Those who do not take an interest or ask questions cannot complain later if things do go wrong.

3. Appoint the right people to help in the management of the scheme

Competent people will do the job correctly the first time around, and should not have to be micro-managed.

4. Don’t neglect to increase the monthly levies

If the financials show that this is necessary, it is good financial practice to adjust the levies as soon as it is seen that the amounts received each month need to be increased in line with inflation or any cost increases. Keeping members happy by keeping the levies low does not do anyone any favours.

Low levies often lead to certain maintenance or repairs being neglected through lack of funds, or special levies having to be raised to cover large unforeseen bills.

5. Don’t be quick to pay contractors

Correct budgeting is an important aspect of financial management and the scheme’s ability to pay all of its accounts every month. If this is done correctly there should be no need to raise special levies for unforeseen projects as there will be a healthy and positive cash flow, and perhaps even a reserve fund.

Don’t pay any contractors without first checking their invoices and the actual work completed. Know what the job at hand was and what is being paid for.

“Check that the standard of work is what is required as it is no good paying for shoddy work, and then when problems crop up later having to pay again to get the job done properly,” says Hanekom.

6. Don’t neglect regular maintenance to the buildings, grounds or equipment

Neglecting maintenance can very quickly lead to deterioration, which then leads to the value of the scheme and the properties within it decreasing

“Your role as a trustee is an important one, and is vital to the effective running of the scheme as a whole. A good board of trustees, working together, will make sure that. In turn, all the owners will remain happy and your job should be less stressful,” says Hanekom.

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