Managing a Body Corporate and Estate
Some body corporates believe that by appointing a managing agent, they are handing over the management of their scheme, in its entirety, to the managing agent. This is, in fact, not true.
The trustees are responsible for the management of the Estate – NOT the managing agent.
In some instances, the managing agent is made to take on more responsibility than just the administrative duties and their role should be set out and determined prior to signing a contract to avoid confusion. Managing agents must be direct in what responsibilities they are taking on as well as those they are not taking on.
Poor management of an Estate results in loss of property value and is often the result of a breakdown in the management structure of a scheme. Ie: the role and responsibilities of the body corporate members, the trustees, and the managing agent.
The body corporate members’ responsibility
The 1st level of responsibility rests with the members of the body corporate. Their responsibility is to elect and appoint competent trustees who will act in the best interest of the scheme and its members, without prejudice or hidden agendas.
Poorly considered trustees who have no knowledge of sectional title laws (Sectional Title Act and STSM Act of October 2016), the Estate property and management thereof as well as having no intention of making a positive difference to the affairs of the scheme all contribute to this breakdown. For this very reason, the nomination of trustees must be well considered and their appointment must be taken very seriously by the members.
The trustees’ responsibility
Trustees are elected for the sole purpose of managing the body corporate’s affairs at the IGM and AGM. Their duties include appointing and managing competent managing agents, contractors and staff, as well as enforcing the management and conduct rules of the scheme, the maintenance of the common property and the managing of collecting the levies and all finances.
Trustees duties and obligation are to adhere to all the laws that govern sectional title living (The Sectional Titles Act as well as the new STSM Act of October 2016).
It is also expected that they will act in a manner that is fair and reasonable and can never be seen to be biased towards any one party.
Unfortunately, some schemes find themselves with ineffective trustees who are negligent and ignorant of their duties and responsibilities in terms of the Act and this is to the detriment of the financial wellbeing of the scheme which may affect its market value.
The managing agent’s responsibility
The managing agent is appointed to assist the trustees with administrative duties such as levy invoicing, paying accounts and managing meetings of members as per the Sectional Title Act and STSM Act of October 2016. Their contract appointment is made by vote at a meeting of the trustees.
It is up to the trustees to negotiate the terms of the contract with the managing agent before appointing them. The trustees manage the BC and the managing agent is there to assist and guide the trustees and members when calling meetings and taking any decisions that will affect the scheme and its members.
Their knowledge and understanding of the Sectional Title Laws, protocols and processes is imperative to running an effective and profitable Body Corporate, and trustees must ensure that the agent has the relevant expertise and experience of managing a BC when making the decision and before appointment.
Managing a sectional title body corporate can be complex and regular checks should be enforced to keep the scheme updated on its legal obligations. This can only be done with an experienced managing agent, having the capacity and expertise to deal with the applicable scheme and its members.
The trustees are obligated to adhere to all rules and regulations of the STA and STSM on behalf of the members of the Body Corporate and may not have sufficient knowledge of such protocols and processes as required by law. This is where the professional managing agency fits in.