The Role and Duties of the Trustees, Managing Agents and Owners.

There are a number of role players in a Sectional Title scheme, and confusion often exists in respect of what is expected of the various parties.  The three most important characters are the owners, the Trustees and the managing agent. 

Sectional Titles schemes are governed by the Sectional Titles Act No 95 of 1986, and all references to the Act, are to such Act. 

The Managing Agent

The Trustees may, in terms of Management Rule 46 of the Act, appoint a managing agent to assist them with their duties, and act on their behalf in the administration of the scheme.

The role of the managing agent is mainly administrative and financial and is generally set out in a contract entered into between the scheme and the Managing Agent. 

The function of the Managing Agent is seldom that of a “dogs body” or general caretaker although some agents do offer a day to day maintenance function, at an additional cost.  The managing agent is often confused with a caretaker, and schemes may, if necessary appoint a caretaker, who will deal with the day to day maintenance and upkeep of the complex.   

The Trustees

The question is often asked at Annual General Meetings, under the point “Election of the Trustees” – “What the Trustees do, what are they responsible for, what is their role and what are their duties”

The Act sets out what is required of the Trustees.  How much, or how little, the Trustees actually do varies from scheme to scheme and Managing Agent to Managing Agent.

We set out and explain the requirements contained in the Act as follows:

The most important duties of the Trustees are summarized in Management Rule 28 which provides that apart from performing the duties specified in the Act, the Trustees should control, manage and administer the common property as well as enforce the Conduct Rules in place.

In terms of the specific duties set out in the Act and the Management Rules, the following are applicable: 

Administrative Functions

These functions are often carried out by the Managing Agent who is better equipped and has the appropriate resources to undertake such duties on behalf of the Trustees.  The Trustees are however still responsible to ensure that such duties are correctly executed. 

• To ensure that the buildings are adequately insured.
• To levy and collect the levy contributions from owners in accordance with the budget drawn up by the Trustees and passed by the Body Corporate and to determine the manner in which such contributions are payable.
• To take action to collect levies that are in arrears, which includes the right to levy interest in respect of overdue accounts.
• To keep a complete set of rules in force and to ensure that any amendments to the Rules are filed in the Deeds’ Office.
• To keep proper books of account and records, which reasonably explain the financial transactions and financial position of the Body Corporate.
• To arrange for the financial records of the Body Corporate to be audited and to present such audited financial statements to the Body Corporate at the Annual General Meeting.
• To prepare an estimate of income and expenditure (budget) for the forthcoming financial year and present such budget to the owners for their consideration.
• To arrange the Annual General Meeting on an annual basis and ensure that the proper documentation as required in terms of the Act is forwarded to the members of the Body Corporate, in sufficient time as provided for in the Act.
• To operate the banking accounts of the Body Corporate and control the payment of expenses from such banking accounts.
• To comply with requests by owners in respect of details for members of the Body Corporate.
• To comply with statutory requirements and submit statutory returns.

Management and Control Duties

The Trustees normally deal with these duties as part of their Trustees’ meetings:

• To keep minutes of their meetings and proceedings as well as those of the Body Corporate in a minute book.  These minute books should be kept in perpetuity.
• To ensure that the common property is properly maintained and kept in a state of good and serviceable repair.
• If practical, to establish and maintain common property garden areas and recreation facilities, and to manage and control the common property.
• To invest surplus funds held by the Body Corporate. (Such investments may only be placed with a registered bank).
• To enter into agreements in respect of the supply of electricity, water, gas, sanitary and other services, from the local authority as well as to owners.
• To let portions of the common property.
• To do all things reasonably necessary to enforce the Conduct Rules.  The Trustees are required to ensure that the Conduct Rules are fair and apply equally to all owners.
• To comply with the provisions of the Act in respect of Special and Unanimous resolutions required.

Whilst the above lists may be of assistance to the legally minded who wish to establish what the statutory requirements in respect of Trustees are, they are of little assistance in guiding a new set of Trustees in terms of what is required of them.

In general, the day to day functions and requirements of the Trustees, in our opinion and experience, are as follows:

• To meet on a regular basis, which could be monthly, bimonthly or quarterly, depending on the projects that need to be undertaken and the amount of correspondence received from owners.
• To keep accurate minutes of Trustees’ meetings and decisions taken at such meetings.  The importance of accurate minute taking cannot be overemphasized.  Problems often arise years after a decision has been taken, and the Trustees who were then in office have since sold and left the scheme, leaving the current Trustees scratching their heads as to what was actually decided or agreed to.  This is often the case in respect of alterations, where standards have been established, but the minutes do not accurately detail what the standard is.
• To consider projects in respect of the maintenance and repair of the common property.  Thus deciding on what projects need to be undertaken, obtaining of quotations and appointing of contractors.  It is a good idea for the Trustees to consider what projects need to be undertaken for their year in office at their first meeting after the Annual General Meeting and then set out a plan of action to tackle such projects.
• To consider requests by owners in respect of matters specified in the Conduct Rules, such as alteration permission requests, pet permission requests etc.
• To enforce the Conduct Rules – this can often be a difficult task, as owners often believe that they can do as they please and the Conduct Rules do not apply to them.  In enforcing the Conduct Rules, the Trustees should consider complaints in respect of infringements reported by other residents and take appropriate action.  Letters of demand can be addressed to the owner in breach, firstly by the Managing Agent and if the owner continues in his or her breach, an attorney can be instructed to take action against such owner.
• To manage the Body Corporate staff and employees.  Again this can be relatively easy or quite difficult, depending on the personalities of both the staff and the Trustees.
• To consider the financial statements, which are usually supplied by the Managing Agent, to ensure that the budget is being adhered to and in the event of unforeseen projects being required, to raise the necessary funding, in order to avoid a deficit arising.

Having read the above, owners may be completely discouraged from standing as Trustees.  A Body Corporate is however only as strong as its Trustees and while it might be frustrating at times, it is extremely rewarding to know that your scheme is being run correctly.

Ownership of property is often the greatest investment a person will make in their lifetime and it is vital that your investment is properly looked after.  That responsibility ultimately lies with you, and, as a trustee, you have hands on control over the care and maintenance of your investment.

The Owner

When a person purchases a sectional title unit, he becomes a member of the Body Corporate.  Many owners confuse the concept of Trustees and Body Corporate.  Every owner is automatically a member of the Body Corporate, and the Trustees are elected from the Body Corporate at the Annual General Meetings. 

As sectional title ownership is legislated by an Act of Parliament, the owner is bound to comply with the provisions relating to such ownership, as set out in the Act.

The most important duty of an owner is no doubt, the duty to comply with the Conduct Rules which are in force in respect of the building.  The conduct rules deal with the day to day “house keeping” issues in the scheme and a good set of Conduct Rules, which are enforced will result in happy community living.

Apart from their legislative duties, owners should act with an enhanced degree of neighbourly consideration towards the other residents of the complex. 

Two sections of the Act, namely Section 44 and Management Rule 68 deal directly with the duties and obligations of owners of Sectional Title units.  For ease of reference we set out these sections of the Act, which are self explanatory as follows:

Section 44:

Duties of owners - (1) An owner shall -

• permit any person authorized in writing by the body corporate, at all reasonable hours on notice, (except in case of emergency, when no notice shall be required), to enter his section or exclusive use area for the purposes of inspecting it and maintaining, repairing or renewing pipes, wires, cables and ducts existing in the section and capable of being used in connection with the enjoyment of any other section or common property, or for the purposes of ensuring that the provisions of the Act and the rules are being observed;forthwith carry out all work that may be ordered by any competent public or local authority in respect of his section, other than such work as may be for the benefit of the building generally, and pay all charges, expenses and assessments that may be payable in respect of his section;
• repair and maintain his section in a state of good repair and, in respect of an exclusive use area, keep it in a clean and neat condition;
• use and enjoy the common property in such a manner as not unreasonably to interfere with the use and enjoyment thereof by other owners or other persons lawfully on the premises;not use his section or exclusive use area, or permit it to be used, in such a manner or for such purpose as shall cause a nuisance to any occupier of a section;
• notify the body corporate forthwith of any change of ownership in his section and of any mortgage or other dealing in connection with his section; and
• when the purpose for which a section is intended to be used is shown expressly or by implication on or by a registered sectional plan, not use nor permit such section to be used for any other purpose:

Management Rule 68 - Statutory and General

In addition to his obligations in terms of section 44 of the Act, an owner

• shall not use his section, exclusive use area or any part of the common property, or permit it to be used, in such a manner or for such purpose as shall be injurious to the reputation of the building;
• shall not contravene, or permit the contravention, of any law, by-law, ordinance, proclamation or statutory regulation, or the conditions of any licence, relating to or affecting the occupation of the building or the common property, or the carrying on of business in the building, or so contravene or permit the contravention of the conditions of title applicable to his section or any other section or to his exclusive use area or any other exclusive use area.
• shall not make alterations which are likely to impair the stability of the building or the use and enjoyment of other sections, the common property or any exclusive use area;
• shall not do anything to his section or exclusive use area which is likely to prejudice the harmonious appearance of the building;
•   shall, when the purpose for which an exclusive use area is intended to be used, is shown expressly or by implication on or by a registered sectional plan, not use, nor permit such exclusive use area to be used, for any other purpose: Provided that with the written consent of all owners such exclusive use area may be used for another purpose;
• shall not construct or place any structure or building improvement on his exclusive use area, without the prior written consent of the trustees, which shall not be unreasonably withheld;
• shall maintain the hot water installation which serves his section, or, where such installation serves more than one section, the owners concerned shall maintain such installation pro-rata, notwithstanding that such appliance is situated in part of the common property and is insured in terms of the policy taken out by the body corporate.

Source: Coppin Attorneys