Fundamental tasks of sectional title trustees

Private Property South Africa
Michael Bauer

In its ongoing campaign to “educate” the trustees of bodies corporate and homeowners’ associations, IHFM, the fast-growing property management company, has time and again to remind them that certain basic tasks are their responsibility and, if they neglect their duties here, they are actually in contravention of the Sectional Title Act and in breach of their constitutions.

The trustees stand in a fiduciary relationship to the body corporate and are entrusted with the due diligence, care, operation and financial welfare of their scheme.

The four fundamental tasks of a trustee are set out in the Prescribed Management Rules as being:

  • To ensure that all buildings are adequately insured and that the insurance premiums are up to date. (Cutting back on insurance is a common mistake which can have dire consequences.) As a corollary to this, the trustees must see that the fire prevention and emergency lighting and signage are kept in good working order.

  • To maintain all common property on the building in good condition. In particular, lights and security equipment can need replacing or major overhauls regularly.

  • To ensure the financial health of the scheme. This includes seeing that levies are paid up, that all revenue and disbursements are listed and that auditors are checking all books. The ultimate responsibility for paying rates and taxes on time also falls on the trustees. Most importantly, they too must see that the budget approved at the AGM is realistic. (Quite frequently, trustees will succumb to pressure from trustees and set levy increases too low.)

  • To ensure that all books and documentation (including the minutes of all trustee and/or member meetings) are kept up and in compliance with the law.

Often, one finds that trustees see their main role as being the implementation of the conduct rules. Important though these are, they are secondary to the task of ensuring that the scheme is financially healthy and stable. This, of course, means that the levies must be adequate and must be collected timeously. If the trustees or their managing agent fail in this task, they will jeopardise the entire future of the scheme.

Often, the appointment of a competent managing agent or a levy collection company can turn a potentially dangerous levy situation around in a matter of months. It is essential for members to keep themselves informed on the situation in their scheme. If the administration is being handled efficiently, the minutes will reflect this. If the trustees are not coping, this is usually detectable in the minutes and will be apparent from the appearance of the building.

It is for this reason that the Prescribed Management Rules make the keeping of minutes a top priority. For many owners, especially those living elsewhere, they are the only check on their schemes: in the less efficient schemes one often finds that the minutes are inaccurate, incomplete or simply do not exist. That is always a warning signal.

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