While it is not compulsory for trustees in sectional title schemes to appoint a managing agent, and many small schemes do manage to run their scheme effectively without the help of one, it is generally recommended if the scheme has more than ten units that they do hire a managing agent rather than trying to do all the work themselves, says Mandi Hanekom, operations manager for Propell.
In medium to large sectional title schemes, the workload involved in managing the financial and day to day affairs can be overwhelming for the trustees, particularly since they most likely would be working during the day at their “everyday” jobs, she said.
“The fact that this work has to be done without compensation also makes a good argument for hiring a managing agent, as the agent will have to bear most of the work load.”
The Prescribed Management Rules state that, should a managing agent be hired, that they be appointed by written contract for an initial period of time (usually a year) and the notice period from either party would be one month’s notice, which is given in writing.
The managing agent’s duties must be specified in the contract of appointment, and these will usually include controlling, managing and administration of the common property, and any other obligations to public or local authorities on behalf of the section owners. Usually, the managing agents will also be tasked with collecting the levies each month.
“Managing agents are not to be confused with caretakers of buildings, however,” said Hanekom. “While some managing agents offer a day to day maintenance function, these are usually at an extra cost as they will then outsource any repair or maintenance work to their contractors and oversee the work done.”
When the decision is made to hire a managing agent, there are a few key things to check with them. The first would be to ask whether they hold separate trust accounts for each sectional title scheme. This is recommended as there is transparency with this type of arrangement, each transaction should be for that scheme only and should able to be checked by the trustees at any time they should require this, said Hanekom.
Managing agents are governed by the Estate Agency Affairs Board and should hold a Fidelity Fund Certificate, and the trustees are within their rights to ask for this. This is to ensure that the body corporate is insured against any theft of money, as managing agents deal with large sums in collected lev ies and payments having to be made each month, she said.
“Generally, if the administration and management work is done by a professional in this field and by someone who only does this work, the performance of the body corporate should improve and the financial situation of the scheme should be healthy and Propell, when enlisted to assist with any of their sectional title financial solutions, would work hand in hand with the managing agent to achieve this”, said Hanekom.