The Sectional Titles Act recognises that the trustees of sectional title bodies corporate, unlike the directors of independent companies, are unpaid volunteers and may lack the full experience required for their positions. For this reason it indemnifies trustees against prosecution for what are clearly errors but still retains its full powers should they try to defraud the scheme or act with gross negligence.
Although protected in this way, sectional title trustees, says Michael Bauer, general manager of IHFM, the property management company, are responsible for the financial health of their schemes, the care and maintenance of its buildings and facilities and the welfare and security of their members.
“It is,” says Bauer, “all too easy for a trustee to take the attitude, “You were desperately short of volunteers so I have allowed myself to be elected – but don’t expect too much of me”.”
This laid-back approach to a trustee’s responsibilities, says Bauer, can be very harmful to a body corporate.
“There will be times in a trustee’s life in which he had to be proactive and, possibly, hard. He has to stand up against members who are letting the side down by not paying their levies or by behaving in a way that is distasteful to other members and this can be uncomfortable if the trustee is living in the same scheme as those who need to be disciplined. It often makes being a trustee unpopular – but that is something they have to accept.”
Many trustees, adds Bauer, have come from backgrounds (e.g. teaching) where they had no or limited chances to acquire financial, accounting or legal knowhow.
This, he says, does not in any way alter the fact that they have to get to grips with the sectional title scheme’s accounts, if necessary calling in an accountant to help them.
A “get-involved” message, adds Bauer, has also to be given to body corporate members: if they do not attend Special and Annual General Meetings, they have only themselves to blame if things go wrong.
“Not long ago,” said Bauer, “the slackness of members and their trustees in a certain scheme allowed a managing agent (who was later declared bankrupt) to misappropriate funds and to accumulate R500,000 in municipal charges arrears. Had the members attended the AGM and discussed the accounts or taken them to a creditable auditor, the problem need never have arisen. ”
One of the trustees’ most important tasks, he added, may be to appoint a good managing agent.
Here, says Bauer, experience has shown that it can be unwise to select an estate agent, even though he may have been highly effective as a sales person.
“Good sales people are not usually good administrators. They often dislike clerical and figure work. The ideal managing agent is an accountant with a good dose of common sense with a sound understanding of the Sectional Title Act for legal matters.”
Michael Bauer is a regular contributor to www.sectionaltitlesa.co.za. For further information on IHFM’s services go to www.ihfm.co.za or telephone Michael Bauer on 083 255 4442. He can also be emailed on michael@ihfm.co.za.