Choosing the right managing agent is vital in any sectional title scheme to ensure financial stability is preserved and overall success is achieved.
It is important to have efficient trustees who are knowledgeable in their field of work. According to Bauer, “They should be run as any other business, with the positions of the day to day management filled by the correct people” says Michael Bauer, general manager of the property management company, IHFM.
How to choose the correct agent.
So how do you know who’s a good fit? Taking time out to research a potential company’s track record and collecting a few references is one way to put your mind at ease. There have been many disreputable companies who have previously masked themselves as managing agents and have ineffectively turned sectional title schemes bankrupt due to negligence and mismanagement.
Warning signs to look out for.
According to Bauer, there are a few important things to consider to ensure you employ the right managing agent.
Keeping an eye out for their Fidelity Fund Certificate (FFC) from the Estate Agency Affairs Board is the first sign of a good potential agent. Although it is not a requirement for every staff member in the company to be registered, the principal agent however must have an FFC. This is crucial due to the large sums of money that is managed in the form of levies, as well as the daily involvement with the EAAB where money is deposited into a trust account in accordance to the name of the relevant scheme.
Explore your surroundings. Discover who the trustees of other schemes have employed as agents to obtain a first-hand account into the experiences shared.
Requesting a contact list of schemes already managed by the potential agent in mind, is a great way to judge how reliable and trustworthy they are. If they confidently hand over their list, there is a good chance they have a good track record.
A managing agent with their own professional indemnity and insurance is another good indication of a dependable agent, because it is important that all the monies collected can be protected from loss, whether caused by mistakes or misappropriation of funds.
Be wary of agents who have their hand in other property affairs such as maintenance, insurance or debt collections as they could funnel business from the sectional title scheme into their other businesses and lose focus on the management job at hand.
According to Bauer, prescribed Management Rules 46 and 47 stipulate some of the terms of a contract that should be signed with a managing agent, which is why it is important to specify all requirements and responsibilities expected of both parties.
“Good managing agents will always supply the information the trustees need to ascertain whether they are suitable for the job. They will, too, be open and upfront about their qualifications and who will be managing their books. They will be open to constructive criticism or input from the trustees of sectional title schemes as they are, after all, both meant to be working the scheme’s best interests.”