November 16, 2016
Trust me, I’m a trustee
The role of trustees in Sectional Title Law
You’ve just moved into your first complex. You’re getting to grips with terms such as ‘body corporate’, ‘sectional title scheme’, ‘trustees’, ‘exclusive use’, ‘common property’, ‘levies’, etc. What do they are mean, and how do they affect your daily life in your new home?
Or maybe you’ve been asked to become a trustee. Are you eligible? What will be expected of you if you agree? Let’s take a look at the role of trustees in the management of a sectional title scheme.
Who can be a trustee?
Trustees are the people who are appointed to look after the finances and running of the sectional title scheme on behalf of the body corporate (the body of unit owners). Any member of the body corporate can be a trustee. The managing agent of the scheme is also eligible for trusteeship but only if he or she is an owner of a unit. Trustees are elected by the body corporate and ideally should be people with practical skills that are useful in running the scheme, such as accounting or law, or knowledge of relevant trades. A trustee can be someone who is not an owner in the scheme, but this is unusual. The majority of trustees must be owners. The role of trustee is voluntary, though a non-owner trustee may receive a fee; and all trustees are entitled to reimbursement of reasonable expenses.
Election and office
Any member of the body corporate can nominate a trustee. Nominations for trustees must be lodged in writing with the body corporate at least 48 hours before the annual general meeting (AGM). The nominees’ acceptances must accompany the nominations. Nominees must be fully paid-up members of the scheme. Anyone in arrears with levy payments is not eligible for trusteeship.
Trustees are elected at the first General Meeting of the scheme and hold office until the AGM, when they stand down but are eligible for re-election. Subsequently election of trustees takes place at each AGM, but there is no limit to the number of terms a trustee may serve.
Trustees appoint a chairperson from among their ranks, and trustee meetings must have 50% attendance in order to be quorate. There are certain stipulations in the Sectional Titles Act regarding minute-taking and notice of meetings, but beyond that, trustees may regulate their meetings as it suits them.
Trustees’ duties and responsibilities
Being a trustee could be classed as a thankless task. It is unpaid, and trustees carry the responsibility for all the decisions relating to the management of the scheme, mandated to them by the body corporate. Inevitably, scheme owners may not always agree with trustees’ decisions, and the role is certainly not a popularity contest. But trustees act in accordance with standards and procedures and should always act in the interests of the body corporate. Duties include:
- Determining the levies paid by the owners towards the monthly running costs of the complex
- Ensuring that levies are banked and correctly applied
- Chasing up owners who are in arrears and ensuring they bring their accounts up to date
- Reconciling payments made to budgeted amounts and ensuring costs are kept within budget
- Keeping the common property in good repair (and its value maintained)
- Arranging adequate insurance for the complex, thus safeguarding owners’ investments
- Overseeing compliance with the rules of the complex by owners and their tenants
- Making sure all trustees and any agents abide by the Sectional Titles Act
- In addition, there are day-to-day activities that the trustees must manage, usually through the managing agent:
- Cleaning, maintenance, management and security of the common property
- Maintenance, management and improvement of communal facilities, such as a swimming pool, clubhouse or braai area
Establishment and maintenance of a fund for the repair and upkeep of the common property. The fund is made up of contributions levied on the owners proportionate to their units
Preparation and presentation of financial statements and reports to the AGM, i.e., anticipated income and expenses of the body corporate for the following year; audited financial statement; and trustees’ report on matters arising and dealt with during the year completed.
If you are invited to be a trustee, think carefully about the commitment involved and the time you will need to devote to the role. It can be an excellent way to ensure your scheme is managed in accordance with your standards and principles, and it gives you a chance to get involved with your neighbourhood and make a valuable contribution to the lives of others. But it requires dedication and a willingness to take occasional hard decisions.
If you’d like to know more about the Sectional Titles Act or the role of trustees, or if you have any questions about your scheme, give Simon a call on 087 550 2740 or 076 116 0623 or email firstname.lastname@example.org. SD Law & Associates are experts in property management and sectional title law and will resolve your query promptly and efficiently.
To view the full set of regulations visit www.nama.org.za