A body corporate has the important role of managing and administering the land and buildings in a sectional title scheme. They enforce the legislation and rules in the Sectional Titles Schemes Management Act 8 of 2011 (the Act), the Management Rules and the Conduct Rules of the scheme. Basically, they act on behalf of, and in the best interest of, the owners. A Trustee is a person or persons appointed by the owners of the units in the scheme to look after their investment in the complex.
A body corporate should have a minimum of two trustees in the sectional title scheme, according to the Act. The Act does not limit the number of trustees, so it is possible that all the owners within a scheme could potentially be trustees as well.
It is up to the Body Corporate to determine the number of trustees to be appointed, and usually, with larger schemes, there are more portfolios. More trustees allow for a much larger workload to be adequately handled. Interestingly enough, an uneven number of trustees helps to avoid deadlocks when voting.
What is a Body Corporate?
When land is subdivided and registered under the Land Title Act 1994 to establish a community titles scheme, a body corporate is created. When you acquire a lot in a community titles scheme, you automatically become a member of the body corporate. The Act gives the body corporate the authority to carry out its responsibilities. The body corporate’s responsibilities include maintaining, managing, and controlling the common property on behalf of owners, determining the amounts to be paid by owners to ensure the body corporate’s ability to operate, and creating and enforcing its own rules, known as by-laws, that tell owners and other residents what they can and cannot do.
Who can be a trustee of a body corporate?
“Is owning a section within a scheme a requirement for the office of a trustee?” The short answer is, no, it is not. Under prescribed management Rule 7(1) and (2), as long as a member of the body corporate (i.e. any section owner) nominates them, any person can serve on the board of trustees of a sectional title scheme.
What role do trustees play in managing a Sectional Title Scheme?
A large portion of the responsibility of a body corporate is all the financial aspects, such as paying rates and taxes, insurance premiums, maintenance expenses, payroll for estate staff, and similar. These expenses all need to be regulated and collected from each owner. The scheme entrusts trustees with the responsibility of all the decisions and management of the scheme so that it benefits all the owners, stays within budget, and ensures all their bills are paid.
Here are some of the other duties of trustees:
- Ensuring the cleaning, maintenance and security of the sectional title scheme
- Insurance against natural disasters
- Maintenance, management and improvement of communal areas/facilities
- Establish a fund for repair and management of common property
- Drafting a ten-year maintenance plan for the scheme
- Preparation and presentation of financial statements and reports at the AGM (Annual General Meeting)
The importance of the Annual General Meeting
The AGM plays an important role in the smooth running of the sectional title scheme. It ensures that all owners and trustees have the opportunity to discuss important issues that relate to the effective management of the scheme. It is also about protecting the investment of all the shareholders, ensuring their property value continues to grow.
It’s also where they decide on what to allocate available funds to, such as property upgrades or maintenance. In an AGM, trustees and owners will decide whether to use services like Debtor Finance and Project Loans from companies like Propell to expedite larger projects and make available necessary funds to secure much-needed maintenance.