Every Sectional Title Scheme in South Africa is mandated to elect a board of trustees – these elected individuals direct the funds and affirm the policies of the scheme. Yet often the role of these trustees is misunderstood, thus leading to serious repercussions both legally and financially for the scheme. Hopefully the pointers below can help individuals understand the role that trustees should play.
First and foremost – the basic tools for the task of a trustee
are:
A copy of the Registered Management Rules
A copy of the Conduct Rules or House Rules
A copy of the Sectional Titles Act
A copy of the Sectional Plan for your scheme
A healthy dose of common sense and a cool head
If your Body Corporate does not have copies of these
documents on file, your first action would be to get your hands on them! The
Act requires that all executive functions and powers of a Body Corporate are
performed by the trustees. This does not mean they are the highest authority. They
are elected by the owners and may be dismissed by the owners. They must heed
the instructions and limitations imposed by owners and all their actions are
subject to the Act and the Rules. Trustees of a body corporate act voluntarily
and without compensation. They are only liable for losses or damages incurred
by the Body Corporate if they act in a manner that can be described as grossly
negligent or fraudulent. After the trustees’ election at the AGM, the trustees
need to hold their own Trustee meeting where one of their first points of
business will be to approve a resolution determining the levies (approved by
the owners at the AGM) for the next year. No trustees' resolution means no
levies determined and payment cannot be enforced in a Court of Law! In order to
perform their functions or duties trustees are endowed with certain powers.
These powers are not unlimited and are strictly circumscribed by the Act and
the Rules, as well as by instructions or restrictions imposed by members at a
General Meeting. Very briefly, trustees can perform the following actions:
Appoint agents and employees, including a managing agent
Borrow funds for the performance of their functions and
give security for such loans, including the cession of levies
Purchase or rent items such as lawnmowers, tools, etc
needed for the BodyCorporate
Establish recreation facilities, gardens and lawns on the
common property where practicalInvest funds not immediately required
Obtain services by contracting with various service
providers
Provide services by contracting with owners and occupiers
Let (for the benefit of the Body Corporate) parts of the
common property to owners and occupiers
Gain access to sections and exclusive use areas for
maintenance purposes
Delegate powers and duties to individual trustees
Trustees must perform the following functions necessary
for the good management and administration of the Body Corporate:
Determining, collecting and administrating levies in
respect of sections and exclusive use areas
Opening and maintaining a bank account
Insuring all building improvements including sections
(but not their contents)
Maintaining common property (including exclusive use
areas)
Keeping minutes
Keeping and administrating all records, including
financial records of all Body Corporate transactions
Keeping a record of the current Rules
Arranging and conducting the AGM and, when necessary,
special general meetings
Preparing the documentation to be presented at each AGM,
including the Budget and audited financial statements
Trustees must keep proper books of account for the
Scheme. All monies received or spent by them must be recorded. Proper financial
statements must be prepared and audited by a professional firm. It is of utmost
importance that these documents be signed by the Trustees and Auditor.
Apart from dismissal, a trustee is automatically removed
from office under the following circumstances:
Upon written resignation
If legally declared to be of unsound mind
Upon his/her sequestration
Upon conviction for an offence involving dishonesty
It follows that a person subject to any of the above
disqualifications may also not be appointed as trustee in the first place.
The role of trustees within a body corporate is a very
important one, and one that is very beneficial to the well being of the scheme.
A good board of trustees will be able to ensure that the scheme yields positive
financials whilst at the same time runs effectively and smoothly keeping
tenants and owners happy.
