14 Sep How owners can hold body corporate trustees accountable
The importance of selecting competent trustees to manage the scheme’s affairs cannot be overstated. Not only do they need to understand sectional title, they also need to fully understand their role and the responsibility, and be committed to carrying out their duties to the best of their ability.
The members of a scheme can – and should – hold the trustees responsible for fulfilling their duties, or for their failure to act where action was required.
Trustees are effectively the managers of the scheme. They must ensure that the scheme runs optimally and need to attend to daily, weekly and monthly issues to ensure that the scheme is managed well.
Some of the most important responsibilities of the trustees are:
- Ensure that the managing agent delivers on its service level agreement
- Manage the financial affairs of the scheme
- Oversee all maintenance-related work on the common property
- Manage the scheme and its residents according to the management and conduct rules
- Ensure the scheme is sufficiently insured for replacement value
- Negotiate contracts with service providers
- Manage all staff employed by the scheme
- Arrange for the annual audit to be done
- Prepare the annual budget for approval at the annual general meeting (AGM)
- Arrange for the AGM to be held and prepare all the required documentation for the meeting
- Manage the scheme in terms of the Sectional Title Schemes Management Act, Sectional Titles Act and any other relevant Acts which have bearing on the operations of a sectional title scheme
There are a number of additional matters – aside from the responsibilities on the list above – that typically get directed to trustees but are not necessarily their responsibility. For many of the tasks listed above, the trustees will depend on their appointed managing agent for guidance and assistance, but remember that this does not make the managing agent responsible for the trustees’ actions (or lack thereof).
How can owners hold the trustees accountable?
Frustrations often arise in sectional title schemes as a result of trustees not performing their duties, or when the members feel that trustees have been negligent in performing their duties. This may cause owners to lose faith in the abilities of the trustees, resulting in a relationship marred by distrust.
Owners may not be aware of their right to hold the trustees responsible for neglecting their duties or for not taking proper care when executing their duties. Tensions would typically simmer until it is time for the AGM where frustrations will be aired, often leading to hostility which is not ideal. Owners can take the following steps to ensure that the trustees are held accountable:
- Arrange a special general meeting (SGM) where the agenda item for the meeting is the removal of a specific trustee or all the trustees
- Nominate persons from the scheme, or external persons to be considered for election at the AGM that will be suitable for the position
- Be proactive and approach owners in the scheme to make themselves available to serve as trustees
- Consider nominating persons that bring useful skill sets to the management of the scheme, i.e., accountants, attorneys, project managers, maintenance managers, etc
Owners can also remove the chairperson of the body corporate by following the SGM route. It is important to note that if the chairperson is removed, they will also have to be removed as a trustee if the intention is to not have the person serve at all.
The above process of removing a chairperson and/or trustee can be done before the AGM is held. The alternative is to ensure that the same people are not elected again at the AGM.
Serving as a trustee on a body corporate requires dedication and commitment; therefore, the position must not be taken lightly. Especially in schemes where duties have been neglected by lacklustre trustees, it is essential that the people nominated to fill these roles take their involvement seriously.
Owners become impatient and disillusioned when they do not see any improvement in the situation or when undertakings are not acted on. This is when owners must demand action and when the removal of negligent trustees should be considered.