The Role of Managing Agents
What is a managing agent?
As a trustee you may be more than willing to fulfill your moral and fiduciary duties to the body corporate and scheme members, but you may struggle to find the time to fix the gate motor or mend a leaking roof. This is where managing agents come in. They can relieve trustees of the administrative and maintenance burden of running a complex. Managing agents are appointed to perform functions of the trustees, and this delegation of duties is permitted in the legislation.
Prescribed Management Rules
The Sectional Titles Schemes Management Act, 08 of 2011 and it’s regulations allows for schemes to employ managing agents and makes considerable provision for their engagement. Prescribed Management Rules – PMRs – set out the functions and powers of the trustees, but the Act does not prescribe the functions of the managing agents specifically. Rather, it provides for their employment, their interaction with trustees, and their execution of the trustees’ functions, by stating that the details of the engagement should be clarified in a written contract. Thus the agent’s duties are not enshrined in the legislation but in the contract. However, those duties must uphold the trustees’ responsibilities in terms of the PMR.
Limits to managing agents’ powers
There are certain duties trustees may not delegate. Responsibility for the oversight of the scheme and fiduciary accountability remains the responsibility of the trustees. They must ensure the managing agent’s performance complies with the contract. How much power the agent has to enforce certain scheme rules will be determined by what has been set out in the contract, which in turn must reference scheme rules.
What must the managing agent do?
A managing agent is literally the agent of the trustees and therefore is subject to all their duties and obligations. The agent is expected to act with professionalism at all times. Agents who do not act with due care and skill may be liable for any loss caused as a result of their negligence or neglect. Notwithstanding the fact that trustees have ultimate fiduciary responsibility, the agent is also responsible for prudent financial management of the scheme. They are expected to arrange an inspection of the property every six months and report to the body corporate every four months on the ongoing administration of the scheme, detailing any repairs and maintenance required, the balance of funds and a reconciliation statement, expenses incurred since the last statement, and any other matters deemed appropriate to bring to the trustees’ attention.
Contract details
It is very important that the details of the managing agent’s engagement and the duties expected should be laid out in a written contract. This contract must not be more than three years in duration and may be cancelled by the body corporate or trustees with two months’ notice, should the performance of the agent not be satisfactory. The agent may also cancel the contract with two months’ notice.
If you feel that your complex/building could benefit from our service offering then you can contact us at info@levytate.co.za and we will happily listen to your needs and provide a tailor made solution for the management of the scheme.
