What your trustees should – and should not – be doing

Trustees play a vital role in the effective management of South Africa’s Sectional Title (ST) schemes, which are now estimated to number almost 60,000, incorporating hundreds of thousands of homes and representing a very significant portion of the country’s residential property market.

Appointed by the owners who make up the body corporate of an ST scheme, trustees are empowered to manage the scheme’s day-to-day affairs, finances, and common property, within the legal framework laid out by the Sectional Titles Schemes Management Act (STSMA), its regulation,s and accompanying legislation.

“They also have fiduciary duties,” notes Andrew Schaefer, MD of leading property management company Trafalgar, “which means they must always act honestly, transparently, and in the best interests of all owners as a collective. 

“In other words, the role comes with significant responsibility, even though most trustees are untrained volunteers who generously spend a lot of their spare time in service to their fellow ST owners.”

Fortunately, he says, the STSMA is clear about what trustees are permitted to do, and equally clear about what falls outside their mandate. “And ST owners should take the time to understand these boundaries, not only to ensure good governance in their schemes, but also in the interests of maintaining a harmonious atmosphere between all residents.”

Some of the most important things that trustees should be doing, says Schaefer, are the following:

• Managing the scheme’s finances responsibly. Trustees need to approve budgets, monitor expenditure, ensure accurate records, and see that levies are collected on time, in compliance with the STSMA.
• Maintaining the common property. This includes planning maintenance, appointing contractors, ensuring safety compliance, and preventing deterioration that could devalue the scheme.
• Enforcing conduct rules fairly. Trustees must ensure that conduct rules are properly approved, through the right process, by owners in the scheme, registered by the Community Schemes Ombud Service (CSOS), and applied consistently and respectfully to all residents.
• Ensuring compliance with legislation. Trustees must adhere to the STSMA, its Prescribed Management Rules (PMRs), the CSOS Act, and any relevant municipal bylaws when making decisions about their schemes.
• Communicating transparently. Owners should be kept informed about trustee decisions through meetings, circulars, accessible documentation, and prompt responses to reasonable queries.
• Seeking professional support when appropriate. Financial audits, legal advice, and technical maintenance usually require specialist knowledge and skills, and trustees should not hesitate to bring in experts when necessary. The assistance of a professional managing agent like Trafalgar can also be invaluable in helping them to meet all their responsibilities and protect the value of the homes in their schemes.

Schaefer cautions, though, that common mistakes can expose trustees and the body corporate to unnecessary risk. Trustees should never:

• Act unilaterally. Major decisions must be taken collectively, and some require special or unanimous resolutions by the members of the body corporate. Trustees simply cannot create their own rules or impose any restrictions or fines unless these have been properly approved.
• Ignore financial processes. Using body corporate funds without authorisation or failing to keep proper records breaches fiduciary duty. Trustees also need to take swift action against owners who fail to pay their levies so that the defaults do not become a burden on other owners.
• Favour particular owners or tenants. Preferential treatment can erode trust and may lead to disputes between individual owners and the body corporate.
• Neglect maintenance obligations. This can result in liability claims against the body corporate, as well as declining property values.
• Exploit their position for personal gain. Conflicts of interest must be declared, and trustees must recuse themselves when necessary.
• Fail to keep proper records. Missing minutes, unsigned trustee resolutions or undocumented quotes can invalidate decisions and violate PMR 27.

The bottom line, says Schaefer, is that effective trusteeship is required to ensure that ST schemes remain financially stable, well-maintained, and harmonious. “Good governance and successful ST communities are dependent on informed trustees, and increasingly, they need professional managing agents with the specialist knowledge and systems to help them navigate the complexities of their role.”