Would You Manage Your Own Sectional Title Scheme?
I read an interesting article recently about self-managing community schemes in America. The author compared the decision of hiring a managing agent versus self-managing to driving an automatic versus a manual car… Sure, the automatic is easier to drive, but the manual gives you more control and sometimes more control is exactly what you want!
According to the article, it’s a common misconception that self-management is only for smaller schemes. Large schemes in America, reportedly of up to 3000 units, have been successfully self-managing for years. The key to self-management for both small and large schemes is a dedicated group of trustees who are willing to invest the time and energy necessary to properly manage the scheme. In larger schemes, an in-house building manager also seems to be vital.
The duties of a self-managing board of trustees include, amongst other things:
- arranging ongoing maintenance of the common property
- financial management – creating the annual budget, raising levies, collecting levies, paying contractors an so on
- dealing with the scheme’s insurance
- arranging, calling and chairing meetings, sending out minutes
- actioning any items resulting from meetings such as obtaining quotes, engaging contractors etc.
- responding to resident enquiries and concerns
- enforcing the rules of the scheme
- staff supervision (if any)
It is no small feat to self-manage. The duties and tasks can be onerous and the role of a trustee is time-consuming and often thankless.
So why would a board of trustees decide to undertake the scheme’s management themselves?
A major motivating factor is the money saved through not paying managing agency fees and disbursements. A self-managing board gets a real feel for the actual costs associated with the scheme and how the building works, making budgeting efficient and accurate.
Having a tight rein on the purse strings also means the board has more control over which contractors it uses for maintenance and repairs. It chooses a contractor based on merit and quote and not because it is the management company’s preferred contractor.
Other benefits of self-management include a greater sense of community amongst owners. They are forced to interact more and therefore get to know each other. This makes for a more harmonious living environment as people are less likely to disrespect their neighbours if they know them. Also, the board of trustees tend to get a sense of satisfaction from contributing to the community and as such often really enjoy where they live.
If you consider going down this road knowledge is definitely power. At a minimum you’d need a working knowledge of the Sectional Titles Schemes Management Act and the Sectional Titles Act as well as the rules applicable to your scheme.
Would you consider self-management?
Photo by Garrhet Sampson on Unsplash
Thinking Inside the Box 
In the intervening 5 years since my first comments on this blog, I have had no cause to change my feelings. Our trustees, with the help of our staff, have successfully negotiated the CSOS and STSMA rapids, and we are compliant with the new legislation. Our Village is as well-maintained and managed as ever, and our community is a happy one. Viva self-management, viva!
While I am fully aware of all the pitfalls of self managed sectional title units I have yet to find a sectional title manager that knows more about their job than I do so it irks me to pay someone to do something and then I have to follow up with them on why it hasn’t been done properly!
Hello all,
Firstly, Anne, I am sure I am not the only one (maybe your employees as well) who will take exception to the fact that you call many of my duties “donkey work”. The complex my wife and I manage is a full time job – we do everything a managing agent does and then some. Days, and sometimes weeks, go by without any contact between ourselves and the trustees. We contact them when the occasion arises that needs there approval or input. Between the two of us we do the accounts (to trial balance Mark and I am no CA), administration, gardens and maintenance. Oh, I forgot, we live on site so weekends and nights are often not our own.
The long and short of it is that us two “donkies” are blessed to have a position and we give our all to keep it.
Hi, Atholb. Apologies if you found my use of a colloquialism distasteful – no disrespect was intended. In the course of a long a varied life, I have also carried my share of the donkeys’ load – not the least when I was a trustee and also as Chairman.
Hi Anne. Apologies accepted. Maybe the points you make in your first and second text regarding the load that, it would appear, trustees and chairpersons carry, albeit that many of you must have MA’s, highlights the fact that in-house management by the correct people is the way to go. I lived in a ST scheme managed by “outsiders” and it was dismal. All they seemed to do was send out badly writen notices threatening us with fines for mundane transgressions. The funny part was that the transgressors were never approached directly.
So, from one donkey to another – hee-haw.
A book on self-management? I could write a couple of volumes on that subject …
Self-management is not to be undertaken likely and, preferably, not at all. It is viable over the long term only in complexes with a vast reserve of retired people and/or in small complexes (no more than 10 units) without any communal facilities. At the bare minimum, you need someone who can manage the finances – in other words, be able to take the books to trial balance, at least, although a CA is ideal. I am the chairman of a self-managed building, which was successfully self-managed for over 10 years, because virtually all the trustees – and particularly the chairperson – were retired or semi-retired. The reality is that three-quarters of trustees only want to attend meetings and will not commit to attending to problems (or want to attend to them only when it suits them). If you have a retired chairperson and at least one other “full-time” trustee, then this is not a problem. However, self-management becomes a pain when you, as the chair, have to do a full day’s job and then try to run the complex. In general, most people under the age of 40 are not interested in doing anything for free, so it is rare for “fresh blood” to come through onto the board of trustees.
Hi, Mark. Self-management doesn’t mean that you cannot employ people with the skills needed, if the trustees don’t have them (or the time). We employ, inter alia, a half-day bookkeeper and a half-day admin clerk, as well as a full-time maintenance supervisor. Although managing the staff does require a bit of time and effort, it’s better than having to do all the donkey-work ourselves.
How are self managed sectional title schemes dealing with the Estate Agency Affairs Board and Fidelity Fund Certificate? Our auditors are asking for a copy of the registration and fidelity certificate. If we don’t comply will they refuse to audit us? We have trustee indemnity and fidelity cover within out sectional title policy.
Hi Pauline. Self managed schemes do not need to deal with the EAAB and are not required to have a Fidelity Fund Certificate. FFCs are required by managing agents (ie. professional managers who are paid to manage schemes and collect levies on behalf of owners). Just confirm to the auditors that you are a self managed scheme and do not require a FFC. They shouldn’t have any reason to refuse to audit the scheme…
Hi, Paddocks one and all, We’ve been managing our 120-section scheme for something like 12 years, and wouldn’t have it any other way. The fact that ours is a reitrement village means that we have the time to devote to the job. It also means that, as we age, we are less able to do so – but somehow the right persons seems to crop up when we need her (or even him!)
We learned early on that we needed to have more than a passing knowledge of the ST Act (not to mention all the other applicable legislation).
All of the plus points mentioned in your article are valid. In addition, as we’re on the spot, residents’ queries or problems can be dealt with without delay. Potential problems are often picked early, before they can develop into disasters.
Yes, it calls for a bit of effort, but it keeps our brains active. Beats sitting in our rocking chairs all day, hands down.
Thanks Anne! We absolutely love your comment. It’s great to hear from owners who are doing it for themselves and making it work. Very well done. Keep up the great work.