Can Sectional Title Trustees be Paid?
By Jennifer Paddock
The position of a sectional title trustee is a voluntary and often thankless one. Dedicated trustees put a lot of their free time and a mountain of effort into scheme management, yet often receive no remuneration in return. In this post we look at the legalities surrounding trustee remuneration.
Remuneration
Prescribed management rule (PMR) 10 deals with this issue. It divides trustees into two categories, being owner trustees and non-owner trustees, and treats remuneration for each category differently.
Owner trustees: may not be remunerated unless the body corporate decides to do so by special resolution.
Non-owner trustees: may be remunerated at such rate as may be agreed upon between the body corporate and the trustees.
Reimbursement
Remuneration as envisaged in PMR 10 may be given to trustees in addition to reimbursement for all disbursements and expenses actually and reasonably incurred by them in carrying out their duties and exercising their powers. PMR 10 provides that both categories of trustees must be reimbursed for these expenses; so remuneration is compensation over and above reimbursement.
Remuneration as an incentive
In most schemes, owner trustees are not remunerated. Presumably the reason for this is that these people are willing to invest their free time in playing a role in ensuring that their properties are being well cared for and that they have more of a say in the scheme’s management than the average owner. But in a scheme where owner apathy is a major problem and owners do not want to stand as trustees, remuneration could be used as an incentive. There are people who are not interested in giving up their free time ‘for nothing’, but if they were offered payment for their time they may well be interested in standing for election as trustees.
Terms of remuneration agreement
The question of how much a trustee should be paid is one that no one can answer except the members of the body corporate. In the case of owner trustees, their remuneration could potentially be different in each case as this would be an expense that forms part of the body corporate’s budget and would have to be agreed to by owners at an annual general meeting. In the case of non-owner trustees, their remuneration will be at such rate as they have agreed upon with the body corporate. How the trustees are paid (ie. hourly, weekly, monthly etc.) will also be something that is agreed upon between the trustees concerned and the body corporate.
Remuneration of an alternate trusteeIf an alternate trustee takes the place of a non-owner trustee whilst the non-owner trustee is unable to carry out his duties and functions, PMR 10 provides that the alternate trustee must claim his remuneration, if any, from the trustee who he replaced and not the body corporate, unless the body corporate has been instructed in writing by such trustee to pay any portion of his remuneration to such alternate trustee.
Paying a trustee for “part-time” work
Some schemes have retired persons with administrative skills who are not prepared to work for nothing, but who are prepared to work for very much less than the cost of their skills on the open market. The nature of the work will often allow them to continue to enjoy their retirement, but spend a few hours a day or a few days a week giving the body corporate’s administration their full attention. Particularly when a scheme is going through a particularly busy period, for example when major repairs are being undertaken, this can be a very wise investment. And for schemes that do not employ managing agents at all, it can be the only way to ensure that at least one of the trustees can be held to account!
What is your experience with Trustee Remuneration? Share with us by commenting below…
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Thinking Inside the Box 
I was asked to be chairlady – without any payment – and after having agreed to be chairlady without any payment – I did so for 1 year – without claiming any monies for costs incurred to me – and know of no complaints lodged against me – until a nasty owner asked for me to be fired – so that she could come in – not as a chairlady – or trustee – but a paid helper – and because she is not always on the premises as I was – an additional paid caretaker has also been appointed – one who is always out.
On the statement it reflects that they are both receiving moneterial “gifts” and “honorarium” payments as well as the caretaker receiving a monthly salary – the question is: are they entitled to these payments and does the caretaker have to have a contract of employment??
Hi Jeanette,
Thanks for your comment. In terms of section 38(a) of the Act, the Trustees are empowered to appoint employees as they deem fit. Such an employee would be employed in terms of an employment contract and would be remunerated in the form of a monthly salary or a weekly wage. The payment of gifts and honorarium payments should not be the form of payment in the normal course.
Regards,
Paddocks
Every owner of a sectional title should be in possesion of a copy of the act
95 of 1986 On the net
Keep yourselves updated
I have been told that you have to have a managing agent who is properly qualified and registered, and that it’s now illegal for trustees to act as the managing agent unless they are registered as managing agents. Our building is run by trustees who do all the accounting etc in-house, with no agent at all. What is our legal position please?
Hi Wayne,
It is legally acceptable for a scheme to be self managed by the trustees. The trustees do not need to be managing agents, or registered debt collectors. Due to the variety of responsibilities that arise from holding office as a trustee, I would encourage that trustees do one of the training courses offered by Paddocks in sectional title management. http://www.paddocks.co.za/courses/sectional-title-trustee-training/
Thanks, Paddocks
holy holy….sounds like my complex…..and the managing agents are just as bad…funny thing is our trustees have not let us know if they get paid or not but from last year hating our managing agents to this year sticking their heads up there asses I assume they got conned into something as now they fight with their own BC and support managing agents. Also just had a 30% increase in levies which we did not approve yet they implemented it.
do we have a case here how do I investigate what is going on. how can we see if they are getting paid or not laying levies. Levies over R3000 now a month. we do not live in sandton this is middle class area. so people are all falling behind on the levies.,….anyone know someone will to investigate…could be a big juicy story. owner of agency said he has put to much time and effort into this complex and he wont loose it. WHY???? we wanted to get rid of him and told him his days are numbered.
he said not a chance.
Hi Romy
Are there any Audited financials for the complex. This is the first place to start. Read through the income statement and look at the expenses being billed. This will give you an idea of where the money is going. If there are no financials, then something is amiss.
I am not sure, but there are some trustees who support the Managing agent (MA). If any, the trustees should ensure that the MA is delivering as their duty is to the complex. If not, then give the MA or the trustee the boot. In most cases the MA uses minimal resources and hence issues never get addressed or resolved timeously. Just safeguard your funds as there is very little help from EEAB.
One should always be careful as to how trustees get paid. If they are only attending one meeting a month and no other correspondence, then the amount could be minimal. However, active trustees who deal with issues speedily on emails, could be entitled to more. If depends on the value they give to the complex.
regards
At our last AGM the chairman suggested renumeration of R1000-00 per month each for the 5 trustees. Under the General one owner proposed thst the suggestion for such renumeration be adoped, another seconded and the proposal was adopted.
NO notice of such a special resolution sent to owners before the meeting.
Is it legal to bypass the requirements of Management Rules by just accepting a proposal from the floor at the AGM ?
A Sean
I cannot comment on the law. A sum of this nature each has to be signed as agreed by all owners at a Special General Meeting to make it legal in my administration. If I’m wrong, apologies, I’m still learning.
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If a trustee gets paid /remunerated by the BC does this impact on their legal obligations compaired to them being a non-remunerated trustee.What impact /additional liability is there if any ?
To the best of my knowledge, it does open another ‘ball park’ and yes I believe they can be held accountable in their personal capacity now.
Hi, I definitely think Trustees should be paid and agree that gratitude is very limited.
Very few owners volunteer because of the gratis approach. R10 000 per meeting is steep. I spend about an hour a day with emails, besides the meetings. If you have a managing agent, you will notice that everything gets billed and hence Trustees should at least get some financial benefit. In doing this task, I would remunerate on a monthly basis as follows:
I don’t see the point for any additional benefit for the chairman as he/she only chairs the meeting and can only have a casting vote in a tie.
1. Attendance of full duration Trustee meeting – R500
2. Responsiveness to email: R 300 (to be decided by other trustees, but very subjective though)
With five trustees, the monthly cost would be (500+300) x 5 = R4000
An annual task like a chairmans report, should be paid at R1000.
Annual chairing of AGM – R1000, whilst other trustees present R500
These are very conservative figures but trying to remunerate more does not mean you will attract the correct caliber of people.
I would not leave the running of the estate/complex to the managing agent solely.
Trustees remain accountable and should influence decisions, work and costs especially in a tight economic environment.
I sure do appreciate your comments, ideas etc. Very helpful indeed.
The problem I have with being an owner/trustee and being paid, is that other owners/tenants then presume that because one is being paid one is at the beck and call of everyone in the block 24/7!
I have been a trustee & chairman of our block for going on 11 years with very little assistance, until recently, from anyone else and in fact had to make a lot of decisions on my own and the only thing I’ve received is criticism, seriously bad attitudes and rudeness.
Very little thanks or appreciation for the effort one has to put in and the time it all takes.
We have a situation where an owner is a trustee as well as the Caretaker of the building. She is compensated for her duties as Caretaker but not as trustee, therefore it is not seen as trustee remuneration. Is this allowed, or would a special resolution be needed?
As a small, self managed complex with only 6 units, owner apathy is really a problem. This is exacerbated by 2 units being let. One cannot reasonably expect the tenants to perform duties for the body corporate. Duties include treasurer, gardens, maintenance, pool service and chairman/manager. We have thus agreed to pay for those services such as pool service which would normally be contracted to an outside contractor.
90% of the time serving as a trustee is a thankless job. I therefore believe they should get paid on top of expenses they incurr. However, a detailed written explaination depicting rate of pay showing member cost per meeting or annual cost of such should be presented to members and not just a simple one liner such as: Refund of levies i.e. Chairperson 100% and other trustees 50% as was recently passed at our AGM. In fact our trustee only meet once every two months and based on that it works out at R10,000 per meeting. We only have 3 trustees and a managing agent that not only runs the complex but controls it by influencing members and insisting on chairing all members meetings. I also think that before members must first settle, nominate and close the discussion on number of trustees BEFORE discussion of compensation be raised to avoid everyone jumping on the gravy train.
Hey, you should be living in our complex. Our trustees get way more than that! They get to break all rules, avoid paying surveyors when increasing their units, don’t adjust PQ’s etc so the benefits are not measurable – and are untraceable