In Defence of Managing Agents
By Jennifer Paddock
Managing Agent.
Now there’s a job I don’t want to do again.
Why?
It’s (insert expletive here) hard!
It’s a job that requires a person to wear numerous hats: accountant, facilities manager, lawyer, psychologist and policeman to name a few.
And the key thing about being a managing agent – it’s all about people:
Chairpersons. Trustees. Owners. Rental agents. Body corporate staff. Municipal representatives. Contractors. Tradesmen. Lawyers. Estate agents. Neighbours. Guests.
It’s the Managing Agent’s job to deal with all of them. Often for a menial salary and having received little or no formal training.
Abuse is no joke
The MA is effectively the public face of the body corporate and the role often involves delivering difficult news to owners about what they may or may not do and about how much money they owe (another special levy?! Definitely the MA’s fault!).
Not many people appreciate that managing agents regularly experience verbal abuse from owners – a classic case of shooting the messengers. The MAs are intermediaries and in most cases do not have the power to rectify issues – they can only manage the communication and the processes around them.
Pressure to keep levies low but get everything done
One of the key tasks performed by a MA is to prepare the annual budget on behalf of the trustees, which, once approved, becomes the basis upon which each owner’s levies are calculated.
In my experience, many owners seem to believe that the MA is directly responsible for how much the levies end up being. In actual fact, the only amounts that the MA has a direct impact on are the body corporate’s management fees and any other charges the management company bills the body corporate. For the most part the new budget is based on the body corporate’s actual expenditure for the previous financial year plus foreseen increases and other anticipated expenditure for the following year. But ultimately the owners at the AGM (and NOT the MA) approve the budget upon which their levies are based.
When I used to receive calls from irate owners shouting at me for the increase in levies I loved explaining to them how the approval of the budget was actually the owners decision (ie. their decision) and then asking if they had in fact attended the AGM. Nine times out of ten they hadn’t. That usually did the trick.
In addition, the ironic thing with this pressure to keep levies low is the corresponding pressure on the managing agent to get all manner of things done. My problem is that the owners have generally not seen the terms of the signed management contract and therefore they do not understand the scope of services provided by the MA. They therefore generally expect everything and anything relating to their section or the common property to be the MA’s responsibility when in actual fact there are many things that fall outside the MA’s agreed scope of services. Not to mention that even if what they are asking for is within the scope of services – it may not have been budgeted for…
As a MA, what can you do about all this?
- Getting a menial salary for a hard job? Get properly trained in sectional title managing agency. Being properly trained means you separate yourself from the other hundreds of untrained MAs and will allow you to demand a higher salary or even give you the confidence to start your own Sectional Title Management Company if that’s a dream of yours.
- Receiving verbal abuse? Firstly, learn how to politely and professionally deal with unfair verbal abuse. Here’s an article I came across on Google to get you started. Secondly, understand the management contract with the bodies corporate you manage and then educate your chairpersons, trustees and owners about the boundaries of your role (what you are and aren’t responsible for).
- Educate your chairpersons, trustees and owners about the approval process for raising levies to ensure they understand that the amount of levies they pay is ultimately up to them, not you.
- Be the best MA you can be and provide a great service so the majority of your chairpersons, trustees and owners respect you. This will make your job a lot more rewarding.
Do you agree that managing agents have a tough job? Share with us by commenting below.
Image source: subversify.com
Content inspiration: lookupstrata.com.au/blog
Thinking Inside the Box 
Can HOA Trustees cancel contract with Managing Agent without the concent or without letting Owners know about it? What are the procesures?
Good Rochelle,
Thank you for your comment. We would love to help but unfortunately do not give free advice. Please see below for how we can help:
– We offer consulting via telephone for R390 for 10 minutes.
– We have Paddocks Club, an exclusive online club, headed by Prof Graham Paddock, to help you get answers to your questions about community schemes: http://club.paddocks.co.za/
– We offer a Free Basics of Sectional Title short course starting soon: http://www.paddocks.co.za/courses/free-basics-of-sectional-title/
Kind regards,
Paddocks
Advance Block Management dislikes the use of putting a levy on leaseholders account. A proactive property management service would ensure and avoid to use of a levy, if the savings have been done properly. Call Advance for more information.
This sounds like an advertisement.
Quite agree, Anne.
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A lot of what has been said in the article and the comments is true. As an owner of our own flat in one BC and another 2 flats in a second BC, I served as a trustee (and ultimately Chairman) in both. Between the two blocks 6 different Managing Agents were contracted in less than 10 years – not a healthy advert for MA’s.
I am no longer involved in either block, having moved overseas. There is a long list of issues with regard to the second block of which the major one was the way in which levies were increased in 2011 – 2013.The MA (and trustees) were unable to demonstrate how the levy amounts were derived from the budget using the PQ factors (to this day they still cannot do so). I continued to pay levies at the existing level but refused to accept the increases. After some 18 months they issued a Summons against me, which literally forced me to pay the so-called arrears with all the interest they had added in the interim.
Nine months later for the 2013 AGM they produced a budget with a levy schedule using the PQ ratios just as I had insisted all along. No explanation was given to the Owners for the changed format nor did they acknowledge that they had been incorrect.
Put this down to inefficient administration, complete lack of understanding of the ST Act requirements for calculating levies and poor communication.
I believe that two issues need to be given far greater attention viz. communication and education.
When someone purchases a unit in a ST block, they should be made aware of their rights and obligations as owners in a ST block via a welcoming letter from the BC (and if possible in person as well). For my first purchase, I had not the faintest idea of what ST ownership was about, nor did the estate agent draw attention to the subtleties involved. In fact the ESTATE AGENT, selling the unit,, should be obliged by law to include a summary of those rights/obligations in the Offer to Purchase. These two actions would help to get the BC – Owner – MA relationship off to a sound start.
On the MA side, whilst much of the work is of a routine administrative nature, there must be at least one qualified staff member vetting all minutes for all trustee meetings (certainly a bugbear for the MA’s).
Trustees must have undertaken training in a recognised short course which helps them to identify the potentially problem issues for which qualified advice may be required. If a BC cannot demonstrate this minimum ‘qualification’, then they should be obliged to refer their minutes to a suitably qualified body for rubber-stamping.
So many trustees complain about the amount of effort they input, but in actual fact many of them do precious little between one meeting and the next, hardly bothering to read the minutes of the previous meeting. That is why meetings drag on for so long. In today’s digital age, most of items that come up at the meeting should have been thoroughly researched and discussed. Just about the only item for discussion at a trustee meeting should be something new which needs urgent attention.
The trustees tend to sit back and assume that all is being taken care of by the MA when they should be executing their management function of keeping a proper watch on their respective portfolios.
One last point – circulating minutes of trustee meetings to all owners (email only) would help to keep owners aware of what does get done ( or perhaps what isn’t getting done!).
Lawless, correspondence is typically fowarded to the MA which is sent on to the Trustees for their attention. I am sure its not a matter of them having too much time on their hands. Perhaps investigate more.
How’s this one. Our managing agents have so much time on their hands that they insist all owners have to send all correspondence to them. We are not allowed to deal directly with the trustees – since the AGM notice has not been sent out as to who they are coz “it is an infringement on their privacy”. We send mail to the M.A. who respond by saying that “your message has been forwarded to the trustees”, and that is where it ends ….
And, we don’t employ a managing agent. We employed the services of a highly recommended accountant with interests in sectional title and the estate agency industry. Makes me wonder if everyone affected by the demise of both Wendy Mechanik Estates and CSTM will ever see their BC’s money again? I’d be meshuggeneh to say that I’d love to have the job of a managing agent – heck, I have been doing it for 10 years already in this building. Trustees, or some trustees, deserve to be financially reimbursed for their portfolio, but only on exemplary performance.
I used to do the books for a Body Corporate (Internally) and I have found some of the owners are ungrateful. In their eyes the Trustees are not at fault.
Hi, Jennifer.
I agree with your comments about the difficulties besetting a MA, and with Les Reynard’s list of the skills needed to do the job. These comments apply equally to the hardworking trustee, who does not have the financial recompense (however menial) of an MA; but does the job without reward. Said trustee, if resident, is also expected to be available day and night, 365 days a year, and does not keep office hours. And, yes, we also have to put up with difficult owners’ who can sometimes be really offensive. The latter is the reason why I finally called it a day, after 10 years.
So, let’s applaud the professional MA, without whom many schemes could not function; but don’t forget the many dedicated trustees.
Hear here, Anne. However, our BC is very generous to me: R250 a month services fee. At least it’s a reduction in our LEVY that would otherwise make it impossible for us to continue living here, despite having paid cash for my unit. I am now into Year 9 consecutively as Admin Trustee for Camelot Body Corporate – I should be doing something right?
I fully agree but it also depends on the owners who can be very demanding and insist on on MA to perform outside their scope. If owners communicate with the trustees as required in stead of pestering the MA it will help. Nine out of ten times these bitchy owners do not attend AGM`s but have a lot to say ones the receive the minutes of the meeting. Johan Van Den Berg
I agree completely. The role of the managing agent, as per contract, falls on deaf ears.
Hi Jennifer
I like what Prof. Cornie van der Merwe on 15-11 of his book Sectional Title, Share Blocks and Time Sharing……. to summarise, an ideal managing agent must be a combination of a diplomat, a person secretary, a nursemaid, an estate agent, and insurance agent, a building society representative, a painter, a plumber, an electrician, a building contract and a superhuman.
At townhouse complexes the BC pay the Grass Cutting Service more than they pay their managing agent!
The Garden Service works twice a month,for a few hours at a time, is not require to have an office in a business area, does not require to have professional bookkeepers and accountants,computers, printers,telephone systems, board rooms, does not have to be an Estate Agent, pay fees to EAAB every year and have their firms audited figures with them by a certain date, failing which you loose your membership and have to reapply for membership, they have no Code of Conduct to worry about, they are not subject to surprise audits to by the EAAB, they do not have to collect points every year by attending EAAB meetings so that they can retain their license to trade (the Fidelity Fund Certificate) they do not have to qualify to NQ4, and NQ5 if they want to be the principle of their business.
I think to some extent it is the fact that when owners get home they can SEE that the grass has been cut and therefore feel the expense is justified whilst it is difficult to conceive what the managing agent is actually doing
They are not responsible to for a complex with an insured value sometimes in excess of R100 million, they are not responsible for advising trustees on correct procedures to follow, they do not receive daily complaints about noise, dogs/cats and other problems. They never have to attend evening meeting with trustees or for AGMs this makes it a long day for PFM’s. Meeting normally last until about 7 pm so the get home time is about 7.30 pm – I missed seeing my kids at bedtime, they were always asleep before I got home.
They never have to give advice on technical or legal matters – what a great profession to be in – and if they give the wrong advice they can be sued…….. Managing Agents would surely swop trades with Grass Cutters any day.
Having said the above – I must admit in the last 30 years I have always loved this business, the dealing with people and the problems as they occur from time to time as the passing on of my knowledge gained over the years. No, I would do it all again.
Les Reynard
Great feedback Les and valid comments – thanks for sharing!
Please please help!
My BC is having their AGM this Saturday.
Some unit holders have not received notifications as yet.
What are my rights, I’m up to date with my monthly levies, but in arrears with a fine, which is currently in dispute and been handled by my attorneys.
Am I eligible to vote at the current AGM.
Also MA refuse to let me have copy of current levy schedule, how is one to see the status of levies to date?
Your favourable urgent response is regards is greatly appreciated.
Vassie Naidoo
(t) 031 – 569 2010
(f) 031 – 569 2132
Hi Vassie, please contact our private consulting department on 021 686 3951 and we will let you know what your options are in terms of receiving advice. Thanks so much.