Thinking Inside the Box

A Paddocks Sectional Title Lifestyle Blog

Duties of managing agents

Property-Management-Agents
By Anton Kelly

Managing agents get a lot of criticism from owners. No doubt some is justified – we all make mistakes and sometimes have gaps in our expert knowledge. To manage owners’ expectations of what their managing agent should be doing and how, we should establish what exactly a managing agent’s job is instead of criticising how well any particular managing agent does it.

There is currently no legislation that deals specifically with managing agents, what they must do or how. For sectional title schemes, the prescribed management rules (PMRs), which are annexures to the regulations under the Sectional Titles Act, 95 of 1986 (the Act), have plenty to say about managing agents but not what they must do for schemes; rather they make provisions for how the scheme interacts with the managing agent if one is appointed. Having said that, the Act and the PMRs have a very strong influence on the managing agent’s duties because managing agents are appointed to perform functions of the trustees and those functions are very specifically legislated.

The Act lays out the functions of the body corporate in section 37 and its powers in section 38. Section 39 provides that trustees perform those functions and exercise those powers. The prescribed rules provide detail of those functions and powers. One of the powers of the body corporate is to appoint agents and employees; the detail in the rule is that the trustees may appoint an agent in connection with the powers and duties of the body corporate. PMR 46 says that the appointment must be made in terms of a written contract. The duties of managing agents are therefore based on contract, not legislation. The contract lists in detail the duties the trustees want the managing agent to perform.

As an aside, it is worth noting that although the trustees may appoint an agent to perform some or all of their legislated tasks, they cannot delegate their responsibility and fiduciary duty in respect of those tasks. They must ensure that the managing agent performs the tasks assigned in the contract to a satisfactory standard. They have a supervisory role. So the questions that arise, such as must the managing agent enforce the rules, issue fines, enforce limitations on the number of occupants of sections, get the door of the mailbox fixed and supervise the garden service, can only be answered by reference to the scheme rules and the management contract. Which is why the contract must be so detailed!

Image source: quintessentialhomestaging.com

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9 comments on “Duties of managing agents

  1. Gesie
    February 2, 2017

    Is it necessary for the MA to consult with the Trustees before doing the Agenda for the AGM?

    • Paddocks
      February 9, 2017

      Dear Gesie,

      Thank you for your comment. We are more than happy to help, however we do not give free opinions / advice. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.

      Kind regards,
      Paddocks

  2. Alichia
    September 15, 2016

    hi. I’m an intern estate agent, possibly selling a hotel at the moment. what would I need, what are the requirements and duties, that I need to have/ do to take the managing agent job for this hotel after ive sold it?

    • Paddocks
      September 26, 2016

      Hi Alichia,

      Thank you for your comment. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.

      Kind regards,
      Paddocks

  3. Phumeza Nojilana
    March 16, 2016

    Please advise i need ideas on how the complex can attract tenants and boost cash revalue

  4. de villiers
    March 26, 2015

    A cheatsheet for contracts MA with BC for the year 2015, when we all have computers, web access, etc is needed. A list of what should be in the contract NOW with the MA in this digital age, would assist us, Anton: It should also be included in the conduct and management rules of ST and the MOI of a HOA.

    Before a MA is appointed the trustees should draw up a “shopping list” of what they want the MA to do and what they expect to be done. The minimum duties of managing agent should be explicitly stated in the MOI. The next step would be to approach a few MA’s and ask them what standard type of services they provide and at what cost. The trustees could interview two or three and find out which of their items could be included (and if there would be additional costs). Once a candidate has been decided on they can start to negotiate seriously about what to include in the contract and which services will be charged for separately. the trustees should accept their responsibilities and interact with the MA and if they do not do this the owners can replace the trustees.

    Some managing agents have easy-to-use computer programs – for instance if you want to get information you click on their website.
So surely there is software available? I would like to hear what software your MAs use, so owners, please ask your MA, and let us know.
Our MA in CT automatically sends electricity bills to letting agent, owner and tenant. The information is simply entered in his computer and from then it happens automatically. It is important for letting agent and for owner to get the electricity bills too, as a sudden increase in use of electricity might mean overcrowding in the unit.
Also all management rules and conduct rules and plan of complex is on the website, which is assessed by using a password.
Simply using MS Excel, all information is easily accessible.
Remember the days before MS Office? we should not insult the MA’s by allowing and encouraging them to use technology from 1990.


    Please provide a list of items you think we can reasonably expect from the MA, so that we can include it in our agenda for AGM. other owners please send web-links so that we can figure out what should be specifically added to MA’s duties at our AGM.
Anyway the auditor do not want boxes full of paper / receipts/ invoices. He wants all information neatly sorted and labeled and ON the computer so that he can do a thorough and decent audit.

    It is the trustees who would appoint the MA i.t.o. PMR 26 (1) (a) and PMR 46 (1) (a) and delegate certain duties to the MA. Often trustees are under the impression this is where their responsibility ends. The bad news is this is where they have to be more on their toes as they are still ultimately responsible for the MA’s actions – they can delegate their duty but NOT responsibility!


    each scheme is unique and has its own specific needs and frills to be catered for.

    Not all MA’s have websites, so to expect the MA to operate a website must be stated in the MOI. If a scheme (trustees and owners) is not happy with the service their MA provides they could request the extra bells and whistles. Open and transparent management is the key to ensure that trustees of sectional title and directors of HOA do not enrich themselves. each client thinks he has to be front of the queue 24/7 as far as service is concerned but the MA is mostly blamed for overcharging and under performing.

    One could have said 30 years ago that the budget should / could be handwritten because MA did not have a word processor or a typist.
In MS Word, click on “create new” and start typing in a web page you create.
 Any email service provides virtually free space for hosting web pages. Please other readers, let us know which of your MA’s have web pages- please send us links, so that our MA’s can get the template or software from them. I have seen some on the web. The point of all this is that the MA has a duty to provide information in a clear and transparent fashion, as laid down by law – the CPA.

  5. Annette Brink
    March 26, 2015

    The fiduciary duties of managing agent in sectional title complex would be interesting. 
In most complexes, the managing agent keeps good record, is accessible, and run and open and transparent management office. However, what about the other managing agents?


    Should a managing agent give advice to trustees? or should he only collect the money?


    Should a managing agent provide a report at the AGM to specify on which apartments money was spent? i.e. are the trustees maintenance problems always be attended to? the only way is to get a table of info – in fact a running total table over 5 years or better still a graph over ten years.

    
Should the managing agent send out newsletters to inform about rates and assessment increases?
Should the managing agent let owners know that city of joburg will soon require individual water meters for each apartment? ( and that financial provision must be made for this?)

    
Should the managing agent let owners know that city of joburg will soon require individual pay as you go electricity meters for each apartment? ( and that financial provision must be made for this installation?)


    Should the managing agent let owners know that the complex need to repainted within 2-3 years and that financial provision should be made?

    
Should the managing agent inform owners about the latest rules about geyser installation, and gas connections?
 Should monthly reports be sent to all owners including the minutes of the trustees meetings?


    Can a managing simply wah his hands in innocence and sy that he has not got any minutes of the trustees’ meetings for the last 10 years?


    Should a managing agent provide graphs of electricity spending so that owners can identify irregularities?

    
Should the managing agent provide graphs of water sent so that all owners can study this?
should this information be freely available? or may it be kept secret by the trustees and the managing agent who are in cahoots?
as the managing agent is appointed by the trustees, it is in his interest to protect the trustees and keep as much information as possible quiet.


    Should the managing agent inspect whether the common property and EUA as given in the Deeds Office Plans are adhered to and that the trustees are not misusing their position.
 Somewhere I read that Prof van der Merwe ( I am told that he is the ultimate academic expert on sectional title) and who has written THE book on PROPERTY LAW expects the managing agent to play a formal role in advising the trustees and body corporate. 
 How are the KING 3 principles (these are general principles of good governance) applied to managing agents?
 All this would help in identifying the managing agents fiduciary duty.
 After all, everyone has MS Powerpoint and can provide graphs, everyone can create pdf files, everyone has MS Excell and can provide the necessary clear and transparent information needed as required under our constitution.
I wish Myburgh would write. long, long article incorporating the To be shortened and included in memorandum of incorporation
    laws in HOA NPC: STO, CPA, access to information, labour law, and the off course,: what High Court and constitutional court has has to say about managing agent, directly and indirectly as far as Human Rights etc is concerned. The rental act is also applicable as NAMA/Ombud said the tenant can also take MA to CPA or Ombud.

    • paddocks
      April 22, 2015

      Hi Annette, thanks for your question. We answer one question a day on our Facebook page for free. Please Like our Page on FB and re-post your question on our wall. One of our consultants should answer you within a few days. Thank you!

  6. Horst Schobesberger
    March 25, 2015

    A detailed contract, understood fully by the Board of Trustees, active trustees, regular trustees meetings with a special item on the agenda for the Portfolio Manager to give feedback and ask for decisions will create and maintain the correct working relationship between the Board of Trustees and the Managing Agent. Failure to do so will create a monster whose boots are becoming too big and who will make ALL decisions instead of the trustees. It is therefore also important that the caretaker understands who is in charge, which does not always happen in block of flats. HORST.

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