A Paddocks Sectional Title Lifestyle Blog
By Zerlinda van der Merwe
Does your managing agent operate a centralised trust account, into which individual members, of each managed sectional title scheme, deposits their levy and other contributions? I have often been posed with the question as to whether managing agents may operate a centralised or composite trust account, more commonly known as a “bucket account”.
Section 1(a) of the Estate Agency Affairs Act 112 of 1976 (“EAAA”) defines an estate agent as any person who for the acquisition of gain on his own account or in partnership, in any manner holds himself out as a person who, or directly or indirectly advertises that he, on the instructions of or on behalf of any other person … iv) renders any such other service as the Minister on the recommendation of the board may specify from time to time by notice in the Gazette.
On 17 July 1981, managing agents were included in the definition of an estate agent in terms of section 1(a)(iv) of the EAAA. Section 2 of the Government Notice Regulation 1485/1981 published in Government Gazette 7663 RG 3233 (“GNR 1485”), included the services of collecting and receiving (a) money payable by any person to or on behalf of developer or body corporate in terms of the Sectional titles Act, in respect of a unit or proposed unit, to the definition of an estate agent in terms of section 1(a) of the EAAA.
In terms of section 32(1) of the EAAA, an estate agent shall (“must”) open and keep one or more separate trust accounts with a bank, and to deposit trust money held or received by or on behalf of an estate agent. The EAAA further provides that the trust money held in these trust accounts, shall be retained by an estate agent, in such accounts until the estate agent becomes lawfully entitled to the trust money, or is instructed to make payment of the money to another party. In terms of the EAAA, an estate agent may administer these accounts, however, the money held in credit in the trust accounts shall not form part of the assets of the estate agent.
Section 37(1)(e) of the Sectional Titles Act 95 of 1986 provides that as part of the functions to be exercised by the trustees, on behalf of the body corporate, they must open and operate an account or accounts with a banking institution or building society. In terms of Prescribed Management Rule (“PMR”) 41 of Annexure 8 to the Regulations of the Sectional Titles Act, trustees must deposit all moneys received by the body corporate into an account or accounts, held in the name of the body corporate, and subject to any direction given or restriction imposed on the trustees, by the members at the Annual General Meeting of the body corporate, and only to be withdrawn for the payment of expenses or investment of the funds in terms of PMR 43.
However, PMR 42 empowers trustees to authorise its managing agent to administer and operate the body corporate accounts, and provided that the managing agent is registered as an estate agent in terms of the EAAA, the trustees may authorise the managing agent to deposit the moneys received by the body corporate in a trust account as prescribed by the EAAA, to be withdrawn only for the purposes as set out in PMR 41 and PMR 43.
Should your managing agent fall within the definition of an estate agent, as defined by the EAAA, and as required by the Prescribed Management Rules of the Sectional Titles Act, and further complies with the relevant provisions of the EAAA, it may operate a “bucket account”.
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Its really sad how the MA and the trustees can sometimes collude to become corrupt. I am glad that you have bank statements and can see expenses and question them. The expenses can also be question when the financials are delivered at the AGM. On remuneration of trustees, I think you could read the other articles as there are a few on Paddocks.
I would get rid of the MA and appoint somebody more credible and transparent. The mere fact that you are being told thats it none of your business alerts me to something that could under handed.
Also becoming a trustee can help you get hold of some of the info. I am sure you could do the job.
Our MA is the only one transacting on the BC’s own bank account. he does as he pleases and the trustees do not have a card to transact on the account. I’m not even sure they have “viewing access” as he calls it. He says he doesnt have to be registered with EAAB as he does not run a trust account, the account is in the BC’s name. I have by way of a subpoena to the bank for statements, seen what he pays himself and “other” people including monies to the chairlady, of which at AGM I was told its none of my business, and the few that attended didn’t ask questions. This has been going on for years. The trustees all elect each other at AGM’s. On our insurance policy, there is a clause especially for a MA WITHOUT FIDELITY INSURANCE TO BE INSURED BY THE BODY CORPORATE, WITHOUT ANY OF US BEING CONSULTED. So we pay for him to use our money as he pleases. Crazy stuff.