Thinking Inside the Box

A Paddocks Sectional Title Lifestyle Blog

Bodies corporate need to budget for the education and training of the trustees

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By Paddocks

Trustees in sectional title schemes have many powers and duties as set out in the Sectional Titles Schemes Management Act, 8 of 2011 (“the STSM Act”). These powers come with a high level of responsibility. It is therefore necessary that the trustees obtain a certain level of education and training.

In particular sections 3, 4 and 5 of the STSM Act prescribe the functions, powers and additional powers of the body corporate that are to be performed by the trustees.

Some of the functions of the trustees include:

  • Establishing and maintaining operating and reserve funds.
  • Budgeting.
  • Raising contributions in proportion to the owners participation quotas.
  • Opening and operating a bank account.
  • Insuring the building, paying the premiums and submitting insurance claims.
  • Maintaining common property, and the pipes, wires, cables and ducts, and any plant, machinery, fixtures and fittings used in connection with the common property.
  • Complying with orders from competent authorities in respect of repairs/maintenance.
  • Maintaining lists of contact details of all the members.
  • Maintaining all the books of account and other records of the body corporate;

Some of the powers of the trustees include:

  • Appointing agents and employees.
  • To purchase or otherwise acquire, take transfer of, mortgage, sell, give transfer of or hire or let units.
  • To purchase, hire or otherwise acquire movable property.
  • To establish and maintain on the common property suitable lawns, gardens and recreation facilities.
  • To borrow moneys and to secure the repayment of moneys borrowed.
  • Investing money in the reserve fund.
  • Entering into agreements for the provision of amenities or services by the body corporate to an owner or occupier.
  • Letting a portion of the common property to any owner or occupier by means of a short term lease.
  • Doing all things reasonably necessary for the enforcement of the rules.

Section 8 of the STSM Act sets out the fiduciary responsibilities of the trustees. In addition to this, regulation 14 of the Community Schemes Ombud Service Act, 9 of 2011 (“the CSOS Act”) places further responsibilities on scheme executives. It specifically requires that a trustee must:

  1. Take reasonable steps to inform and educate themselves about the community scheme, its affairs and activities and the legislation and governance documentation in terms of which the community scheme operates.
  2. Take reasonable steps to obtain sufficient information and advice about all matters to be decided by the trustees to enable him or her to make conscientious and informed decisions.
  3. Attend all body corporate and trustee meetings, unless excused by the chairperson of the trustees on reasonable ground.
  4. Exercise an active and independent opinion with respect to all matters to be decided by the trustees.
  5. Exercise due diligence in relation to any business of, and necessary preparation for and attendance at meetings of the trustees or any committee to which such trustee is appointed.

This Regulation also clearly states that these obligations are in addition to and do not derogate from the fiduciary obligations of the trustee in terms of the common law or any applicable statute.

From the above discussion, it is clear that holding office as a trustee involves hard work, dealing with varied and strong personalities including apathetic and ignorant owners, and complicated physical, financial and legal issues. However, trustees do have a certain degree of control in the administration of the scheme; can contribute constructively to the scheme and the value of the property and can ultimately play a vital role in the success of the scheme.

Ideally, trustees should be properly elected, experienced and qualified in all matters relating to sectional titles. Trustees, as their name implies, are in a position of trust and must manage the scheme for the benefit and in the interest of all the owners.

Trustees need to know and understand the sectional title legislation and follow the applicable rules in such a way so as to organise the sectional title scheme in the owners’ best interests.

It is for these reasons that bodies corporate should include as a line item in each budget a certain amount of money for the education and training of their trustees. This will ensure that trustees can have access to the knowledge and information required to properly execute their tasks as the elected executives of the scheme.

Paddocks offers various courses that could be useful to trustees. For a list of all our courses please visit www.paddocks.co.za.

Image source: unsplash.com

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2 comments on “Bodies corporate need to budget for the education and training of the trustees

  1. Anne Greening
    August 29, 2018

    Regarding “Letting a portion of the common property to any owner or occupier by means of a short term lease.” I have a concern that this may be misleading, as it appears not to be within the Trustees’ powers, unless approved by a special resolution of the body corporate (STSM Act Section 4(h)).

  2. Amanda
    August 29, 2018

    We have new trustees every year, we ask them to educate themselves as to budget for them to go on courses every year would almost double our levy.

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