Duties of Trustees
WHAT AND WHO ARE TRUSTEES
A Sectional Title Scheme or Complex, as it is often called, is controlled and managed by a Body Corporate. Trustees are persons who are appointed to look after the finances and running of the Sectional Title Scheme on behalf of the Body Corporate.
I HAVE BEEN ASKED TO BE A TRUSTEE .WHAT SHOULD I DO ?
The Trustees of a Body Corporate are appointed by the owners in a Sectional Title Scheme. They act in a position of trust and manage the affairs of the scheme on behalf of the body corporate. The determination of the number of Trustees and the election of Trustees for the ensuing year is done at the Annual General Meeting. The Trustees appoint a chairman as their “leader” or manager of the group. A Trustee is trusted to act honestly and for the interests of the Body Corporate. They play such an important role that their appointment, duties, and conduct of meetings is dealt with in great detail in the 1986 Act under the statutory management rules, known as Annexure 8 of the Act. These notes have been prepared to give an overview of the Annexure 8 of the Act with respect to the duties of a Trustee.
SO WHO AND WHAT IS A TRUSTEE ?
A Trustee is a person or persons appointed by the owners of the various Units in the complex to look after their investment in the complex.
HOW DO I LOOK AFTER THE INVESTMENT ?
The most important duties of a Trustee are to:
Check that each owners pays his/her fair share (levy) towards the monthly running costs of the complex,
Check that the moneys received (levies) are banked and used correctly,
Check that owners, who are in arrears, bring their accounts up to date and do not sponge off the goodness of those who keep their payments up to date.
Check that payments as determined by the budget are made as and when required,
Check that the expenses as specified in the budget are not exceeded,
Check that the common property is always in good repair and does not depreciate in value,
Check that the Complex is adequately insured at all times so that the owners investment is not ever at risk,
Check that the owners, and their tenants, abide by the rules as determined by the owners of the complex,
Check that he/she and the other Trustees abide by the Sectional Titles Act
Check that the Managing Agents, or any other agents used to assist in the Trustees in their duties abide by the Sectional Titles Act.
WHAT ARE SOME OF THE OTHER DUTIES OF A TRUSTEE ?
The Trustees shall, on behalf of the Body Corporate, control, manage and administer through its appointed agents and employees:
The cleaning, maintenance, management and security of the Common Property.
The Insuring of the buildings against natural disasters,
The maintenance, management and improvement of the communal facilities.
The establishment of a fund for the repair, upkeep, control, management and administration of the Common Property by levying contributions on the owners in proportion to the quotas of their respective units.
The preparation and presentation of financial statements and reports to the Annual General Meeting. This entails: –
An itemized estimate on the anticipated income and expenses of the Body Corporate during the ensuing year.
An audited financial statement of the period under review.
The Trustees’ Report on matters attended to during the period under review.
HOW TRUSTEES GET THINGS DONE
Trustees meet, discuss what has to be done and decide who will do it.
This sounds simple but certain procedures are necessary and have been stipulated by the Act.
Firstly the meeting must be correctly convened, have a quorum and minutes kept and a record kept of Trustees attending the meeting and decisions reached.
At least 7 days written notice shall be given to Trustees (and any first mortgage holders if they have so requested) convening a meeting.
In the case of urgency shorter notice as is reasonable in the circumstances may be given. Rule 15(1), (2), (3)
50% of Trustees but not less than 2.
The trustees present, who shall not be less than 2, shall form a quorum. Rule 17 If no quorum present after 30 minutes of the appointed time the meeting stands adjourned to the next business day at the same place and same time.
The Act stipulates that the Trustees shall:
appoint their own chairman, The chairman’s duty is to chair the meetings, keep minutes of their meetings, keep all minute books in perpetuity and comply with all facets of the Act.
Trustees may regulate their meetings as they think fit. Rule 15(1)
MEETINGS OF TRUSTEES
At least 50% of the total number of Trustees must be present to form a quorum for a valid meeting of the Trustees, in no circumstances can only one Trustee hold a valid meeting.
A Trustee cannot be represented at a meeting by a proxy or any other agent.
An alternate Trustee, who does not represent but replaces an absent Trustee, is counted for the purpose of establishing a quorum at a meeting of the Trustees.
If the Chairman should relinquish the office as chairman then the Trustees shall elect another Chairman who shall hold office for the remainder of the period.
If the chairman vacates the chair during the course of a meeting or is unable to preside at any meeting then the trustees present shall choose another chairman for the meeting who shall have the same voting rights as the chairman.
In terms of the Management Rules the Trustees may regulate their meetings as they see fit. Because there are a limited number of Trustees and they deal with practical day-to-day management issues, they are usually able to conduct their meetings far more informally than general meetings of the Body Corporate.
We offer the following information based on experience gained from some of the Sectional Title Complexes that we manage.
Each of the Trustees should have a specific portfolio assigned to them.
The first is the Chairman who should have some financial and/or legal knowledge and be fully conversant with Annexure 8 of the Act.
The second is the Secretary who should have access to a computer, with a word processing program, and a printer.
The third is the Caretaker who should have a general practical knowledge of maintenance and access to sub- contractors that may be required on an urgent basis at various times.
The remaining Trustees, could oversee matters such as security, gardens, staff, etc…
MORE INFORMATION ON DUTIES
The Chairman, Secretary and Caretaker must have a good working relationship with each other.
The Chairman should, at all times, know what money is in the bank, what costs have to be paid during the month and budgeted for in the future and how much and where any surplus funds are invested. He should oversee the finances in conjunction with the Managing agent, and see that the costs of the various sections do not exceed the budget. He should also know which owners are in arrears with their levies, and initiate follow up procedures so that these offenders will bring their payments up to date.
The Secretary is the main record keeper. Other duties will include advising Trustees and members of meetings, recording the minutes of the meetings, paying of accounts when due .
The Caretaker is responsible for any labour employed by the Body Corporate, repairs and maintenance that might be required and keeping the complex neat and tidy. Generally the Caretaker would be given Petty Cash for anticipated minor expenses that will come up. The Caretaker may not sign or enter into any contracts for maintenance and repair work without approval of the Board of Trustees. However he may undertake to do urgent repair work with the approval of at least one other Trustee provided the work is adequately documented and submitted to the Board at the next Trustees meeting for their approval and recording.
The remaining Trustees should assist wherever possible and be ready to take over the duties of any of the three main Trustees at any time.
DO I GET PAID FOR BEING A TRUSTEE ?
Trustees who are owners, under normal circumstances, do not get paid for for their services. However Trustees who undertake certain duties such as being the Caretaker of the complex may be paid for their services provided this payment has been agreed to at a Special General Meeting .
Rule 10 (1)
WHO MAY BE TRUSTEES
Any person, or resident, or non resident may be elected as a trustee, as long as the majority of trustees, are owners or spouses of owners.
ELECTION OF TRUSTEES
Trustees are elected at the first General Meeting and hold office until the Annual General Meeting at which time they stand down but are eligible for re-election. Thereafter election of Trustees takes place at each subsequent Annual General Meeting.
NOMINATION OF TRUSTEES
Written nomination for the election of a person as a Trustee is made by an owner. This nomination must be in writing accompanied by the written consent by the person being nominated. The nomination must be given to the body corporate or the managing agent at least 48 hours before the meeting.
However should insufficient written nominations have been received prior to the meeting then owners may nominate trustees, with their consent, at the meeting.
VOTING FOR TRUSTEES
If more than the pre-determined number of trustees are nominated prior to the meeting then a ballot shall be held at the meeting to establish who of the nominated trustees shall be appointed to office.
If insufficient trustees were nominated prior to the meeting and nominations from the floor at the time of the meeting result in the nomination of more trustees than the pre-determined number then a ballot shall be held to determine who of those nominated from the floor are to be appointed to office.
WHAT IF A TRUSTEE VACATES HIS POSITION DURING THE YEAR
The trustees may fill any vacancy in their number. This is usually done by invitation. Any trustee so appointed is expected to hold office until the next annual general meeting when the trustee would stand down but be available for re-election.
WHO AND WHAT ARE ALTERNATE TRUSTEES
During the absence of a trustee or if a trustee is unable to act as a trustee then the remaining trustees may appoint another person, owner or otherwise, to the position of a trustee. An alternate trustee has the same powers and responsibilities as a trustee. An alternate trustee ceases to hold office if the trustee whom he replaces ceases to be a trustee, or if the alternates appointment is revoked by the trustees.
ARE TRUSTEES PAID FOR THE WORK THEY DO
Trustees are not paid for the duties they perform for the body corporate unless a special resolution by the owners is specifically recorded and agreed to by the owners.
Trustees may be reimbursed by the body corporate for expenses actually and reasonably incurred by them in carrying out their duties. Alternate trustees, if they are not owners, may claim any remuneration from the trustee he so replaces.
GOOD FAITH OF A TRUSTEE
Any act performed by a Trustee shall be valid even if after the act a defect is found in the appointment of the Trustee.
Every trustee, agent or other officer or servant of the body corporate is indemnified against all costs, losses, expenses and claims which he may incur in the discharge of his duties unless such costs etc. are caused by the male fide or a grossly negligent act or omission of the said person.
It is the duty of the trustees to pay such indemnity out of the funds of the Body Corporate.
DISQUALIFICATION OF A TRUSTEE
A trustee shall cease to hold office if:
he tenders his written resignation to the Body Corporate, he becomes of unsound mind, he surrenders his estate as insolvent, or his estate is sequestrated, he is convicted of an offence which involves dishonesty, he is removed from office by resolution at a General Meeting in accordance with Rule 13 (e) Annex 8, he is disqualified in terms of sect. 218 or 219 of the Companies Act from being a director of a company.
REPLACEMENT OF A TRUSTEE
The Body Corporate may appoint another trustee to replace a disqualified trustee at a general meeting.
DOS AND DON’TS
MAKING OF LOANS
Trustees may not make loans on behalf of the body corporate to owners of units or to themselves.
SIGNING OF DOCUMENTS (INSTRUMENTS)
The trustees have the power to sign instruments which shall be binding if signed by two trustees or one trustee and the Managing Agent.
COMPLIANCE WITH THE RULES
Trustees shall at all times ensure that the occupants comply with the rules. The Managing Agent should act between the trustees and offending occupants so that any form of victimisation is reduced to a minimum.
LEVIES AND THE BUDGET
The trustees are responsible for the calculation and collection of levies for the body corporate. The Managing Agent has the experience and skills for this undertaking and should be used. The budget and the monthly levies for the ensuing year must be tabled, amended if necessary and accepted at the Annual General, Meeting.
ENFORCEMENT OF THE RULES
The trustee shall do all things reasonably necessary for the enforcement of the rules in force.
LIABILITY FOR LEGAL COSTS
An owner shall be liable for and pay all legal costs, including costs as between attorney and client, collection commission, expenses and charges incurred by the body corporate in obtaining the recovery of the arrear levies, or any other arrear amounts due and owing by such owner to the body corporate, or in enforcing compliance with these rules, the cond rules or the Act.
CHARGING INTEREST ON OUTSTANDING AMOUNTS
The trustees shall be entitled to charge interest on arrear amounts at such rate as they may from time to time determine.
IMPROVEMENTS OF A LUXURIOUS NATURE
The trustees may, if the owners by unanimous resolution so decide, effect improvements of a luxurious nature on the common property.
IMPROVEMENTS NOT OF A LUXURIOUS NATURE
Should the trustees wish to effect any improvements to the common property, other than luxurious improvements (see above) they shall first give written notice of such intention to all owners indicating:
indicate the intention of the trustees to proceed with the improvements upon the expirery of a period of not less than 30 days reckoned from the date of posting such notice: provide: details of the costs, manner of financing and the effect in the levies, the need, desirability and effect thereof.
The trustees shall at the written request of any owner convene a special general meeting to discuss the proposals above and the owners may veto, amend or approve such proposals by way of special resolution.