Body Corporates Need Strong Trustees

Owners of units in sectional title developments need to elect strong trustees of their Body Corporate in order to ensure their interests are properly represented, warns Kim Pistor, legal manager of the Rabie Property Group.

Pistor warns that the role of the trustees of a body corporate in a sectional title development are not always fully understood which can lead to failure by the trustees to properly carry out their obligations or can result in a managing agent, appointed by the body corporate, running roughshod over the general will of the trustees to the detriment of those that rely on trustees to properly represent their interests.    Trustees’ responsibilities include financial management and administration, building management, control and maintenance (particularly in relation to the common property), employment of contractors and the necessary staff and the enforcement of rules of the body corporate.
Pistor points out that a managing agent may not be a trustee unless he or she is also an owner of a unit in the scheme.

“The trustees are entitled to appoint a managing agent to undertake some or all of the functions of the trustees.  In such a case, the managing agent would stand in a master and servant relationship with the trustees insofar as the managing agent would be accountable to the trustees and would have to act in accordance with an agreement which would regulate their relationship.

“Although the trustees can delegate most of their responsibilities to the managing agent, the trustees are still ultimately responsible to the body corporate for the management and control of the scheme and trustees are therefore cautioned to ensure that these responsibilities are properly carried out.”

Trustees, she says, stand in a relationship of good faith with regards to the affairs of the body corporate which requires them to avoid conflict between their own affairs and those of the body corporate and to act in the best interest of the body corporate.
“Trustees are indemnified from any claims arising as a result of their negligence with regards to their duties as long as they act in good faith.  Trustees who act in bad faith or are grossly negligent expose themselves to liability to the body corporate for losses suffered by the body corporate or to any economic benefit achieved by such trustee.
“A managing agent does not enjoy the same protection unless the contract provides otherwise and diligent trustees should also ensure that the managing agent’s contract includes the obligation to disclose any interest in contracts concluded for the body corporate.”

1 Comment
  • Juan Smith

    May 11, 2012 at 10:59 pm

    The trustees are entitled to appoint a managing agent to undertake some or all of the functions of the trustees.