The newly enacted Property Rates Act, which provides for sectional title units to be valued and rated separately, will add to the administrative and management burden of bodies corporate and their members.

The complexities of sectional title management have already posed considerable challenges for bodies corporate in a range of matters ranging from accounting to coping with levy arrears.

Peter Nathan, MD of Sectional Title Services, says amendments to the Sectional Titles Act have increased the responsibilities of bodies corporate.

As a result, legislative, financial and managerial issues related to sectional title place significant fiduciary burdens on trustees, who are seldom equipped with the necessary expertise, he says.

"Therefore, the need is for a higher level of professional bodies corporate management in a market beset by unprecedented challenges, where managing agents may not be providing the necessary level of service or even expertise."

This is a scenario that places the collective interests of unit owners potentially under threat, while in some instances exposing the members of the body corporate to personal legal and statutory risk, he says.

The test of a good relationship between a body corporate and a managing agent essentially rests on the body corporate receiving good, speedy professional service, while the managing agent provides only those services that he is required to do in terms of his mandate. Anything else is by negotiation, Nathan says.

Stress between bodies corporate, boards of trustees and their managing agents is evident, primarily from a lack of understanding or incorrect perceptions and expectations, he says.

"This is attributable to the fact that there is often no written contract between bodies corporate and the managing agents, or, where one exists, it defines responsibilities inadequately."

Nathan says that the duties and responsibilities of the managing agent should be defined contractually in terms of the Sectional Title Act.

If the agent is clearly in breach during his appointed period the body corporate can terminate that contract rather than resorting to potentially lengthy dispute resolution.

"There is always another side of the coin and bodies corporate are known to have acquired the services of a managing agent purely on the basis of fees charged, without consideration of the quality, reputation or professionalism of the service.

"Also, some trustees take the erroneous view that even if a managing agent earns no fees he will somehow be in business tomorrow to serve them.

"The basic principle driving the relationship between bodies corporate and managing agents has to be one of fairness and equity, contextualised within the framework of a contract legally binding on both parties."

Business Day

Publisher: Business Day
Source: Business Day