By Ané de Klerk
As a company in the business of community scheme disputes we are made aware of, and subsequently instructed to challenge, countless unauthorised payments made by and/or on behalf of bodies corporate every month. While the nature of the expense being paid is often the root of the dispute, personally I find it much more worrying when a payment is in dispute because a managing agent clicked that “pay” button simply “on instruction of the chairman”. Why can this faithful following of orders land the managing agent in hot water? Let’s take a closer look.
What you need to make a payment:
1. An approved budget
Take a closer look at the body corporate’s current budget, duly approved by the majority of members at the most recent AGM. Does it clearly make provision for the payment you are about to make? If not, the body corporate will have to wait to include it in next year’s budget before the payment can be made.
2. A trustee resolution
Do you have a copy of such resolution:a. passed by the majority of the trustees at a trustee meeting which was properly called and had a quorum;ORb. obtained after written notice detailing the payment to be approved was given to every trustee and was replied to with the signatures of the majority of the trustees confirming their vote in favour of the resolution (and therefore the payment).
Should you be making a payment from the body corporate’s reserve fund, the checklist will look slightly different in that you either need:
1. A 10 year Maintenance, Repair and Replacement Plan, which complies with all the requirements set out in PMR 22(1), has been duly approved by the majority of members at the most recent AGM, and provides for the payment you are about to make; and
2. A trustee resolution authorising the payment (as discussed above).
1. A trustee resolution whereby the majority of trustees have resolved that the payment is necessary to have urgent maintenance, repair or replacement works carried out.
If you cannot tick the relevant boxes above you are not legally authorised to make the payment and doing so could cause major problems for the body corporate and yourself down the line. Make sure your i’s are dotted and t’s crossed before you click “pay”.
Unsure whether you should or should not make payment? You are welcome to email email@example.com to arrange a consultation to discuss your position. Better to get sound advice before you act than be sorry you didn’t.