Abandon ship!

paddocks_blog_post.jpgBy Auren Freitas dos Santos

Are you wondering what steps you could take to protect yourself from going down with the sinking ship that is your body corporate? A result of either non-existent or incompetant trustees, insufficient funds or overall non-compliance with the requirements of the Sectional Titles Schemes Management Act (STSM Act) and its regulations?

Our default response in these types of situations is to abandon ship by selling as quickly as possible because the alternatives will almost always be more challenging, stressful and costly.

Unfortunately in most cases you will be unable to sell your property because no purchaser in their right mind would consider purchasing a unit in a dysfunctional scheme.  A poorly managed scheme has a serious detrimental impact on the market value of its units and owners in these types of schemes usually find themselves unable to escape.

If jumping overboard is not an option the only alternative that you will have is to try everything in your power to plug the holes in an attempt to stop the body corporate from sinking.

We suggest that you consider taking the following steps to save your body corporate from serious financial or administrative mismanagement, but please remember that although these options may be successful, they are time consuming, costly, and often unpleasant:

  1. The first and most obvious step is to get involved in the management of the body corporate by electing capable and competent trustees, or even consider becoming a trustee yourself;
  2. The second, and possibly most effective option, is to appoint an executive managing agent to take over the management of the scheme.  The executive managing agent will have the authority to perform the functions and exercise the powers that would otherwise be carried out by the trustees.  A competent and experienced executive managing agent has the potential to salvage the sinking ship if the owners are willing to cooperate;
  3. Finally, if your body corporate is past the point of rescue by the intervention of an executive managing agent, the last resort is to appoint an administrator in terms of section 16 of the STSM Act.  The administrator will have such powers and duties of the body corporate as the Magistrate’s Court directs and must exercise these powers to address the body corporate’s management problems as soon as reasonably possible.

Should your community scheme require any advice on how to deal with financial or administrative mismanagement or the appointment of an executive managing agent please do not hesitate to contact our consulting department at consulting@paddocks.co.za for a no-obligation quote to provide the necessary legal assistance.


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