It is often said that if the trustees of the body corporate in a sectional title scheme do the job they are meant to, the scheme would probably not run into financial difficulty or have other problems.
However, Johann le Roux, executive director of Propell says many are elected to do the ever-important job of being a trustee without being trained or given all the materials needed to do so.
The board of trustees is elected by the members of the scheme and they are mandated to manage the funds and affirm rules and policies within the scheme, says le Roux
He says every trustee should have copies of the Registered Management Rules, the conduct or house rules, a copy of the Sectional Titles Act and the Amendments Act, the sectional plan of the scheme, as well as the ability to keep a cool head and think logically.
The trustees are volunteers and are not remunerated for the work they do, which can often be onerous, but they can be reimbursed for expenses that they incur while doing that job.
The first thing to do as a new trustee (after being elected at the AGM), would be to hold a trustees meeting where the points of business such as the levy budget for the next year are established, and pass a resolution for this budget. If there is no resolution the levies cannot be collected legally.
The powers that the trustees are given are governed by the Sectional Titles Act and the rules of scheme. The roles of trustees are to appoint agents and employees, including a managing agent if necessary, borrow funds for the performance of their functions (if the amount needed is large and is preferred to raising a special levy) and give security for such loans, including the cession of levies. They also need to buy or rent items such as lawnmowers and tools needed for the body corporate, establish and maintain recreation facilities, gardens and lawns on the common property wherever practical and invest any funds not immediately required.
All monies received or spent by the trustees must be recorded and proper financial statements must be prepared and audited by a professional accounting firm.
Trustees should obtain services by contracting with various service providers, e.g. garden services, painters and electricians, etc and let (for the benefit of the body corporate) parts of the common property to owners and occupiers, such as parking bays as well as gain access to sections and exclusive use areas for maintenance purposes and delegate duties to individual trustees where necessary.
Trustees must perform these functions in order to manage the scheme well, says le Roux. These are determining, collecting and administrating levies in respect of sections and exclusive use areas, opening and maintaining a bank account and insuring all building improvements including sections and making sure that it is for an adequate amount (but not their contents). It is also maintaining common property (including exclusive use areas), keeping minutes, keeping and administrating all records, including financial records of all body corporate transactions and keeping a record of the current conduct rules. Functions such as arranging and conducting the AGM and, when necessary, special general meetings and preparing the documentation to be presented at each AGM, including the budget and audited financial statements are also important.
Trustees must keep financial records for the scheme. All monies received or spent by them must be recorded and proper financial statements must be prepared and audited by a professional accounting firm. It is of utmost importance that these documents be signed by the trustees and auditor.
Le Roux says the body corporate finance function should be dealt with as any business would as there are often large sums of money being paid over, and the enormity of the financial responsibility to keep these funds in good hands is often underestimated.
Apart from dismissal by the members of the scheme, a trustee is automatically removed from office when his levies are in arrears for 60 days, if he tenders his resignation or if legally declared to be of unsound mind. He can also be removed if he is sequestrated or convicted for an offence involving dishonesty.
It goes without saying that any person subject to any of the above disqualifications may not be appointed as trustee in the first place, says le Roux.
The role of trustees within a body corporate is an important one, and it is crucial to the wellbeing of the scheme, says le Roux. “A good board of trustees will be able to ensure that the scheme yields positive financials while running it effectively and smoothly, and keeping the occupants happy.