By Anton Kelly
Sectional titles schemes are mini democracies, run by elected executives who themselves often delegate some or many of their functions to managing agents.
This is particularly so in larger schemes where the day-to-day physical, administrative and particularly financial management of the scheme is best left to experts in community scheme management. Smaller schemes may also choose to spend the money on a managing agent, particularly when the trustees are employed elsewhere full-time and busy with their own affairs.
One of the main issues in choosing a managing agent these days is the question of finding suitable candidates with an established track record of integrity and reliable references. However, there is a range of other, more common problems that can be addressed by careful selection of a managing agent. As with most service providers, word of mouth is a good place to start. It will require a bit of homework.
Checklist for selecting a good managing agent
• Find out who the trustees of a few other schemes in your area are. Ask them what their experience is and if they can recommend a good managing agent.• If you have a particular managing agent in mind, ask them for the contact details of other schemes they manage. If they have a sound record, they will be only too happy to provide a list.• Check that the managing agent has a valid Estate Agency Affairs Board fidelity fund certificate. It’s not necessary for each individual at the agency to be registered, just the principal. Almost all managing agents collect levies and are therefore legally bound to register with the EAAB so that their clients’ money is protected by the EAAB Fidelity Fund when deposited to their trust account.• Check that the agency has its own professional indemnity and fidelity insurance. Any managing agency with a genuine concern for the welfare of its clients will ensure that it and those it employs are covered by policies that cater for losses caused by mistakes and by rogue employees who steal client funds. In this regard, bear in mind that the cover provided by the EAAB’s fidelity fund is only for money stolen from the managing agent’s trust account. In practice it takes many years for these claims to be settled, during which time the scheme is left short of the stolen funds.• Ask whether the managing agent is involved in other property management related businesses, for example, building maintenance, garden service, insurance brokerage, levy finance and debt collection. Your scheme could become a captive market at less than favourable rates.
Once you have chosen a suitable managing agent, the most important thing is to make sure that the contract specifies exactly what you want them to do, and exactly what discretion they have in the management of your scheme. Prescribed management rules 46 and 47 also stipulate some of the required terms of the contract.
The managing agency industry is very competitive, with agencies trying hard to provide good service at reasonable rates to retain their contracts. The good ones will readily supply the information you need to assess their suitability. They will also tell you what formal training the person who will deal with your scheme has undergone. If you are dissatisfied with any aspect of their service, make sure you let them know in a constructive way. If things don’t improve, remember you are free to give them notice that you will not be renewing the contract at the end of its annual term.
Article reference: Paddocks Press: Volume 8, Issue 2, Page 1
Anton Kelly is the course convener of the University of Cape Town (Law@Work) Sectional Title Scheme Management course. Next course starts, 7 June 2013. For more information please contact Emma on 021 447 4130 or email@example.com.