The Sectional Titles Schemes Management Act 8 of 2011 brought significant changes to how sectional title properties are administered and managed.
This discussion focuses specifically on the role and responsibilities of executive managing agents within these schemes.
An executive managing agent operates under a formal management agreement and assumes the duties and powers that would typically belong to trustees elected by scheme members. While the appointment of such an agent doesn’t eliminate the legal requirement for trustees to exist, the practical need for multiple trustees diminishes since the executive managing agent handles their core responsibilities. Schemes may therefore operate with only the minimum number of trustees required by law.
The process for appointing an executive managing agent can follow two paths. Body corporate members may make this appointment through a special resolution, or alternatively, members holding at least 25% of the total sectional quotas can petition the Community Scheme Ombud Service to make such an appointment.
Once in position, the executive managing agent bears the same legal duties and obligations as trustees would. This includes managing the scheme with professional competence and due care. Should the agent fail to meet these standards, they become personally liable for any resulting losses to the body corporate. Like trustees, executive managing agents owe fiduciary duties to all body corporate members, meaning they must act in the collective best interests of the scheme rather than pursuing personal gain.
The role carries specific operational requirements. In our case the caretaker/manager must conduct physical inspections of common property at least twice yearly and provide comprehensive reports to all members annually. These reports must cover several key areas including planned repairs and maintenance for common areas, and relevant observations about property conditions. The managing agent report on current balances and reconciliation statements for both administrative and reserve funds, detailed breakdowns of body corporate expenses encompassing repair and maintenance costs, and summaries of all decisions made during the reporting period.
These reporting obligations mirror those required of court-appointed administrators, reflecting the significant responsibility and accountability that comes with managing sectional title schemes on behalf of their members.