Sean Radue
This week, the YourProperty expert explores the role of a managing agent versus that of the body corporate in a sectional title scheme.
A reader is concerned that the agent appointed to manage his complex is not fulfilling her mandate effectively and costing the scheme money instead.
See the reader’s question here.
According to Sean Radue of Radue Attorneys in Port Elizabeth, the rules of the Sectional Titles Act provide for the appointment of a managing agent and the termination of such a contract under certain circumstances.
“Interestingly, while the trustees could pass a resolution to terminate the agent’s contract, an owner could also instruct the trustees to terminate the mandate in an instance where the agent breaches his or her services contract.”
This is provided that the owner offers security for any claims that may arise from the trustees putting the instruction to terminate into effect, says Radue.
“The owner is also required to indemnify the trustees from any litigation and other costs, claims and the like that may result from the managing agent taking legal steps.”
He says the agent is usually tasked with the day-to-day running of the scheme, which includes administrative tasks such as the collection of owners’ contributions and payment of accounts.
“The agent would also arrange for quotations and repairs within the scheme, deal with complaints, enforce the applicable rules and administer the minutes of trustees’ meetings and the like.”
Radue says an agent is appointed on contract and, where a standard agreement outlining the scope of the services is provided, the terms should be carefully considered and negotiated.
“The same applies to the fees but these are secondary to the agent’s ability to implement the required services, considering his or her experience, number of schemes administered, administrative support available and the like.”
He says the contract should be scrutinised where there is any doubt as to whether a particular task falls within the domain of the agent.
“The Estate Agency Affairs Act will also apply where a managing agent falls within its definition of ‘estate agent’.”
As the managing agent typically deals with the administration of scheme monies, this legislation will apply and he or she must hold the same fidelity fund certificate that an estate agent would, says Radue.
“Similarly, the code of conduct applicable to estate agents will also apply.”
While the managing agent has a contractual duty to the body corporate, he says the body corporate is ultimately liable for any actions of the agent, as he or she is ostensibly acting under their mandate.
“This, of course, is problematic in itself as the trustees are only liable for acts of gross negligence or those committed in bad faith.”
In other instances, they are covered and indemnified using body corporate funds, says Radue.
