A trustee has been advised of newly effective legislation relating to the Sectional Title Schemes Management Act 8 of 2011 and wants to know how this will affect their duties.
He wants outlined some of the more important aspects that trustees should take cognisance of in performing their duties.
See the reader’s question here.
In general, the Sectional Title Schemes Management Act deals with administration of a scheme through its representative body corporate.
The act is generally narrower in scope than the Sectional Titles Act and focuses on specific aspects.
In many instances, it merely draws directly from the wording of the Sectional Titles Act but also contains numerous amendments and new provisions.
As a trustee, the reader should pay particular attention to the definitions contained in the act.
The relevant definitions apply throughout the act and will aid in the interpretation of the provisions it contains.
Definitions to be familiar with include common property, participation quota, special resolution and unanimous resolution as these will come into play during one or more meetings or disputed situations.
The functions of a body corporate are dealt with in Section 3 of the management act and generally address aspects of a financial nature, including contributions from owners, insurance and maintenance.
It is important for our reader to have a firm grasp of the duties of the body corporate as these will dictate what is required from the trustees.
The body corporate are granted certain powers in Sections 4 and 5 of the act which assist them in carrying out their duties.
For example, the powers of the body corporate allow the appointment of managing agents and the acquisition or sale of common property.
They also cover the maintenance of the common property and several financial aspects related to the administration of the scheme.
Importantly, the fiduciary relationship between the trustee and the body corporate is dealt with in Section 8 of the act.
The provisions of this section confirm that a trustee is to act honestly and in good faith and is to avoid any material conflict between his or her own interests and those of the body corporate.
He adds that it is important to note that a trustee of a body corporate who acts in breach of his or her fiduciary relationship is liable for any loss suffered or any economic benefit received.
There should be disclosure to the body corporate of any interest where the trustee benefits.
This often arises where a trustee is involved with an entity rendering services to the scheme.
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