A reader who owns a flat in a sectional title scheme has approached the YourProperty experts with concerns about the trustees’ management of the scheme.
He explains that the community living in the building is not financially well off and much of the mismanagement stemmed from a combination of greed and ignorance.
The building seems to be in a poor state of repair, with the roof leaking when it rains, external pipes rusting and the like.
The reader says the levies paid to the body corporate for maintenance purposes were stolen by the trustees and no repairs were ever carried out.
The old trustees have since been replaced by the reader and others who appear determined to set the matter straight.
The previous body corporate apparently went so far as to secure a loan, presumably for the repair work to be done but the money has disappeared. No repairs have been made and the former trustees cannot, or will not, explain what the money was used for or where it went.
The trustees have, however, informed the owners that they, as the owners, are now responsible for the repayment of the loan.
The reader is understandably frustrated with the conduct of the body corporate and would like to know what their duties are as they refute responsibility for almost any aspect of the administration of the building.
See the reader’s question here.
The body corporate is generally tasked with the management and administration of a sectional title scheme, in accordance with the provisions of the Sectional Titles Act.
Their role is to ensure the smooth functioning of the scheme. This administration extends to the maintenance and upkeep of the building for the benefit of all owners to ensure a harmonious community.
The body corporate has a number of specific functions and duties that must be carried out.
The owners’ role is to act in accordance with the law and rules of the scheme to enable the body corporate to carry out its functions.
It is certainly the body corporate’s responsibility to see to the maintenance and repairs to common property, which includes pipes, cables and ducts.
This doesn’t mean that the trustees serving on the body corporate are personally responsible for providing the financial means required to carry out their functions but they are responsible for creating and growing a fund of financial reserves from the owners’ levies.
Each owner should contribute in accordance with his or her participation quota.
The body corporate should ensure the prudent management of the funds so that the necessary repairs are seen to and so that surplus funds are preserved for future expenses.
The monies must be held in a separate bank account and only accessed in accordance with the provisions of the Act.
The account is not there for the trustees of the body corporate to access freely for their personal use.
A trustee should not derive any personal benefit that he or she is not entitled to as a result of fulfilling the functions of the office of trustee.
Accordingly, the misappropriated funds could possibly be recovered depending on the circumstances.
The loan secured by the previous body corporate is not necessarily odd as this is permitted when used to perform the body corporate’s functions, as long as it is in accordance with the provisions of the Act.
The manner in which the loan was secured should be examined properly as it could have been in circumstances that would be regarded as ultra vires, or outside of the scope of authority of the trustees, and the credit provider may not be able to enforce the recovery of the loan.
Because of the scheme’s poor administrative history and the big task of getting the process back on track, the new-look body corporate could consider appointing a managing agent to see to the proper management of the scheme, at least in the short term.
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