Trustees, managing agents and EMAs: Who does what?  

The trustees and managing agents of Sectional Tile schemes have very different roles to play – but need to work together to ensure the smooth operation of those schemes, as well as good governance and legal compliance.
 
“In short, trustees and managing agents are supposed to collaborate closely and share information, insights and expertise. Trustees rely on the professional guidance and operational support of managing agents to properly oversee the affairs of a Sectional Title scheme, while managing agents require the direction and decisions of the trustees to execute their responsibilities,” says Andrew Schaefer, MD of leading property management company Trafalgar.
 
“However, there are some important differences, the main one being that trustees are generally elected by the owners who make up the body corporate of the Sectional Title scheme, while managing agents are independent service providers registered with the Property Practitioners Regulatory Authority (PPRA) and appointed by the trustees to assist with the day-to-day administration and operation of the scheme.”
 
The trustees, he notes, are often newcomers to property management who generously volunteer their time, usually after hours and without remuneration, to make important decisions and take responsibility for ensuring that all laws and policies regarding the financial management, governance, maintenance and smooth running of the scheme are followed, on behalf of all the other owners.
 
They have to account to the body corporate for their actions and decisions and also have various statutory fiduciary responsibilities in terms of the Sectional Title Schemes Management Act (STSMA).
“Managing agents, on the other hand, are licensed and registered professionals hired to provide expert advice and guidance to enable trustees to make informed decisions on matters relating to property management, financial management, administration and compliance with the multitude of Acts and regulations that apply to Sectional Title schemes.
 
“They are usually also tasked by the trustees with specific practical aspects of running the scheme, such as the co-ordination of security, maintenance and repair services, as well as administrative functions like the collection of levies, debt collection, accounting, record-keeping and the organisation of general and special meetings of the owners. A signed management agreement defines the service scope and contractual expectations of the managing agent.
 
In addition, says Schaefer, managing agents can ride to the rescue when there are too few owners in a Sectional Title scheme who are willing to take on the increasingly complicated job of being a trustee – as is the case in a growing number of schemes.
 
“Fortunately, Prescribed Management Rule 28 of the STSMA provides for the owners that make up the body corporate in such schemes to take a special resolution to appoint an Executive Managing Agent (EMA) to perform all the functions and exercise all the powers that would usually have been the responsibility of the trustees.
 
“Alternatively, the Rule states, if there are not even enough interested owners to hold a meeting and pass the special resolution, any group of owners who collectively hold 25% of the scheme’s total Participation Quota can apply to the Community Schemes Ombud Service for the appointment of an EMA.”
 
In terms of Rule 28, he says, an EMA is subject to all the duties and obligations of a trustee under the STSMA and the rules of the scheme, obliged to manage the scheme with the required professional level of skill and care and liable for any loss suffered by the body corporate as a result of not applying such skill and care.
 
“What is more, an EMA must arrange for the inspection of the common property at least every six months and must report to all the members of the body corporate every four months on the decisions taken with regard to the administration of the scheme and its finances, and the balance of its reserve and administrative funds.
 
“In other words, the EMA must be capable of carrying quite a heavy burden. So while Rule 28 does provides a handy solution for bodies corporate that don’t have willing or able trustees, it is clearly also intended to ensure that they don’t make random appointments, but rather seek professional assistance from a property management company like  Trafalgar, which has the all necessary resources and systems in place to fulfil these obligations.”