Legal Articles

Appointing a Managing Agent – Some important considerations

In accordance with the Sectional Titles Act [Management Rule 46(1)], the body corporate trustees have the responsibility of appointing a managing agent.

At least two trustees must sign the written contract appointing a managing agent. This contract is valid for a 12-month period, and should notice not be given to the managing agent, the contract is then renewed automatically for an additional 12-month period.

Managing Agent Termination Procedure

In the case of termination of a current managing agent, trustees must have the new contract signed by the intended agent, who then typically has two months to take over from the present agent.

Appointing a Managing Agent

When given the task of choosing a new managing agent for a sectional title complex, this should not be a decision made with the intention of cutting costs. 

The role of a managing agent today is a complex one and requires a professional approach. To carry out this critical role requires knowledge of the Sectional Title Act, property law, building construction, health and safety regulations, basic accounting and much more.

This is because the managing agent and their company will be responsible for the overall management and financials of the entire complex. For your convenience, we have compiled a list of the additional factors that trustees should take into account when appointing a managing agent.

1. Registered Estate Agent

A managing agent MUST be a registered estate agent; they must also have an up-to-date Fidelity Fund Certificate issued by the Estate Agency Affairs Board.

Trustees negligent enough to appoint a non-Estate Agent may be held liable for the body corporate losses in their private capacities.

When an estate agent is registered and has a Fidelity Fund Certificate, it ensures that in the case of fraudulent activity or theft by that managing agent, the Estate Agent’s Board will refund the body corporate for money lost.

2. National Association of Managing Agents of South Africa

Is the agent a member of the National Association of Managing Agents of South Africa (NAMASA)? Having a registered NAMASA agent may soon become a condition when obtaining bonds from banks on sectional title properties.

3. Choosing an Established Estate Agent or Managing Agent

Having a managing agent with years of experience is beneficial for a number of reasons. They will have previous experience with dealing with typical issues that arise and know how to avoid such issues.

4. Sectional Titles Scheme Management Certificate

This will soon be the benchmark for anyone in the estate agent industry. Ensure that the company you select has the University of Cape Town Certificate in Sectional Titles Scheme Management.

5. More than just a bookkeeping service

It’s important to make sure that the managing agent you appoint offers all of the services needed rather than just one or two.

The managing agent also must be familiar and up-to-date with the Sectional Titles Act and its amendments.

6. Past References

If a company has a great track record and happy clients, it means that they are trustworthy and proficient at what they do.

Choose a company with more than 3 references from different body corporates

Request the following:

• Names of the complexes (ask for chairmen who have been trustees for more than a year)
• The names of their chairperson
• Their phone numbers

7. Effective monthly reporting

Having effective reporting is vital to the success of a sectional title scheme. Trustees need to know how competent a managing agent’s monthly reporting is in order to make sure that:

• They are strict on owners not paying their levies.
• Late payers are promptly handed over to debt collection attorneys.
• Their bookkeeping is easy to understand.
• There is a follow up process and action report detailing action taken against non-payers.

Compiling a monthly sectional title scheme management report

It’s important for trustees to make mention of their reporting requirements in the contract and to ensure the monthly reporting includes all of the necessary information such as:

• Copies of the last bank statement
• Copy of the last paid municipal account
• Details of monthly water consumption per unit

8. Annual General Meetings

A managing agent will attend various meetings where they will have to address the body corporate. This will demand skills in conducting a meeting, public speaking, taking minutes and managing people and their grievances.

This is where a practiced managing agent will be beneficial as confidence and these skills are learnt through past experience. It must also be stated in the contract how often a year the managing agent will attend trustee meetings and at what cost.

9. Picking the Right Managing Agent

A managing agent works closely with trustees, owners and tenants , so it’s crucial for all parties to get along. Therefore, it’s important to make sure that the managing agent chosen is trustworthy and generally liked by all.

10. Visit a Managing Agent’s Work Premises

Visiting the work premises of an agent will help indicate whether they are organised. The number of staff will also indicate if they have a back-up portfolio manager to use when your manager is sick?

11. Managing Agent Quotes

It’s easy to see why a cheap managing agent quote is almost always not the agent to go for. It may save money at first however the company may not offer all of the necessary management services.

Van Deventer & Van Deventer Incorporated - Property lawyers Johannesburg

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