Legal Articles

Management of a Sectional Title Scheme by an Executive Managing Agent

An executive managing agent (EMA) is any person who provides a body corporate with management services and thereby receives monetary or other compensation. 

This definition is in accordance with the regulations section of the Sectional Titles Schemes Management Act 8 of 2011 as well as the Prescribed Management Rules.

Appointing an executive managing agent

A person is appointed as an executive managing agent to carry out the functions that would normally be carried out by the trustees of the scheme. The managing agent is nominated as well as elected by the members of the body corporate.

Section 28 of the Prescribes Management Rules govern the appointment and termination of an executive managing agent as well as his or her duties and obligations.

Appointing an EMA does not eliminate the need for trustees. Nevertheless, because the managing agent takes on the responsibilities of the trustees, a trustee committee or more than 2 trustees may not be necessary.

This article focuses on the management of a scheme when trustees are absent. This is referred to as Scheme Management solely by an executive managing agent.

Executive Managing Agent Duties

Once the executive managing agent has been appointed, he or she is required to fulfil all the duties and obligations of a trustee. The managing agent is compelled to go about managing the scheme in a professional and skillful manner.

Should the managing agent fail to fulfil any of the duties in administrating or managing the scheme, he or she will be held accountable for any loss experienced by the body corporate.

The executive managing agent has a fiduciary obligation towards all the members of the body corporate as do the trustees.

The EMA has an additional responsibility to schedule an inspection of the communal property of the scheme at a minimum interval of 6 months. Furthermore, a detailed report related to the administration of the scheme must be issued to each member of the body corporate at least every 4 months.

The report must include:

• Any proposed maintenance and repair of the communal property
• Any relevant matters which address the overall condition of the communal property
• The latest balance of the body corporate’s reserve and administrative funds
• A reconciliation report for each fund
• Maintenance, repair and replacement and any other expenses of the body corporate

The report required by a Court appointed Administrator of schemes is similar to the report required by an executive managing agent.

An executive managing agent will act on behalf of the trustees and will handle all administrative and executive matters of the body corporate. This is done so by being actively involved in the every-day functioning of the body corporate as well as exercise the powers of the body corporate according to the provisions stipulated by the STSMA.

The executive managing agent will also be subject to any other rules laid out by the body corporate and any additional regulations or restrictions put in place by the members.

Property Law in South Africa – Van Deventer & Van Deventer Incorporated

Our property attorneys in Cape Town and Johannesburg provide assistance with setting up managing agreements as well as the process of appointing an executive managing agent for schemes in South Africa.