Real Estate Investor Magazine South Africa July 2014 | Page 35

RESIDENTIAL
not clear whether there will be enough nominations to
fill the required number until after this decision has been
made, which does complicate matters.
It is also sometimes difficult to motivate owners to
make themselves available as trustees. This is because
the work can be time-consuming and although they can
be reimbursed for expenses incurred, they cannot be
paid for the hours that they put in unless the owners
agree and pass a special resolution to this effect.

Trustees are crucial
What happens where there are no trustees? In a
particular case we recently dealt with, it was found that
a scheme had been running for years without trustees,
and the managing agent had been handling all the
management and administration. It was found that
the managing agent had tried to get trustees to accept
nominations, but none of the owners accepted. At a
meeting with nine owners present, the managing agent
said he would appoint them all as trustees, which cannot
happen as, firstly, the trustee has to be nominated and
accept this nomination and, secondly, he has to be in
good standing in terms of his levy payments.
Even though on paper this scheme seemed to be
healthy and was running fairly normally, it was not
operating legally. Without the trustees, there can
be no legal AGM, which means no legal budget
approval, no legal lev y resolution or interest rate
resolution and no legal way of collecting funds for
the scheme. If the bond stakeholders (the banks)
in a case such as this f ind out that there are no
trustees, they can apply for the building to be put
under administration.
Furthermore, in cases of levy arrears, if the case were
to go to court, there are no legal grounds for suing
the owner for levies as he technically does not owe
anything, as no specific amount has been set. The other
questions to be asked are: Who checks on the managing
agent if there are no trustees? And who appointed the
managing agent legally? Who is checking on the body
corporate funds?

The right trustees
It is crucial for a sectional title scheme to have trustees,
but it is just as important to have the right trustees.
www.reimag.co.za

Often, the difficulties encountered by bodies corporate
and/or a lack of administrative experience can result