Real Estate Investor Magazine South Africa July 2016 | Page 47

STRATEGIES

Choosing the right

Managing Agent

Success of a Sectional Title Scheme

BY MICHAEL BAUER

S

ectional title schemes, while varying in size,
all need the right management so that their
financial stability is kept intact. They should be
run as any other business, with the positions of the
day to day management filled by the correct people.
When choosing a managing agent it is important to
check the company’s track record carefully and ask for
a few references. There have been many disreputable
companies who have set themselves up as managing
agents and end up running the sectional title schemes
they were working with badly, which can end in the
scheme either becoming insolvent, neglected and they
can lose property values fast.
If the trustees find themselves looking to employ a
managing agent, there are a few things to look out for.
Firstly whether the managing agent has a Fidelity
Fund Certificate from the Estate Agency Affairs
Board. While it isn’t necessary for every staff member
in his company to be registered, the principal agent
must have an FFC. This is necessary as there are huge
sums of money being managed in the form of levies
and managing agents must register with the EAAB
and deposit money into a trust account in the name
of the scheme.
They should find out who the trustees of other
schemes are using to manage their schemes and get
direct referrals from them if they are happy with the
job being done.
If there is a particular managing agent in mind,
the trustees should ask him for a contact list of the
schemes he manages. If he is reliable and confidently

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hands a list over, there is a good chance he does have
a good track record.
Check that the managing agent has his own
professional indemnity and professional insurance
because it is important that all the monies collected
can be protected from loss, whether caused by
mistakes or misappropriation of funds.
Also check whether the managing agent is
involved with any other property businesses, such as
maintenance, insurance, debt collections, as he could
funnel business from the sectional title scheme into
his other businesses and charge more than the going
rates for these and also lose focus on the management
job at hand.
Prescribed Management Rules 46 and 47 stipulate
some of the terms of a contract that should be signed
with a managing agent, so it is important, says Bauer,
to specify exactly what it is that is required of him and
the extent of his responsibilities.
Good managing agents will always supply the
information the trustees need to ascertain whether
they are suitable for the job. They will, too, be open
and upfront about their qualifications and who
will be managing their books. They will be open to
constructive criticism or input from the trustees of
sectional title schemes as they are, after all, both
meant to be working the scheme’s best interests.

RESOURCES
IHFM
JULY 2016 SA Real Estate Investor

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