Fiduciary duties in a section title scheme
Sectional title condominiums have become a popular way of life for many South Africans, and along with that way of life comes corporation and trusteeship. When you purchase a partial title property, you automatically become part of the corporate body, which is the collective name for the property owners within the system. The role of the corporation is to manage and maintain the property and finances of the system. The trustees are elected by the general meeting on proposal, with each trustee responsible for a different part of the overall tasks. It is important that trustees understand the role they should play in the corporation, so we’ve outlined five main areas of responsibility for trustees below.
1. Meetings are a must
It is up to the Trustees to ensure that meetings are held to communicate what tasks are to be performed and to ensure that the body as a whole is coordinated. Trustees must hold general meetings each year to review financial statements, decide where to allocate the budget, and report on various projects. Without communication, a corporation cannot successfully make decisions and stay on track, so these meetings are critical to keeping the trustees and other corporation members informed. While Covid-19 may be around, these meetings can still be held online or at a safe social distance wearing masks (as per government regulations).
2. Maintenance, maintenance
The maintenance of common property in the partial title regulation is another duty that is incumbent on the trustees. This includes all cleaning, human resource management, and safety duties required by the program. Maintenance is essential when it comes to property, and cleanliness and order in public areas is the responsibility of the trustees. This also includes making sure that all buildings are adequately insured and that someone is dealing with the administrator of the system. Home insurance is important, but it can often be overlooked, especially when it comes to common areas. Hence, it is the role of the trustee to do so.
3. Keep the money in a row
First and foremost, it is up to the trustees to ensure that there is a bank account for the system. You must keep track of all corporate financial records and have all financial statements audited by a professional company. Trustees are also required to provide homeowners in the corporation with a summary of the estimated income and budget for the following year. Basically, it is up to the trustees to manage all the finances of the system and to clearly document all transactions. This is an important task and should not be taken lightly as finance is an integral part of the functionality of a section title scheme.
4. Rules are rules
Compliance with and enforcement of the Code of Conduct rules are part of the duties of the trustees. This includes recording the current rules decided by the corporation and ensuring that all homeowners abide by these rules. The rules are designed to ensure that everyone can live in harmony, and in the interests of all homeowners, it is a good idea that they are in place and followed.
5. Don’t skip donations
A key element of the trustees’ role is to ensure that a fair tax payment has been made and that all tax payments are up to date and paid using the method chosen. This also includes the collection of unpaid tax payments, i.e. the collection of interest on overdue taxes. The trustees are responsible for ensuring that the levy payments are used in relation to specific sections of the system as well as the common areas of use.
Propell works with numerous section title systems across South Africa by providing them with financial solutions. Our debtor financing option provides reliable and steady cash flow for partial title programs when dues are unpaid, and our project loan option is a revolving credit facility for property maintenance, renovation and projects. We build trust. Contact us if you would like to know how we can help your community project achieve its vision.
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