Trustees need to understand their responsibilities

Sectional title living has become a popular choice among buyers today, so much so that annual property inflation for sectional titles outperformed that of freehold properties at the end of 2023, according to Lightstone Property.

As popular as sectional title ownership is, many fail to take the time to understand the role of a trustee and the body corporate, and this can lead to some costly consequences.

Regional director and CEO of RE/MAX of Southern Africa Adrian Goslett said many young homeowners volunteer to act as trustees on behalf of their body corporate without fully grasping the scope and responsibility of the role.

“Many young buyers fail to realise that they can actually be held personally liable for certain failures regarding the management of the complex. It is important to understand this before signing up for this responsibility,” he warned.

To fully understand what the responsibilities of a trustee are, as well as to understand the regulations for this type of property ownership, Goslett recommended that homeowners familiarise themselves with the Sectional Title Schemes Management Act, preferably before they buy into a sectional title scheme.

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“Not everyone realises that owners within a Sectional Title scheme may be held liable for the debt of the body corporate.

“This is why it is important to assess if the scheme is being managed correctly and that the financial statements of the body corporate are in order before buying into the scheme,” he noted.

Here are some some key points from the act:

• Each trustee of a body corporate must stand in a fiduciary relationship to the body corporate. In short, a fiduciary relationship is when one person (the fiduciary) has a duty to act in the best interest of another person (the beneficiary) when handling money, property, or making decisions on their behalf.

• Each trustee must avoid any material conflict between his or her own interests and those of the body corporate. For example, a trustee cannot unfairly start the complex maintenance at their house rather than starting it where it is needed most.

• A trustee who acts in breach of his or her fiduciary relationship can be held liable to the complex for any loss suffered as a result.

• To avoid being in breach of duty, any deviations in conduct would need to have received the written approval of all the members of the body corporate to inform them of all the material facts.

“There are multiple aspects to consider before volunteering to be a trustee for your complex. It can be a thankless job, but it can also provide a homeowner with greater insights into the running of the complex and will also provide greater peace of mind knowing that the complex is being well managed,” Goslett concluded.

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