Sectional title schemes

Sectional title schemes - Principles and resources
Article by Graham Paddock - Paddocks

A sectional title body corporate is responsible for management and administration of its scheme. It must ensure that the provisions of the Sectional Titles Schemes Management Act (the Act) are complied with and it must enforce the provisions of its management and conduct rules. These responsibilities must be carried out in the best interests of the body corporate itself and for the benefit of the owners of units in the scheme.

In practice, some of the body corporate's most important obligations are to:

(a) manage its finances (collecting contributions and paying expenses) and keep its accounts;

(b) keep a range of records required for scheme administration,

(c) maintain and repair the common property in the scheme,

(d) take out and maintain various types of insurance cover, and

(e) control behaviour on the common property by enforcing the provisions of the Act and its conduct rules.

To achieve these objectives it may appoint agents or employees in terms of written contracts. The elected trustees of the body corporate are its primary representatives and they have full power to perform its functions and exercise its powers, subject to directions given and restrictions imposed by owners in general meeting.

The body corporate can also be represented by duly appointed agents or assisted by employees. The prescribed management rules make specific reference to both managing agents, who act under the supervision and control of the trustees, and executive managing agents who take over and perform the role of the trustees. In addition the body corporate may appoint other agents and employees who will operate under the control of the trustees or an executive managing agent. Examples of agents are attorneys and insurance brokers and examples of employees are resident building managers and building contractors.

Whatever management arrangement your scheme has, it is important to remember that the owners in general meeting can give binding directions and impose binding restrictions on those who carry out its management functions and powers. This means that ultimate control of a sectional title body corporate is (or can be) in the hands of the section owners. This is very different to the management structure of a company where executive power vests in the board of directors and the only remedy of unhappy shareholders is to remove directors. In addition, owners who believe that they have been prejudiced by the maladministration of their scheme can make application to the Community Scheme Ombud Service or the High Court for relief.

Article reference: Paddocks Press: Volume 14, Issue 02
Posted In: Paddocks Press Newsletter | 27 February 2019
This article is published under the Creative Commons Attribution license.

17 Sep 2019
Author Graham Paddock - Paddocks
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