Payment of sectional title trustees
Schemes need reliable executives to work with their managing agents. People are becoming more conscious of their rights and more demanding of those who owe them duties. At the same time, society is becoming less polite. People revel in their ability to be highly assertive and initiate loud and sometimes brutal conflict at meetings, on social media and in emails. At the same time, the law that regulates sectional title schemes – the legislation, the regulations, the CSOS directives, the high court and adjudicator’s orders—are becoming more extensive and complex.
It is a real challenge for schemes to find suitable trustees willing to commit to regular meetings, heavy responsibilities and tasks that are often difficult, without any reward.
Some owner trustees ask for the reversal of their levies while they hold office, but the law prohibits this. If the trustees are to be paid, which can be an excellent deal for schemes, do this strictly following the law. It is not overly complex, but it does involve several distinct steps.
Step One – Budget for trustee payments.
Any payments to trustees must be authorised by an administrative fund budget item, as approved at the annual general meeting. [See PMR 9(c).]
Step Two – Take a special resolution authorising the payment—but only if the trustee is an owner.
Schemes cannot pay trustees who are owners unless the body corporate has taken a special resolution authorising this. [See PMR 8(2).]
Step Three – Ensure an owner or trustee resolution approves the contracts and appointments.
Trustees do not need the agreement of owners to pay a non-owner trustee if the owners have budgeted for this expense. Still, an owner or trustee resolution must authorise the appointment of a specific person. [See PMR 9(b).]
Step Four – Draft a ‘paid trustee contract’.
The appointment of any body corporate agent or employee must be in terms of a duly signed written contract. [See PMR 9(d).] ’Paid trustee contracts’ should set out the trustees’ duties, delegated powers and entitlement to payment. It is not unusual for the body corporate to give a paid trustee delegated powers and duties. In this case, a trustee resolution must authorise the delegation, and the contract must specify:
(i) the power or duty concerned;
(ii) a maximum spending amount for any particular purpose; and
(iii) any conditions that may apply to the delegation. [PMR 21(3)(g).]
If you need professional assistance with your paid trustee contract and are prepared to pay a sectional title specialist lawyer to assist you, email consulting@paddocks.co.za with details of the appointment you want to make.
Author: Graham Paddock is a specialist community schemes attorney, notary and conveyancer. He has been advising clients and teaching students for over 40 years, and was an adjunct professor at UCT for 10 years.
Article reference: Paddocks Press: Volume 16, Issue 12.
Article Date: 8 December 2021
This article is published under the Creative Commons Attribution license.
Sectional title funds – why a cheque account simply won’t do