Managing Agents: Unpacking Their Duties

Managing sectional title schemes comes with legal, financial, and operational responsibilities. As a managing agent, it is vital to not only understand your role but also actively guide trustees and ensure the body corporate remains compliant. This blog will unpack some of the key areas every managing agent should be well-versed in:

• financial compliance;
• levy collections;
• meetings;
• maintenance planning;
• trustees’ responsibilities;
• insurance management.

Financial Compliance: More Than Just Money in the Bank

When evaluating a body corporate’s finances, the primary focus should be on cash flow, not just bank balances. Is the scheme operating at a surplus or a deficit? The audited annual financial statements provide the clearest snapshot of financial health and compliance. Key regulations include:

• Management Rules (PMR) Sections 21, 24, 25 & 26: Govern financial reporting and processes.
• Section 54(1): Relates to proper administration of funds in a dedicated bank account.
• Section 54(2): Ensures reserve fund contributions are made in line with the budget and maintenance plan.

The Ten-Year Maintenance Plan is critical to long-term financial stability and must be budgeted for and updated annually. Additionally, compliance requires insurance valuations every three years, including fidelity insurance to safeguard against fraud or mismanagement.

Levy Collections: Compliance and Processes

Levy collections have become increasingly specialised. Managing agents must ensure that:

• Owners are notified within 14 days of any levy change post-AGM.
• Levy payment terms are clearly defined in the trustees’ resolution—monthly or annual payments depending on the scheme.
• Interest charged on arrears does not exceed the limits prescribed by the National Credit Act. Compounded interest must be explicitly stated in the resolution.
• Legal handovers include the required 14-day notice, and a separate account – T-account must be used for legal fee recoveries.

Note: Charging for debt collection activities such as SMSs, letters of demand, etc., requires the managing agent to be registered with the Council for Debt Collectors.

Budgets and Reserve Funds: Planning for the Future

Every budget has two legs:

• Administrative Fund: Covers day-to-day operations.
• Reserve Fund – MRF: For major capital expenditure as outlined in the 10-Year Maintenance Plan.

An effective budget aligns expected income (levies) with both operational and future maintenance costs.

General and Special Meetings: Compliance and Timing

Managing agents must ensure that:

• AGMs are held within 4 months of the financial year-end.
• 14 days’ notice is given for AGMs.  30 days for SGMs involving special or unanimous resolutions.
• The notice period excludes the day of issue and the day of the meeting, effectively requiring more planning.
• Quorum: 33.33% PQ at AGMs and SGMs; 80% for unanimous resolutions.
• Voting structures differ: ordinary “simple majority:, special “75% of quorum”, and unanimous “100% of attendees”.

Managing voting efficiently using pre-filled voting cards and summarising results post-meeting ensures transparency and accuracy.

10-Year Maintenance Plan:

The 10-year plan is critical to all managing agency firms.  It must be:

• Updated annually.
• Realistic and implementable, not just a tick-box.
• Developed with professional input, especially for complex schemes with centralised infrastructure.
• Reviewed to reflect unexpected maintenance issues and adjust for inflation or project shifts.

Use a rolling five-year focus for practical budget integration.

Trustees and Managing Agents: Roles

Trustees bear legal responsibility, but managing agents must:

• Provide guidance and support, not directives.
• Maintain transparency, especially when trustees request secrecy.
• Step back if ethical or compliance standards are compromised.

Trust and communication are key. Provide trustees with agendas, compliance calendars, and tools for effective decision-making.

Insurance Policies: Understanding and Managing Risk

A managing agent must:

• Review insurance cover annually with a broker who understands sectional title requirements.
• Present updated sum insured values at AGMs.
• Identify when units are over-insured due to bondholder requirements or owner improvements.
• Communicate premium adjustments transparently to affected owners.
• Understand policy exclusions and seek clarification where needed.

Special attention should be paid to:

• Public liability
• Trustee indemnity
• Fidelity cover

In Closing

Being a managing agent is more than sending levy statements and arranging meetings. It’s about ensuring compliance, guiding trustees, and protecting owners’ investments through sound financial planning, legal adherence, and transparent communication. With the right systems and understanding in place, you not only stay compliant.  You add value to every scheme you manage.

Disclaimer:

This blog is for general information only and does not constitute legal, financial or professional advice.