Managing agent duties in a sectional title scheme

01

What a managing agent is, and the two kinds of appointment

Every sectional title scheme has a body corporate, made up of all the owners, and under section 7(1) of the Sectional Titles Schemes Management Act 8 of 2011 (the STSMA) its functions and powers are performed by the trustees. Section 4(a) gives the body corporate the power "to appoint such agents and employees as the body corporate may consider fit", which is how a managing agent comes in.

Rule 2(1)(j) of the Prescribed Management Rules (PMR), Annexure 1 to the Sectional Titles Schemes Management Regulations (Government Notice R. 1231 of 7 October 2016), defines a managing agent as "any person who provides scheme management services to a body corporate for reward, whether monetary or otherwise, including any person who is employed to render such services". PMR 28 then allows two quite different appointments:

• A managing agent under PMR 28(5), appointed "to perform specified financial, secretarial, administrative or other management services under the supervision of the trustees". This is the usual arrangement: the trustees stay in charge and the agent does the work they delegate.
• An executive managing agent under PMR 28(1), appointed by special resolution of the owners "to perform the functions and exercise the powers that would otherwise be performed and exercised by the trustees". Under PMR 28(2), owners holding 25 per cent of the total participation quotas may also apply to the Community Schemes Ombud Service (CSOS) for one to be appointed.

An executive managing agent steps into the trustees' shoes. PMR 28(3) makes it subject to all a trustee's duties, obliges it to manage the scheme "with the required professional level of skill and care", makes it liable for loss caused by not doing so, and gives it a fiduciary obligation to every member.

An ordinary managing agent has no such standing. Its duties are those in its management agreement and the trustees' written delegations, and the trustees remain answerable to the owners for its work. (Estates and homeowners' associations have managing agents too, under their own constitution and rules; this guide is about sectional title.)

02

The law behind the role: the rules, the Property Practitioners Act and the CSOS code

Two pieces of legislation and a code of conduct shape what a managing agent in a sectional title scheme may and must do.

• The STSMA and the Prescribed Management Rules. PMR 9(d) requires the trustees to appoint any agent "in terms of a duly signed written contract". Under PMR 21(3)(g), a delegation to an agent must specify in writing the power or duty, the maximum amount of the body corporate's funds that may be spent, and any conditions. Schemes may amend the prescribed rules within limits, so check yours.
• The Property Practitioners Act 22 of 2019, in force from 1 February 2022 under Proclamation 47 of 2022, which replaced the Estate Agency Affairs Act 112 of 1976. A property practitioner "includes any person who for remuneration manages a property on behalf of another", and regulation 1.22 of the Property Practitioners Regulations, 2022 (Government Gazette 45735 of 14 January 2022) names a PMR 28 managing agent expressly. The regulator is the Property Practitioners Regulatory Authority (PPRA).
• The CSOS Code of Conduct for Executive Managing Agents, which applies only to executive managing agents (clause 2.1) and still refers to the Estate Agency Affairs Board and Act.

Under the Property Practitioners Act, four points matter most to trustees:

• Fidelity Fund certificate. Section 48(1) prohibits acting as a property practitioner without one, and section 48(3) makes that an offence; section 48(2) requires every director, member, trustee or partner of a firm to hold one. Section 53(1) requires it to be displayed prominently at every place of business.
• No certificate, no fee. Under section 56(1) a property practitioner is "under no circumstances entitled to any remuneration" for the acts the definition lists unless it holds a Fidelity Fund certificate at the time.
• Trust money. Section 54 requires trust money to be kept in a separate trust account with a registered bank, with the records balanced at least monthly and audited. Regulation 2.6 excuses a managing agent from this for a body corporate whose money is in a bank account in the body corporate's own name, one of the two options PMR 21(4) allows.
• Documents. Section 55(1) requires a property practitioner to keep every agreement incidental to its business for five years.

03

The usual duties of a managing agent

No rule lists an ordinary managing agent's duties: they are whatever the management agreement says. A full-service agreement usually covers the following, much of it tracking what the Prescribed Management Rules require of the body corporate.

• Levies and arrears: levy statements, collection, interest within the limit PMR 21(3)(c) sets, and arrears follow-up as the trustees instruct.
• Funds and accounts: separate books and bank accounts for the administrative and reserve funds (PMR 26(1)(b)), paying accounts within the approved budget, and monthly management accounts.
• Budgets and financial statements: both budgets, and annual financial statements audited and presented to a general meeting within four months of the year end (PMR 26(4)).
• Meetings and minutes: notices, attendance, and minutes the trustees must distribute within 7 days (PMR 9(e)).
• Insurance: the scheme's cover and claims, including public liability cover of at least R10 million (PMR 23(6)) and fidelity cover against fraud or dishonesty by a trustee, managing agent or employee (PMR 23(7)).
• Maintenance administration: helping the trustees with the 10-year maintenance, repair and replacement plan (PMR 22), quotes, appointing and paying contractors on instruction, and following up repairs.
• Records: the rules and registers PMR 27 requires, and correspondence, and owners' requests to inspect them.

PMR 28(7) limits the management agreement itself: it may not run longer than three years, and whatever it says, the body corporate may cancel it without penalty on two months' notice after a special resolution at a general meeting, and the agent may cancel on two months' notice. Under PMR 28(8) the body corporate or the trustees may also cancel it in accordance with its terms, or decline to renew it, by ordinary resolution. A good agreement lists every service, fee and extra, the spending limits delegated under PMR 21(3)(g), and how often the agent will visit.

04

The managing agent's part in maintaining the common property

Section 3(1)(l) of the STSMA requires the body corporate "to maintain all the common property and to keep it in a state of good and serviceable repair", section 3(1)(q) to maintain the plant, machinery, fixtures and fittings used with it, section 3(1)(m) to comply with any notice or order from a competent authority requiring repairs, and section 3(1)(p) to ensure compliance with any law relating to the common property. The duty stays with the body corporate; the managing agent usually runs the administration that turns it into work done:

1. Know what is due: a schedule of recurring work on the common property, such as gate motors, stairwell lights, the pool, drains and gutters, fire hose reels and extinguishers, the electric fence, the standby generator, the lift service, and garden and cleaning visits.
2. Appoint the people who do it: the caretaker, the cleaning, garden and security contractors and the specialists, each on a signed written contract (PMR 9(d)).
3. Follow up faults: log each fault reported, get it quoted and fixed within the delegated limit, and tell the owner who raised it.
4. Report to the trustees: what was done, what is outstanding, and what the next items on the maintenance plan will cost.

Health and safety law follows the work. Section 8(1) of the Occupational Health and Safety Act 85 of 1993 requires every employer to provide and maintain, as far as is reasonably practicable, a working environment that is safe and without risk to the health of its employees, and section 9(1) extends the duty to other people directly affected, which on common property includes owners, tenants and visitors. A body corporate that employs a caretaker or cleaner is that employer.

Contractors bring in section 37(2), which applies the employer's liability for its employees' acts and omissions to a mandatary, including a contractor, "except if the parties have agreed in writing to the arrangements and procedures between them to ensure compliance by the mandatary with the provisions of this Act". An agent appointing contractors for the body corporate should see that each has such an agreement.

Fire safety in use is set by each municipality's fire safety by-law, so what must be checked, and how often, depends on where the scheme is. The managing agent does not replace any of those inspections; it organises them and files the certificates.

05

Records, owners' rights and handing over to a new agent

Most of the body corporate's records sit with the managing agent, but they belong to the body corporate:

• What must be kept: the rules with an index, minutes with the text of every resolution and the voting results, and lists of trustees, members, tenants and bondholders (PMR 27(1) and (2)).
• How long: books of account and financial records for six years after the transactions they relate to (PMR 26(3)).
• In what form: in writing "or in a form that can be easily converted to writing" (PMR 27(8)).
• Who may see them: a member, a registered bondholder or someone either authorises in writing, on a written request, within 10 days, or five days for the rules (PMR 27(4) and (5)).
• Handover: when the body corporate ends a managing agent's contract, the agent must deliver all these records within 10 days (PMR 27(7)). The CSOS code gives an executive managing agent 14 days to hand over the records and transfer the funds it controls (clause 8.1.4).

The rules say far less about the evidence beneath the agent's monthly report: whether the caretaker walked the complex, the cleaners came on the days invoiced, or the gate motor fault was reported on the first day or the tenth. A sound record lists each recurring check, who did it, when and what they found, written at the time, with a photograph where the condition matters, beside a fault list showing when each fault was reported and fixed.

If an owner takes a complaint to CSOS, section 39(5) of the Community Schemes Ombud Service Act 9 of 2011 lets the application ask for an order requiring a managing agent "to comply with the terms of a person's contract of appointment and any applicable code of conduct or authorisation", or declaring whether the association may terminate the agent's appointment, and section 54(1) has the adjudicator grant or refuse it. Dated records are what let both sides answer with facts.

06

Where the record fails, and what SiteClara does about it

A portfolio manager may look after dozens of schemes and visit each one monthly at best. Between visits, the agent relies on contractors' invoices, the caretaker's notebook and a chat group where faults are mentioned and forgotten. When an owner asks at the AGM whether the stairwell lights were checked last month, or when the leaking gutter was first reported, the answer has to be pieced together from emails.

SiteClara records routine checks at the place they happen. A printed QR poster, with an optional NFC tag behind it, is fixed at each location on the common property where a check is scheduled: the gatehouse, a stairwell, the pool pump room, the bin area. The caretaker or a contractor's staff scan or tap with their own phone, with no app to install, see the checks due there, and mark each one done or say what stopped them. The time and the named person are recorded as it happens, with a photo when one is asked for, and a fault reported there goes onto a list of open jobs until someone closes it.

A supervisor sees what is due, done and missed, gives the reason when a check was missed, and each day approves a short report that goes the next morning to the nominated contacts, such as the portfolio manager or a trustee: a dated record of routine work, made at the time by the people who did it.

07

Questions people ask

Does a sectional title scheme need a managing agent?

Not always: under rule 28(5) of the Prescribed Management Rules in the Sectional Titles Schemes Management Regulations, the body corporate may appoint a managing agent if the trustees so resolve, and must appoint one if a registered mortgagee of 25 per cent in number of the primary sections, or a resolution of members, requires it. Otherwise the trustees may run the scheme themselves.

What are the responsibilities of a managing agent?

They are whatever the written management agreement and the trustees' delegations say: rule 28(5) of the Prescribed Management Rules in the Sectional Titles Schemes Management Regulations describes an agent appointed "to perform specified financial, secretarial, administrative or other management services under the supervision of the trustees". An executive managing agent, by contrast, is subject to all the duties and obligations of a trustee under rule 28(3).

Is a managing agent a property practitioner?

Yes: the Property Practitioners Act 22 of 2019 defines a property practitioner to include "any person who for remuneration manages a property on behalf of another", and regulation 1.22 of the Property Practitioners Regulations, 2022 names a rule 28 managing agent expressly, so it must hold a Fidelity Fund certificate.

What is a managing agent for a property?

In sectional title schemes, rule 2(1)(j) of the Prescribed Management Rules in the Sectional Titles Schemes Management Regulations defines a managing agent as "any person who provides scheme management services to a body corporate for reward, whether monetary or otherwise, including any person who is employed to render such services".

08

Where to read the official guidance, and a list to take away

• The Sectional Titles Schemes Management Act 8 of 2011: sections 3, 4 and 7.
• The Sectional Titles Schemes Management Regulations (Government Notice R. 1231 of 7 October 2016): PMR 2, 9, 21, 22, 23, 26, 27 and 28.
• The Property Practitioners Act 22 of 2019: sections 1, 48, 53, 54, 55 and 56, with the Property Practitioners Regulations, 2022, and the PPRA's Property Practitioners Act page.
• The CSOS Code of Conduct for Executive Managing Agents and the Community Schemes Ombud Service Act 9 of 2011, sections 39(5) and 54(1).
• Your scheme's own registered rules and your municipality's fire safety by-law.

A short list for trustees appointing or reviewing a managing agent:

1. Sign a written management agreement of no more than three years that lists every service, fee and extra.
2. Put each delegation in writing, with the power, the spending limit and any conditions.
3. Check the agent's current Fidelity Fund certificate, and every principal's.
4. Know whether the scheme's money is in the body corporate's own account or the agent's trust account.
5. Ask for monthly management accounts, a fault list and a record of routine checks on the common property.
6. Give every contractor a signed contract and a written section 37(2) agreement.
7. Agree in advance how records and funds will be handed over if the agreement ends.