Trafalgar News

Trafalgar News

The importance of a Managing Agent being compliant

Recent reports regarding dishonesty during the financial management of schemes by Managing Agents have caused Trustees to review the agreements in place with their managing agents.

There remain however many reasons why a Body Corporate should rather have a Managing Agent than manage themselves.  For one, in just two years a manager of 30 schemes will probably for example have attended at least 60 Annual General Meetings, 30 special general meetings and more than 300 Trustee meetings and taken more than 6000 telephone and email enquiries.  A trustee in a self management scheme would have to serve for 60 years to gain similar experience.

The Trustees should however ensure that their Managing Agent is compliant with the following:

• The Managing Agent must have a valid fidelity fund certificate issued by the Estate Agency Affairs Board (EAAB).  In terms of the EAAB definitions Managing Agents are estate agents – they must therefore be registered members of the EAAB.  If they operate a trust account they must contribute to the EAAB’s fidelity fund.  This fund is there to protect the Body Corporate against theft and fraud.  Once the Ombuds Act is implemented it is expected that Managing Agents will be regulated by the Ombud.

• It is further recommended that the Managing Agent have its own fidelity guarantee in place.  This cover protects the managing agency against theft or fraud by any of its employees and provides further protection for body corporate funds.

estate agency affairs board  Member of NAMA

• The industry formed its own regulatory body – the National Association of Managing Agents (NAMA) that requires its members to comply with a code of conduct – make sure that your Managing Agent is a member of NAMA and thereby complying with a comprehensive code of conduct.

• Confirm with the Council for Debt Collectors that your Managing Agent is registered with them – without this membership the Managing Agent is not legally entitled to collect arrear levies.

• Managing Agents should know the Sectional Titles Act and Regulations and advise the Trustees in this regard seeing that Trustees are normally volunteers with other jobs.

• It is also important that your managing agent has some form of qualification – NAMA has supported the UCT/Paddocks Sectional Title Scheme Management course and this has now become the recognised minimum qualification for Managing Agents.

Written by Andrew Schaefer MD – Trafalgar Property Management

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