Hi, my body corporate and trustees want me as chairman. We have a large complex of 37 units let to tenants and occupied by owners. I would like to know the legal ramifications of being chairman or a trustee. Can one be sued in one’s personal capacity by an owner or tenant, and what responsibility does one have to staff like gardeners? We have a caretaker and a managing agent. – Mike
Hi Mike, as a point of departure, it is important to note that a chairperson does not have any more powers than that of a trustee. The main roll of a chairperson is to conduct all meetings of the body corporate, and to give the casting vote where there is a stalemate of vote.
That being said, the duties owed by the chairperson to a body corporate are essentially the same as that of the trustees.
The Sectional Titles Act No. 95 of 1986 (STA) deals with the fiduciary duties of the trustees to a body corporate under Section 40. The term ‘Fiduciary Relationship’ implies that a trustee shall in relation to the body corporate act honestly and in utmost good faith. In this regard it is most notable that a trustee may not receive any personal economic benefit by reason of his/her office, and may be liable in his/her personal capacity to the body corporate for any loss suffered by it arising out of the trustee’s mala fide or grossly negligent act/omission, or in respect of any economic benefit derived by the trustee by reason thereof.
The Regulations in terms of the aforementioned act deal more extensively with the duties of trustees, including inter alia insurance of common property, and of each unit (excluding the owner’s interest therein); the trustees’ duty to compile an expected income and expenditure report for the financial year, and to levy and collect contributions from members in this regard; to keep a record of the rules applicable to the body corporate; to make decisions in regards to improvements to the common property; to keep detailed accounting records of the financial position of the body corporate; as well as the statutory audit requirements applicable to body corporate.
The more recent Sectional Titles Schemes Management Act No. 8 of 2011 does not repeal the provisions of the STA except insofar as the provisions of the old act are inconsistent with the new act. In this regard, Section 8 of the new act, dealing with the fiduciary duties owed by the trustees to the body corporate echo that of Section 40 of the old act.
The Regulations to the new act deal extensively with the election, and disqualification of trustees and chairpersons alike.
It is by reason of the cumbersome statutory duties placed on the trustees of a body corporate that the many bodies corporate will resolve to appoint a managing agent (who may not be a body corporate member) to control, administer and manage the common property, as well as the statutory and general obligations of the body corporate.
One should, however, not be quick to shy away from election as a trustee or chairperson where the individual is in a position to take on the job, by reason of the onerous statutory duties or potential personal liability. As long as a trustee understands the scope of his/her duty owed to the body corporate, acts honestly and in good faith, there can be little to no risk of personal liability, and the reward will be a successful well managed and financially viable scheme.
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Who is Claire Laurent?
Claire Laurent, candidate attorney at SSLR, obtained her LLB degree from the University of Pretoria in 2014, and due to her academic achievements she was placed on the Dean’s Merits List during 2013 as well as 2014. She joined SSLR during January 2015, and is currently completing her articles at the firm.
She has been placed in SSLR’s residential property department, and finds great joy in assisting landlords with all residential-related disputes, including the drafting of demand and cancellation letters, instituting eviction proceedings and rental recovery.