Sectional title trustees can’t shirk fiduciary duties

ALTHOUGH many tasks in sectional title schemes can be delegated to managing agents, fiduciary duty remains with the trustees, says Willem le Roux, director of sectional title finance company Propell.

“The duty of trust or fiduciary duty really means that the person responsible will exercise his powers in good faith and he will not act in his own interest or for another’s gain, but for the members – the owners of the sectional title units - he represents,” says Le Roux.

“Trustees must disclose any conflicts of interest. Section 40(b) of the Sectional Titles Act specifies that a trustee shall avoid any material conflict between his own interests and those of the body corporate.”

In particular, trustees may not derive any personal economic benefit to which they are not entitled by reason of their office as trustees of the body corporate, from the body corporate or from any other person in circumstances in which that benefit is obtained in conflict with the interests of the body corporate.

They must also notify every other trustee, at the earliest opportunity practicable in the circumstances, of the nature and extent of any direct or indirect material interest which they may have in any contract of the body corporate.

“If you act on behalf of another you have a duty to act with care.

“If you don’t do this, you can be held liable for any losses suffered by members,” says Le Roux.

“The trustees must, therefore display reasonable care and skill in managing the affairs of the body corporate.

“To ensure they are qualified to execute their duties trustees should familiarise themselves with the Sectional Titles Act and their schemes management and conduct rules.

“They should also read some of the many how- to guides about sectional title, appoint a competent managing agent on whom they can rely for advice, and appoint a company such as Propell that can help ensure that levies are raised correctly and that levy debt is collected without fear or favour.”

Le Roux says a competent board of trustees is the key to all successful schemes. Only people willing to act in the interests of all members should be elected as trustees. And once they are elected, trustees must equip themselves with the knowledge needed to perform their duties competently.

“Knowledgeable trustees who steer clear of conflicts of interest can never be accused of having breached their fiduciary duty,” says le Roux.

Call Willem le Roux on 0861 33 34 35 or see www.propell.co.za