Executive managing agents

Executive managing agents, as defined in the Sectional Titles

There is much talk in the industry on the topic of Executive Managing Agents. Executive Managing Agents, as defined in the Sectional Titles Schemes Management Act (“STSMA”) only apply to Sectional Title Schemes and not to HOAs. This article should answer some questions you may have. For ease of reading it is presented under various sub-headings.

Who appoints an Executive Managing Agent?
Executive Managing Agents are appointed by the owners of a scheme by special resolution. A special resolution means a normal quorum of owners is required at the owners meeting (in most cases one-third of the owners’ presence in person or by proxy) and then 75% of those present in number and in value must vote in favour of the appointment. There is another way for an Executive Managing Agent to be appointed and that is when owners representing 25% of the quotas of all sections apply to the Ombud for such an appointment.

How does a Managing Agent qualify to become an Executive Managing Agent? 
There are no qualifications or criteria for a Managing Agent to become an Executive Managing Agent. A Managing Agent needs to be registered as an Estate Agent and have a current Fidelity Fund Certificate issued by the Estate Agency Affairs Board.

What services and duties do an Executive Managing Agent perform?
The Prescribed Management Rules set out 6 obligations of an Executive Managing Agent.

  • he is subject to all the duties and obligations of the Trustees under the STSMA and the Rules of the Scheme;
  • he is obliged to manage the scheme with the required professional level of skill and care;
  • he is liable for any loss suffered by the Body Corporate as a result of not applying such skill and care;
  • he has a fiduciary obligation to every member of the Body Corporate. A fiduciary obligation means that he has a legal obligation of trust to act in the best interests of every member of the Body Corporate;
  • he has to arrange for inspection of the common property at least every 6 months;
  • he must report to every owner on the administration of the scheme at least every 4 months.

n Executive Managing Agents Contract
The contract between the Executive Managing Agent and the Body Corporate cannot continue for a period longer than 3 years and may be cancelled by the Body Corporate with 2 months notice after the cancellation have been approved by a special resolution of owners passed at a general meeting. The Executive Managing Agent can also cancel the agreement on 2 months notice. The agreement may also be cancelled in accordance with the terms contained in the agreement. Besides these contractual requirements and the other duties and reporting mechanisms in Management Rule 28 the parties are free to agree to most of all the other contractual terms.

How must an Executive Managing Agent report?
As stated above an Executive Managing Agent reports to the owners every 4 months. His reports must include at the least the following details:

  • the proposed repairs to and maintenance of the common property and assets within the next 4 months;
  • the proposed repairs to and maintenance of the common property and assets within the next 4 months;
  • the balance of each of the administrative and reserve funds on the date of the report and a reconciliation statement for each fund;
  • from date of the last report, a list of the expenses of the Body Corporate and a brief description of the date and nature of all the decisions made by Executive Managing Agent.

Can an Executive Managing Agent be appointed while there is a Board of Trustees?
An Executive Managing Agent must be appointed whilst there is a Board of Trustees. The Trustees continue in their position while the Executive Managing Agent performs their duties and obligations (to the exclusion of them). However, please note the Prescribed Management Rule 17(6)(j)(vii), which states that at an annual general meeting the number of trustees is only determined if the scheme is not managed by an Executive Managing Agent.

Must the Executive Managing Agent be appointed by CSOS? 
As stated above, CSOS may appoint an Executive Managing Agent if owners representing 25% of the total quotas of all sections apply to CSOS. Can a current appointed Managing Agent be upgraded to an Executive Managing Agent? As soon as the owners resolve to appoint an Executive Managing Agent as set out above, the Trustees can negotiate and upgrade the Managing Agent’s agreement to an Executive Managing Agent’s agreement.

Executive managing agents, as defined in the Sectional Titles

Alan Levy - Alan Levy AttorneysAuthor
Alan Levy is an attorney at Alan Levy Attorneys, Notaries & Conveyancers who specialise in Community Scheme Law, Levy Collections, Rentals & Evictions and Conveyancing. Email or call Alan on enquiries@alattorneys.co.za / 083 968 5045\. alattorneys.co.za Disclaimer: Please note that the views and opinions expressed in articles and/or blog posts are those of the authors concerned and do not necessarily reflect the official policy or position of Amiti Solutions.