“Sectional title schemes, while varying in size, all need the right management so that their financial stability is kept intact”, says Michael Bauer, general manager of the property management company, IHFM.
“They should be run as any other business, with the positions of the day to day management filled by the correct people,” he says. “Just as it is important to have trustees who are good at their jobs and know what they are doing, so it is with choosing the right managing agent.”
“When choosing a managing agent”, says Bauer, “it is important to check the company’s track record carefully and ask for a few references. There have been many disreputable companies who have set themselves up as managing agents and end up running the sectional title schemes they were working with badly, which can end in the scheme either becoming insolvent, neglected and they can lose property values fast”.
“If the trustees find themselves looking to employ a managing agent, there are a few things to look out for”, he says.
The first thing to check is whether the managing agent has a Fidelity Fund Certificate from the Estate Agency Affairs Board. While it isn’t necessary for every staff member in his company to be registered, the principal agent must have an FFC. This is necessary as there are huge sums of money being managed in the form of levies and managing agents must register with the EAAB and deposit money into a trust account in the name of the scheme.
They should find out who the trustees of other schemes are using to manage their schemes and get direct referrals from them if they are happy with the job being done.
If there is a particular managing agent in mind, the trustees should ask him for a contact list of the schemes he manages. If he is reliable and confidently hands a list over, there is a good chance he does have a good track record.
Check that the managing agent has his own professional indemnity and professional insurance because it is important that all the monies collected can be protected from loss, whether caused by mistakes or misappropriation of funds.
Also check whether the managing agent is involved with any other property businesses, such as maintenance, insurance, debt collections, as he could funnel business from the sectional title scheme into his other businesses and charge more than the going rates for these and also lose focus on the management job at hand.
Prescribed Management Rules 46 and 47 stipulate some of the terms of a contract that should be signed with a managing agent, so it is important, says Bauer, to specify exactly what it is that is required of him and the extent of his responsibilities.
“Good managing agents,”said Bauer, “will always supply the information the trustees need to ascertain whether they are suitable for the job. They will, too, be open and upfront about their qualifications and who will be managing their books. They will be open to constructive criticism or input from the trustees of sectional title schemes as they are, after all, both meant to be working the scheme’s best interests.”