Advice and Opinion

Do’s and don’ts for Sectional Title Trustees

The Mismanagement of a sectional-property scheme can have widespread and unforeseen repercussions for both the owners and the residential market. Anyone buying into a sectional title should take a careful and thorough review of the schemes management, to satisfy themselves that the body corporate is solvent.

Paul Stevens, CEO of Just Property says that “a thorough understanding of the management within the scheme is vital as it accounts for all projects being undertaken, be they general maintenance, repairs or additional building. An active interest in the progress of the work being undertaken ensures that there are no surprises later on in the schemes lifespan. When repairs are required, ensure that work is completed timely and effectively. Shoddy and improper fixes will result in double the work and time spent on every issue as more contractors are hired to repair the initial issues along with the faulty ‘fixes’. Regular maintenance will ensure that the value of the scheme does not decrease through general disrepair”.

The Do’s

DO budget correctly – correct budgeting will leave you with a healthy scheme that is able to meet all of its financial obligations, thereby raising or at least maintaining the value of each of the individual units within the scheme. Correct budgeting is also able to ensure that no unforeseen special levies need to be raised, allowing owners to stick to their own financial commitments with no surprises.

DO play an active role in the schemes day to day and monthly running. It is vitally important that you know what is happening within your scheme. Know what services and maintenance contracts are being undertaken so that the scheme is able to keep on top of things at all times.

As trustees. DO appoint “the right people for the job” to assist in your management. Surround yourself with competent people who have the schemes best interests at heart and who are able to dedicate sufficient time and efforts to the scheme.

The Don’ts

DON’T neglect levy increases to lower your monthly payments. You may feel that you are keeping your members happy by not raising levies, but in the long run this is detrimental to the health of your scheme. Low levies inevitably lead to the need to raise Special Levies. Levies need to be regularly adjusted so as to ensure that they are in accordance with inflation and cost increases in the market.

DON’T pay contractors without scrutinizing the invoice and work completed. Ensure that you know what you are paying for and that the work has been done to the standard you required. Sloppy work by contractors leads to future problems that will invariably cost more to fix than the original problem.

DON’T neglect maintenance on the scheme. This is one of the most important tasks of the trustees. Neglecting maintenance leads to the deterioration of the schemes buildings and appearance, which in turn lowers the value of the entire scheme and the value of each of the individual units.

Correct budgeting is one of the more important factors in financial management as well as the schemes ability to pay all of its monthly accounts. The steady flow of cash generated by a stable scheme should ensure that there is no need to increase levies on any unforeseen projects.

Communication with the owners should take place on a regular basis. An increase in levies, general maintenance work or any other upcoming issue should be communicated well in advance so that both the body corporate and residence are made aware. Raising levies should be done in accordance with national inflation and not as a result of covering repairs or maintenance which has spiraled over budget.

Ensure that there is a well-implemented system for levy debt collection procedure in place, with a strong focus on legal recoveries. Residents should have the penalties of late collection made clear to them prior to signing any agreements, and penalties imposed should be far in relation to the infringement.

With a strong board of trustees working effectively together, the smooth maintenance and running of any sectional title should result.