Consumer Information

Author:  STONEWOOD Property Management
July 2020

CAN SECTIONAL TITLE TRUSTEES BE REMUNERATED?

Being a trustee in a sectional title scheme is by all accounts a thankless job for which there is usually no payment offered. Why then, do people make themselves available to perform the duties of a trustee?

Why be a trustee?

Trustees are generally owners in a sectional title scheme who want to be involved in the day-to-day management of the complex. They have a vested interest in the form of an immovable asset and want to ensure the value of their asset is maintained and increased. The reality of being a trustee is that as time passes, less trustees are available or have the time to deal with the matters of managing the scheme and its complicated problems.

Remuneration is possible

Trustees are entitled to be remunerated for their time and efforts by the body corporate. The Sectional Titles Schemes Management Act No 8 of 2011 allows for trustees who are body corporate members to be paid but only if this has been approved at a special general meeting of the scheme. However, this seldom happens.

A trustee is anybody who has been nominated and who accepted such a nomination. This means that a trustee does not have to be an owner in a scheme. With the numerous changes in the sectional title laws implemented on 7 October 2016, being a trustee has become very burdensome from a fiduciary and responsibility point of view. Trustees remain responsible for the actions of the body corporate and may be held legally responsible for any wrongdoing in their management of the scheme affairs.

Move towards professional trustees

Many bodies corporate are now considering appointing professional trustees – also known as execute trustees. The ideal candidates are individuals with extensive knowledge of sectional title laws, the management of bodies corporate as well as the responsibilities of trustees and the managing agents. Though, with employment comes the requirement of remuneration. The Sectional Titles Schemes Management Act No 8 of 2011 is clear that trustees who are not members – such as professional trustees – may be remunerated for their services.

Appointing members and non-members

A trustee – who is also an owner in a scheme – may be remunerated if the body corporate members pass a special resolution. In the case of a trustee who is not a member, a normal resolution (with a majority vote) taken at a general meeting is required. The proposed remuneration must be included in the annual budget and must be approved. The appointed person must be nominated, accept the nomination and be voted to stand as a trustee.

Legal responsibility

The various sectional title acts are filled with the responsibilities of trustees. The appointment of a trustee, who is not an owner in a scheme, does not absolve the appointee of the legislative responsibilities. The appointee is also subject to the contractual responsibilities with the body corporate as detailed in their contract of appointment.

Bodies corporate will do well to consider the appointment of professionals as trustees considering the complexities of scheme management, trusteeship and legislative requirements.

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