What are the fiduciary duties of trustees?

Author
MyProperty
South Africa's #1 independent property portal

While many tasks in sectional title schemes can be delegated to a managing agent, the fiduciary duty remains with the trustees.

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.

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

(i) shall not derive any personal economic benefit to which he is not entitled by reason of his office as trustee 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;

(ii) shall 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 he 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 do not do this, you can be held liable for the loss suffered by members.

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

The steps trustees can take to ensure they are qualified to execute their duties are to:

  • familiarise themselves with the Sectional Titles Act and their schemes management and conduct rules;

• read one of the many how-to guides about sectional title;

  • appoint a competent managing agent on whom they can rely for advice;
  • appoint a management company that can help ensure that levies are raised correctly and that levy debt is collected without fear or favour.

A competent board of trustees is the secret to all successful schemes. Only people willing to act in the interest 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.

Legal Property News
Your guide to compliance certificates as a home owner
Legal
Your guide to compliance certificates as a home owner
08 Sep 2023
In South Africa, compliance certificates are essential documents that property sellers and landlords must obtain to ensure that their properties meet certain legal and safety standards. These certificates help protect both buyers and tenants by verifying that the property is safe and in compliance with relevant regulations.
read more
Homeowner Associations: What home owners, tenants and prospective buyers need to know
Legal
Homeowner Associations: What home owners, tenants and prospective buyers need to know
23 Aug 2023
Homeowner associations (HOAs) are an integral part of many residential communities and complexes, offering a range of benefits and playing a crucial role in managing and maintaining the communal aspects of a complex or estate.
read more
How to evict non-paying tenants
Legal
How to evict non-paying tenants
11 Aug 2023
While it can be a lengthy process to evict tenants who fail to pay their rent, there are procedures in place to make sure that both the tenant’s and the landlord’s rights are protected. Following the necessary steps is key to a hassle-free eviction process.
read more
Everything you need to know about property sales agreements
Legal
Everything you need to know about property sales agreements
28 Jul 2023
In the world of property transactions, one crucial document serves as the cornerstone of the entire process—the property sales agreement. While it may seem intimidating at first, understanding its significance is essential for both buyers and sellers.
read more
Real Estate Tools
Get pre-qualified
Make offers with confidence knowing what you can afford. Then shop for the best home loan
Bond Calculator
Calculate the estimated repayments on a home loan and savings with extra payments