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
Legal
Sectional Title trustees cannot award themselves contracts
22 Sep 2022
Any owner in a Sectional Title scheme who is in good standing can become a trustee, and they can even nominate and vote for themselves should they wish.
read more
Legal
Understanding conditional clause when buying (or selling) a property
14 Sep 2022
As if property transactions weren’t already convoluted enough with reams of documentation and legalese to navigate, there are also often suspensive conditions included in the Offer to Purchase that needs to be met by one or both parties, and these need to be gone over with a fine tooth comb.
read more
Legal
How to safely cancel a residential lease agreement
05 Sep 2022
It is not always possible to see out the full term of your lease agreement and there may come a time when you need to cancel it for whatever reason. Not following the correct procedure can be costly though, says Tiaan Pretorius, manager for Seeff Centurion.
read more
Legal
A New bill will put government in charge of the deeds office
30 Aug 2022
The Deed Registries Amendment Bill seeks to put the minister of agriculture and land reform in direct charge of technical decisions around the Deeds Office.
read more
Real Estate Tools
icons_2
Property Law
Contact our partner attorneys with your conveyancing and property law questions
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