Orders Relating To Services Of Managing Agents In Community Schemes
A CRITICAL ANALYSIS OF CERTAIN ASPECTS OF THE COMMUNITY SCHEMES OMBUD SERVICE ACT, NO 9 OF 2011 MONTH 7: JULY 2019 Orders Relating To Services Of Managing Agents In Community Schemes There are many different community schemes and arrangements in South Africa. For many years there was no regulatory body governing these schemes. The Community Schemes Ombud Service Act 9 of 2011 (“CSOSA”) came into operation in October 2016 and many of these schemes now qualify as community schemes under the CSOSA. Subsequently, the CSOSA established a regulatory body established by government to deal with complaints and disputes in community schemes and to oversee compliance and corporate governance in such schemes. The CSOS is designed to provide an alternative, impartial, cost-effective and transparent service for the resolution of administrative disputes in community schemes. The term “community scheme” refers to a wide range of shared land use arrangements, including sectional title, share block and retirement schemes, home owners’ associations and housing co-operatives. The CSOSA defines a “dispute” as: “a dispute in regard to the administration of a community scheme between persons who have a material interest in that scheme, of which one of the parties is the association, occupier or owner, acting individually or jointly”. This means that the CSOS can deal with disputes regarding the administration of a community scheme if the dispute is between persons who each have a material interest in the scheme, such as executive committee members, owners, occupiers, managing agents and bondholders, and one of the parties to the dispute should either be the association or an owner or occupier. Section 39 of the CSOSA provides for a list of seven types of orders that a CSOS adjudicator can give in terms of a dispute application. Each month, I will consider one of these seven categories of types of orders from a practical point of view to determine which kind of community scheme disputes can be taken to the CSOS for resolution and how an adjudicator can deal with such disputes. It is important to note that the list of orders provided for in the CSOSA is not exhaustive as the chief ombud is entitled to propose any other order. Many community schemes make use of the services of managing agents to assist with the management of a scheme. A CSOS adjudicator can give three types of orders that deal with compliance and termination of an agreement in any type of community scheme and the appointment of an executive managing agent for sectional title schemes. An order requiring managing agent compliance Managing agents will typically conclude a written contract with the association which sets out the terms of their employment and the scope of their responsibilities. They may also be given additional authority by the association and may be bound by a certain code of conduct. In terms of section 39(5)(a) of the CSOSA, an application may be made for an order requiring a managing agent to comply with the terms of a person’s contract of appointment and any applicable code of conduct or authorisation. Therefore, any person prejudiced by a managing agent’s failure to comply with their employment contract, code of conduct or additional authorisation can apply for an order requiring the managing agent to comply with their responsibilities. An order declaring that the association does or does not have the right to terminate the appointment of a managing agent, and that the appointment is or is not terminated As any other employment contract, the association will have the authority to terminate the contract with the managing agent, if it falls within the terms of the contract. Should a dispute arise between the association and its managing agent regarding the right of termination of the contract, the CSOS can be approached to provide clarity. Typically, when a notice of cancellation or termination is given, the managing agent will often dispute its validity. In these cases, the association or the managing agent can apply for an order confirming the position. In terms of section 39(5)(b) of the CSOSA, an application may be made for an order declaring that the association does or does not have the right to terminate the appointment of a managing agent, and that the appointment is or is not terminated. Although this provision provides protection for both parties, I believe this is a matter of interpretation of the employment contract read together with employment legislation and I am sceptical about whether an adjudicator will have the necessary expertise to give such an order. An order for the appointment of an executive managing agent Because many schemes make use of the services of managing agents these days, members of a sectional title scheme who are entitled to at least 25% of the total quotas of all sections, are given the power to apply for the appointment of an executive managing agent if they believe that the scheme should be managed by an executive managing agent, which agent will then exercise the functions and powers of the trustees. Should the members not be able to obtain the necessary support to take the special resolution required to make the appointment of a managing agent, they can apply to the CSOS for an order authorising and requiring that appointment. In terms of Prescribed Management Rule 28(2) issued under the STSMA, members entitled to 25 per cent of the total quotas of all sections may apply to the CSOS for the appointment of an executive managing agent. Keep an eye out for next month’s newsletter as I will consider orders relating to maintenance, repairs and works pertaining to private areas and common areas. |
DANIËL VAN ZYL ATTORNEY & CONVEYANCER LL.B & LL.M ASSOCIATE AT VAN ZYL KRUGER INC |
Provided by Van Zyl Kruger
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