This is according to Martin Bester, the managing director of Intersect Sectional Title Services. "Every managing agent dealing with trust funds on behalf of its clients is an estate agent by definition," says Bester.
"This means that the managing agency is subject to the same terms and conditions as an estate agency as laid down by the EAAB and is therefore required to maintain a valid fidelity fund certificate at all times. Moreover, the head of company and each of the property managers must have satisfied the EAAB's requirements in terms of the qualifications and professional designation exams so as to hold and maintain their individual fidelity fund certificates."
Bester states that failure to ensure that the managing agent appointed to administer the affairs of the body corporate or home owners association is in receipt of same could jeopardise any future claims against the EAAB's fidelity fund, leaving the body corporate or home owners association with a loss.
"Should the trustees be found not to have performed reasonable due diligence at the time of the appointment of the managing agent a gross negligent act or omission could be argued and, if proven, could find the trustees held liable in their personal capacities for the loss or part thereof as the Sectional Titles Act or the Constitution or Memorandum of Association only indemnifies the trustees as long as they were acting in good faith and that no gross negligence can be proven."
It is therefore imperative that due diligence is performed prior to the appointment of any managing agent and the very least to request are copies of the fidelity fund certificates of the company; of each of the agents as well as that of the principal. Moreover an explanation of how trust funds are dealt with, preferably in writing, would be strongly advised. Lastly, the trustees must, without exception, insist on monthly management accounts and keep an eye on the inflows and outflows of the scheme.
