Can trustees be paid for their time?

The role of trustee is often a thankless and time consuming responsibility, and the question is often raised whether they should be remunerated for their work or not.

Property Blog Articles | Advice | Contractual Matters | Market News

Every sectional title scheme is managed by a body corporate which is headed up by trustees. These trustees are appointed by the owners of the sectional scheme and are tasked with managing the maintenance and finances of the property.

The role of trustee is often a thankless one, and depending on factors such as the size of the scheme, the maintenance required, and the involvement of all owners in the scheme, a trustee’s job can be rather time consuming. In many cases, an external managing agent is contracted and paid to assist. However, there often remains the question as to whether the trustees should also be remunerated for the the work put into managing the sectional scheme.

This question is actually regulated by the Sectional Titles Act, 95 of 1986 and the Prescribed Management Rules. These rules deal with the remuneration of trustees for the work done, and make a distinction between trustees who are also owners within the scheme and non-owner trustees.

While both categories of trustees may be reimbursed for expenses incurred as part of the required management of the property, payment for time and expertise are dealt with differently.

Non-owner trustees may be paid for their expertise under the Prescribed Management Rule 10. The value of this payment, however, is not specifically regulated and must be agreed upon by the body corporate.

For trustees who are also owners within the scheme, payment for the role as trustee is only possible if a special resolution is passed. This means that at least 75% (in number and value) of the scheme members present at a body corporate meeting must vote in favour of this decision. Alternatively, the special resolution can be passed through a ‘round robin’ (i.e. by obtaining the written signature of 75% of all owners within the sectional scheme – again this is in terms of number and value).

The concept of number and value can be slightly different and both need to be above 75% for the special resolution to be passed. The number refers to the number of individual owners (i.e. if there are 100 owners in a sectional scheme, 75 must vote in favour of the special resolution for it to be passed). The value refers to the participation quota (i.e. the vote of an owner with a larger portion or multiple sections of the scheme has more weight than an owner with a smaller portion).

It can be useful to incentivize the role of a trustee, particularly where the role requires significant time, effort and expertise. However, the regulations relating to the payment of owner trustees are in place to protect all members of a sectional scheme and to ensure the effective management of the scheme’s finances.

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Can trustees be paid for their time?

The role of trustee is often a thankless and time consuming responsibility, and the question is often raised whether they should be remunerated for their work or not.

Property Blog Articles | Advice | Contractual Matters | Market News

Every sectional title scheme is managed by a body corporate which is headed up by trustees. These trustees are appointed by the owners of the sectional scheme and are tasked with managing the maintenance and finances of the property.

The role of trustee is often a thankless one, and depending on factors such as the size of the scheme, the maintenance required, and the involvement of all owners in the scheme, a trustee’s job can be rather time consuming. In many cases, an external managing agent is contracted and paid to assist. However, there often remains the question as to whether the trustees should also be remunerated for the the work put into managing the sectional scheme.

This question is actually regulated by the Sectional Titles Act, 95 of 1986 and the Prescribed Management Rules. These rules deal with the remuneration of trustees for the work done, and make a distinction between trustees who are also owners within the scheme and non-owner trustees.

While both categories of trustees may be reimbursed for expenses incurred as part of the required management of the property, payment for time and expertise are dealt with differently.

Non-owner trustees may be paid for their expertise under the Prescribed Management Rule 10. The value of this payment, however, is not specifically regulated and must be agreed upon by the body corporate.

For trustees who are also owners within the scheme, payment for the role as trustee is only possible if a special resolution is passed. This means that at least 75% (in number and value) of the scheme members present at a body corporate meeting must vote in favour of this decision. Alternatively, the special resolution can be passed through a ‘round robin’ (i.e. by obtaining the written signature of 75% of all owners within the sectional scheme – again this is in terms of number and value).

The concept of number and value can be slightly different and both need to be above 75% for the special resolution to be passed. The number refers to the number of individual owners (i.e. if there are 100 owners in a sectional scheme, 75 must vote in favour of the special resolution for it to be passed). The value refers to the participation quota (i.e. the vote of an owner with a larger portion or multiple sections of the scheme has more weight than an owner with a smaller portion).

It can be useful to incentivize the role of a trustee, particularly where the role requires significant time, effort and expertise. However, the regulations relating to the payment of owner trustees are in place to protect all members of a sectional scheme and to ensure the effective management of the scheme’s finances.

Follow Snymans on Facebook for more legal advice, information and news about property.

3022