Understanding the hierarchy of decision making at a complex is often complicated.  

Let's face it, 99% of people aren't familiar with the acts that govern complexes and why would they, our lives are busy enough as it is.  

Often times just understanding the definitions is confusing, not to mention where it all fits in.  I've decided to try and help the everyday person to better understand the hierarchy of decisions during the everyday life of a complex.

We will focus on the most common residential complexes, Sectional Title and Homeowners Associations (HOA).  An easy way to differentiate between the two (though by no means the only way), if different owners own units on top of each other, it's probably a sectional title and if you receive your water and electricity bill directly from the local Council, you are probably in a Full Title (HOA).

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We need to get a few of the definitions out of the way - Please remember that while there are official definitions in the respective acts, mine are kept simple so to not confuse the topic. Examples would be me referring to a unit (actually a section in the Sectional Title Management Act) or a house if a Full Title.

• Body Corporate – refers to all the owners combined. You are part of the Company/Body Corporate/HOA, but you don't take part in the decision-making process (except for the Annula General Meeting of course).  These combined Owners are the combined shareholders of a Company
• Trustee or Director - refers an elected group of people that do make decisions. This group is in charge, they must make decisions and take the responsibility. They also don't (usually) get paid :(. These would be the Directors of a Company.
• Owner- means a person or company that owns a section in the complex, or an Erf at an Estate (HOA). It means you have rights within the complex, you are allowed to vote at meetings AND (unfortunately) you have to pay a levy. This represents a single shareholder.
• AGM (Annual general Meeting) - means a meeting that should be held annually to which all the owners are invited. Owners are allowed to vote; they are allowed to nominate others to stand on the new board or even discuss the budget for 3 hours.
• Tenant- refers to somebody living in a unit or house but does not own it. They have a contract with the owner of the unit/house.  They have the same rights as any other resident, but not the same as an owner.
• Managing Agent - Reverse to a service provider.  The have no decision-making rights, the serve the Trustees/Directors. This Represents the Employees in the example of a company.

Let's stop there we don't want this to read like set of court documents. Time to get started, who's in charge? What must I do to effect change? What gives the Trustees the right to decide this without my vote?

Consider the Pyramid below!

This needs some explaining. Let's start from the bottom up.

The Managing Agent

It is a common misconception that the managing agent makes decisions, as with all things the impossible sometimes happen.  If you do have a managing agent that makes decisions, you need to act and rectify this immediately. Why? Simple, the managing agent was not chosen to make decisions.  An AGM chooses Trustees/Directors, they put their TRUST (so to speak) in the elected board, and in so doing in the board's ability to make the right decisions.  If trustees are delegating decision making to the managing agent, your investment might be at risk.  Simply put if the AGM wanted the managing agent to make decisions, they would have elected to appoint an executive managing agent _Rule28

Chances are that you have more interaction with a managing agent then with Trustees, this blurs the lines. it's easy to misinterpret action with decision. If the Directors of a company make a decision, they expect the employees to carry it out, this is the same thing. Let's use examples to clarify.

I know the management agent makes payments.

Chances are that the agent may be in control of the bank account. This is the case, more often than not. But why are they, a trustee directive, it is commonplace for the managing agent to handle the bank account/s as well as payments, BUT payments may only be done on the express instruction of the trustees.  GMA has a policy document where the actions we are allowed to take relating to payments from the complex bank account are determined.

The Managing agent does the maintenance or appoints the contractor.

The managing agent may not decide what maintenance needs to be done nor are the allowed to decide which contractor to appoint, they must certainly not decide on whether any work done was done to satisfaction.

While the managing agent certainly assists the trustees with obtaining quotes, the trustees must inform them what quotes they need obtained, and from which contractors.  Once quotations have been obtained, the trustees have to decide which quotation to accept.  A managing agent is often relied upon to provide potential contractors that can quote, providing this information is a service, nothing more.

Let's recap, everything maintenance related remains a duty of the trustees, these duties are often delegated to the managing agent, in that case they are still limited to only assist until a decision needs to be made.

The Managing agent charges admin fees or interest.

Each complex has its own levy recovery process. These processes are discussed and negotiated. Ultimately a resolution is signed which directs the managing agent to act in a specific manner.  This directive or resolution comes from the Trustees/Directors, but it's often delegated to them by the AGM.  It is important to remember that an AGM instruction is binding to the Trustees/Directors, they don't have a choice in the matter, they are obligated to act in accordance with the directive, unless of course the directive is illegal.

The Managing Agent sent me a Conduct letter and a fine

The Managing agent probably sent you a letter after somebody complained in writing to the trustees.  After discussion and deliberation, the trustees instructed the managing agent to write the letter or potentially they wrote letter themselves and requested that the managing agent just send it.

To summarize, managing agents are not part of the decision-making process. Their tasks are administrative in nature, often making it seem like they are making decisions.  

Tenants

Tenants are marked as A on the Pyramid since they actually have no decision-making rights. Sure, a tenants can become a Trustee, and if so, they have the right to make decisions in their capacity as a trustee, but not in their capacity as a tenant. A tenant has an agreement with the owner of the unit, by extension they have rights as any other resident. If they want to effect change, they must discuss this with the owner of the unit.  In turn the owner can act within their rights. What is important to note is that tenants may not attend owners' meetings, such as an AGM (unless the owner gives them a proxy).  They may not vote, they may not make decisions.

Owners

In your capacity as an individual owner. Your decision making in the complex to effect change is very limited. Again, let's use the analogy of a company. In this case, you are a shareholder. You own a stake in the complex, but you are not part of the management team. Your ability to effect change is limited until you attend a general meeting of some kind, like an AGM. Of course you have other methods in which you can take action, the act describes them in detail, but you will need votes to force these actions. Alternatively, you have CSOS to turn to in case your Trustees are not doing things legally. To effect real change day to day, you can become a Trustee.

This does not mean that you can't decide to obtain Financials, or request maintenance to be done, you are simply limited to the rights afforded to you by law.

Trustees / Directors

With great power comes great responsibility.

This is where the real responsibility within your complex is situated. This is by no means a glamorous position, in fact it's a thankless position. it takes your family time and is normally tied to countless confrontation. I say this to honour the Trustees that do the work without reward, but must, because their investment requires it.

If you ask, what is it that Trustees do, well.... everything.  Every single decision (outside of an AGM) must be taken by them. Obviously, there are certain decisions that they cannot make. But for everything else,theres.....The board of Trustees/Director

The pressure here is never really considered, let me elaborate.

• They are expected to make decisions.
• In record time
• While considering information such as budgets, current financials, bank balances not to mention owners' opinions.
• All while they are potentially not an expert in the field that requires their decision (think plumbing, electrical, access control even finance and legal matters, lately Solar!)

All this while still being held responsible and accountable for their decisions. Often times it is difficult to get trustee positions filled, and most of the times more than half of the trustees are barely active.

I am pointing out that this is by no means an easy job. But the rules are rules. If a Trustees/Director is elected and agrees to take office, they are expected...no required, to do what the Act requires, or they can resign the position.

The word Trustee is mentioned 147 time in the Sectional Titles Schemes Management Regulations and 23 times in the Sectional Title Management Act

We have already covered quite a few examples but let's provide a short list of some of the things they need to do. While the list of things they do are vast and go into great detail on the acts, this is a simplistic list of everyday things.

• Ensure that the AGM is held annually within 4 months after year end.
• Discuss maintenance work with contractors, check the work and provide payment instruction.
• Provide a Report to the AGM of what happened the past year.
• Consider the Audit and sign it off.
• Provide a Budget for the AGM.
• Uphold the Conduct Rules, even if they do not like it.
• Make decisions such as to charge interest and start recovery procedures.
• Appoint contractors, yes that includes Managing Agents.
• Attend to broken gate motors, even at 2AM.
• Address common property insurance claims.
• Deal with conduct rule complaints.
• Deal with high water and electricity charges

See the all incorporating Section 7 of the Act

This barely scratches the surface. You may say, but the managing agent does most of that and you would be correct. For that reason, Managing Agents exist, they are appointed by Trustees/Directors (not an AGM) to assist the Trustees with all their responsibilities. This also has the added effect of delays from time to time. Because while someone else can follow up on quotes, and draft a letter, the decision (before action can be taken) must be taken by Trustees.

What about the Chairperson can't he/she make quick decisions?

Simply, no. The Chairperson leads a meeting, leads the board, guides and directs, but their vote is the same as any other _{(casting vote aside [a casting vote is a vote the chairperson has if there is a stalemate during voting]).}

The Chairperson may not decide on their own. The rule is that a majority vote is required for any action (more the 50%).

Ok let's discuss voting mechanics. This seems like an important decision process.

Great, say complex JFK elected 7 Trustees at their last AGM. Effectively, majority rules, so if a decision needs to be made, 51% or more of the Trustees/Directors need to vote in favour of this decision before it can be actioned. But is this practical.... certainly not. Thats why board members are usually assigned portfolios and in so doing they are provided the internal right to manage and decide within the bounds of that portfolio. Couldn't they go rouge. That is certainly possible! For this reason, the majority rule remains and overrules anu decision. If other Trustees question the actions of a rogue element, then they must stand up and dispute the actions, if the majority disagrees, then that's what is actioned.

The majority will always rule. But acting on majority for each decision is aften impractical, your Managing Agents must wait for the proper amount for responses, before they can act. Having a well structured group of Trustees equals smooth sailing.

The Body Corporate

The highest seat of power always remains the combination of owners. To regulate this process the act has put in place various processes for votes like this to take place.. The most common of them all...the Annual General Meeting.

So why does votes like this require a process?

Because of the power this forum holds.

It can easily be argued that you have a small complex of 8 units, can't the decisions just be made around a braai. Well, if the braai was properly called in accordance with the act...you certainly can. But seriously, the rules need to account for all sizes, some complexes consist of 700 units! Proper notice must be sent before such a meeting, including documents such as: -

• A Notice with time and place
• An Agenda
• Special notice for things like Special and Unanimous resolutions
• Proxy forms
• Enough notice, 14 or 30 days, depending on the agenda items.

See Section 15 through 20 of the STSMR

What powers are you referring too - lets name a few.

Changing the Conduct Rules

Why is this so important. Consider that all too contentious issue, pets...you are a pet owner, you stay in a "pet friendly" complex. Snuggles is your love and joy, the complex you live in have strict pet rules and that is ok. Imagine for a moment, the pet friendly rule can be changed by Trustees! One day pets are allowed, the next you are hounded to remove your pet. You had no say in the matter, it was just decided. Luckily that can't be done, you have a voice in these all affecting matters.

A similar case can be made for any other rule. If you move into a small complex with nice gardens and strict rules to ensure the quiet nature of the building remains. These rules can only be changed at such a General Meeting, with proper notice, thus allowing you to have your say. Remember, majority rules.

Altering the Common Property or making changes that affect your investment.

Consider that the complex has an Elevator and hmmm, let's say an Olympic size swimming pool. You bought a penthouse on the 30th floor and you casually do 20 sets in the pool every day (did I add that you are an Olympic swimmer). It turns out most of the building's occupants don't swim and the first 6 floors of the building reckons the Elevator must be removed, 6 flights of stairs don't bother them that much. They do however feel the upkeep of the elevator and the pool is a serious levy burden. These changes won't just affect your daily enjoyment. imagine what would happen with your ability to sell or rent a penthouse on floor 30, if there is no working elevator. now Imagine the Trustees all live on floor 2 and they can make this decision.

The point of a General Meeting is exactly this. To safeguard you and your investment, but also to provide a process, that if not followed, can be overturned. Democracy does however still apply, if you are in the minority, chances are, you will ultimately lose that pool or potentially, the elevator. (This is an exagerated example and this will such a decision will probably not hold in court, but the possibility remains)

Electing Trustees

At an AGM, or a general meeting called for the prepose of Trustee election, you can change the Trustees. This often brushed over item on the agenda is probably the most important decision you can make. Why....because ultimately, they have the power in the building for 364 days.

Let's wrap up this final, but crazy important section.

At a General Meeting, anything _(almost) can be changed, if procedures are followed, the decision is not illegal, and the required number of votes are obtained. The outlandish examples I used are very rare and a court will probably never allow such an elevator decision to be upheld. The principles remain the same. This forum is there for big changes, it convenes seldomly but can have huge effect. From there all the tasks are delegated to the Trustees/Directors.

Summary

I truly hope this article assists you in understanding the nature of a complex. I consciously left out so much that can be said. A single article can be written to just discuss an AGM's Quorum requirements. This article is meant to be simple, understandable and relatable to people that do not study the Sectional Title Management Act. You can find many examples in the article and provide me with "what if" scenarios, where your scenario will have a different outcome. We are not here to discuss the detail, just to give you the big picture.

The Big Picture.

The Big Picture is that during the entire year, the only real decision makers, are the Trustees. No one else, no not the Managing Agent either. Be aware of that as an owner, so that you know who is really in charge. Take note if you are a trustee, and ensure you take charge, because you are responsible and accountable.

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