ARTICLE: The increasing importance of dealing with reputable service providers in your scheme.

The economic crunch in South Africa has put multiple schemes, this being bodies corporates, share-block companies, and homeowners’ associations,  under heightened financial pressure. It is in times like these that it is vital that schemes partner with trusted service providers to assist them to navigate these challenging times.

Scheme executives (trustees and or directors) would be well advised to exercise some basic checks before formally engaging and contracting with third-party service providers:

• Managing Agents:
  • Ensure they are registered with the Property Practitioners Regulatory Authority and are in possession of a valid FFC;
  • Ensure they registered with the Council For Debt Collectors and/or operate in tandem with a registered Debt Collector;
  • Check references, preferably multiple;
  • Check how many years they have been in operation, a good check as to operational ability;
  • Google and research the principal/directors and confirm qualifications.
  • Are they registered with NAMA/ARC?
  • Insist on meeting the assigned portfolio managed and confirm the number of buildings under their direct management (understanding a company support setup being an important factor); years of employment and qualifications.
  • Check and ensure a thorough understanding of costs, especially ancillary costs;
• Contractors:
  • Ensure they registered with the appropriate bodies (SESSA, PIRB, IPA, ECB);
  • Ensure they are qualified, and check their qualifications;
  • Ensure they have adequate contractor all risk cover;
  • Check how many years they have been in operation;
  • Ensure your check their references thoroughly;
  • Google and research the principal/directors and confirm qualifications;
  • For larger projects, ensure a competent project manager is appointed in order to assist with scope, tenders, tender evaluation, etc;
  • Be wary of unnecessarily high deposit requirements.
• Insurance brokers:
  • Ensure they are in possession of a valid FSP license, check their license as well as key individuals and representatives;
  • Ensure they have FSP professional indemnity insurance;
  • Ensure they are specialists and have adequate expertise in the scheme space – horses for courses;
  • Ensure you do reference checks, and be weary of commission arrangements.
• Attorneys:
  • Ensure you appoint a specialist, again horses for courses;
  • Insist on a fee mandate and confirm costs;
  • Understand who is to do the work – candidates, paralegals, or the partner(s).
• Credit providers:
  • Ensure they are registered with NCR;
  • Ensure you check their references;
  • Don’t rush and make knee-jerk decisions;
  • Peruse template contracts;
  • Understand the product, costs and associated revenue streams and best match to the scheme’s needs;
  • Check authority required per STSM Act, MOI or Constitution.

Scheme executives would be well advised to exercise some basic checks and balances to safe guard the schemes as failure to do so could result in potential losses down the line.

With the ever-increasing responsibility and potential liability faced by trustees, the option of an Executive Managing Agent(“EMA”) is becoming increasingly popular and makes financial sense, often being self-financing within a short period of time.

The Executive Managing Agent(“EMA”) effectively professionalises the role of the trustees with the appointment of suitable qualified person(s) to oversee the operations of the scheme on a full-time basis.

Speak to us to find out more.

ABOUT ZDFIN – https://zdfin.co.za/

ZDFin is a professional Executive Managing Agent and specialist finance company providing smart solutions for Sectional Title Bodies Corporate, Home Owners’ Associations and Share Block companies. ZDFin has a wealth of practical experience in property and financial management. We understand these challenges and our range of targeted financial products can be tailored to meet the specific needs of each individual scheme. Schaefer was previously a director and shareholder at Trafalgar, the country’s biggest residential property administration company, started by his father over 50 years ago.