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Benefits Of Appointing An EMA (By Junaid Mally)

Benefits Of Appointing an EMA 

 

Junaid Mally (ZDFin)

 

Is it beneficial to a Scheme to be run by volunteers, after hours and without compensation: A dive into the benefits of appointing an Executive Managing Agent in a Sectional Title Scheme

In a previous article published by our office on the 27th day of June 2022, which is readily available for your perusal on our company website,[1] we delved into exactly what an Executive Managing Agent (an “EMA”) is. The purpose of this article however, is to conduct an enquiry into what the benefits are to a Sectional Tile Scheme (a “Scheme”) of appointing an EMA and the overall avail of the professionalisation of the role of the Trustee.

In many Schemes, the role of the Trustee is more often than not performed by volunteers, who own a unit in the Scheme, who purport to act in the best interest of the Scheme, but perform these functions after hours, almost as a secondary employ, after a strenuous day of labour at their actual place of employment. Some of the functions that a Trustee is mandated to perform includes inter alia the management of the common property, financial management of the Scheme, maintenance management, record management, oversight of levy collection and increases and the hosting of an annual, and on occasion a special general meeting.

In the instance where an EMA is appointed, and summarily assumes the position of Trustee, the Trustee role is forth wind professionalised. This is due to the fact that the EMA ‘team’ consist of individuals who in their rights are professionals in their fields, such as inter alia:

  1. Attorneys who are well versed in the laws of South Africa, and more specifically with the laws regulating Schemes, such as the Sectional Title Management Act (the “Act”),[2] and the Sectional Tile Management Regulations,[3] as staying compliant with laws and regulations in the South Africa is crucial for a Schemes. An EMA should thus keep abreast of legal requirements, ensure that the Scheme adheres to all regulations, and mitigate risks associated with non-compliance, as well as facilitate the processes associated with the consequences of non-payment of levies;
  2. Charted Accountants with a wealth of knowledge in relation to the assessment of the financial standing of a Scheme, drafting and management of budgets, assisting with audits and a plethora of financial assistance. Managing finances in a Scheme requires careful budgeting, accounting, and financial reporting. An EMA should provide transparent financial management, ensuring that funds are handled responsibly and in compliance with regulations; as well as
  3. Ex property managing agents who possess a wealth of experience and expertise in all facets of property management as well as maintenance and record management. The upkeep of common areas and facilities is essential for the value and appeal of the Scheme. An EMA should oversee maintenance activities, coordinate repairs, and implement preventive measures to ensure the longevity of the Scheme.

Whilst each skilled individual has an affinity to their trait, the conglomeration of these skilled individuals ensures that the Scheme operates optimally, smoothly and efficiently.

As stated above, Trustees voluntarily tend to the oversight of the day-to-day running of a Scheme whilst still working a full-time job. In the realm of the EMA, the oversight of the day-today running of the Scheme is the full-time job of the EMA. By delegating management tasks to an EMA, Trustees and owners are afforded the opportunity to focus on other pertinent things, whilst the responsibility of tending to the Scheme is borne by the EMA.

An EMA is an independent body. More often than not, as a result of being an owner and developing relationships with other owners, those relationships being either positive or negative, Trustees find it difficult to remain impartial. Any representative of an EMA is skilled in handling conflicts and disputes that may arise. Their neutral position and professional approach help resolve issues amicably, maintaining harmony among residents.

As is commonly known, effective communication is key to a well-managed Scheme. An EMA facilitates clear and open communication between themselves, the managing agent, owners, and service providers, fostering transparency and accountability. This is partially due to the fact that an EMA is mandated to report to the Body Corporate on the administration of the Scheme once every four months under the Prescribed Management Rule 28(4), however, mainly as a result of constant communication with the owners of a Scheme and the collaboration with the managing agent of a Scheme.

Whilst a Trustee is afforded indemnification, an EMA is afforded no indemnification in terms of the Act and is fully liable for all decision and omissions made. Due to the aforementioned, an EMA is more likely to act in the best interest of the Scheme, and less likely to bring the Scheme into disrepute, as there is less protection afforded to an EMA than to a Trustee.

In conclusion, the appointment of an EMA in a Scheme offers various benefits that contribute to the optimal operation, financial stability, and long-term sustainability of the Scheme. Their expertise, experience, openness and dedication to the efficient management of the Scheme makes them valuable assets in ensuring the success and well-being of the Scheme.

By Junaid Mally (ZDFin)

 


[1] https://zdfin.co.za/executive-managing-agents-what-are-they-and-what-is-their-value-to-a-scheme/?gad_source=1&gclid=CjwKCAjw7s20BhBFEiwABVIMrT8_1TES7-4Z2RHRKdMGTnumvRuhWuuJRZ1nGa3GdXuV9jep8Yd0zRoCpP8QAvD_BwE

[2] Sectional Tile Schemes Management Act, 8 of 2011

[3] Sectional Tile Schemes Management Regulations, 2016

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