Proxies in Body Corporates and Homeowners’ Associations
If you are an owner or a resident in a sectional title scheme, you might reasonably assume that all the trustees would be sectional title holders. However, that is not always the case – and this can be a cause of concern. Should you be worried if you find yourself in such a situation?
What’s the legal position with proxies?
You may be surprised to learn that to be a trustee, there is no legal requirement to own a section within the scheme. Previously, under the provisions of the Sectional Titles Act of 1986, there was a requirement that a majority of trustees had to be owners within the scheme, but updated legislation has quietly dropped this stipulation.
In other words, anybody can be a trustee – whether or not they are a sectional title holder. The only requirement is that they are nominated by someone who does own a section (a member of the body corporate). This nominated person would then serve as a proxy on the board of trustees.
Why would this happen?
Not all the sectional title owners may physically live in the scheme, and if they don’t, there’s a limit to how useful they can be as trustees – especially if they live too far away to attend meetings or keep up with the day-to-day management of the scheme.
In this case, it makes more sense to have residents as trustees, as they will have a vested interest in issues that affect everyone, such as maintenance or security. While it’s true that sectional title owners have a financial interest and tenants don’t, it’s the tenants who will be most directly impacted by any operation problems, and are therefore more likely to make engaged, active trustees.
Non-owner trustees can also bring useful extra skills to a board of trustees, and this could be to everyone’s benefit. Understandably, accountants make popular proxy trustees!
*On that point, kindly note that these are merely examples and Solver Property Services have many investor trustees that are invaluable and contribute immensely to the betterment of the community scheme*
Can a tenant become a proxy?
Yes, absolutely! Tenants can join the board of trustees – as long as they are nominated by a member of the body corporate. All they must do is ask the landlord for an official nomination – one may even find that the Landlords are glad to be free of the responsibility, and to have ‘eyes and ears on the ground’ if they live further away (I.e., outside Gauteng or overseas).
What about homeowners’ associations?
By definition, all the members of a homeowners’ association (‘HOA’) must own a property in the community scheme in question. However, there may still be a role for proxies here, if an owner is unable to attend a meeting.
Whether or not proxies are permitted depends on the way that the HOA is set up. In the case of common law HOAs (i.e. those which are not set up as companies), the right to appoint proxies does not automatically exist. It would need to be written into the constitution of the HOA. Your Property Manager / Managing Agent can advise you in this regard.
Where this right exists, the owner must always specify in their proxy appointment how they wish their proxy to vote on each issue on the meeting agenda. While being able to appoint a proxy is convenient, many HOAs actively discourage this practice as they (quite reasonably) feel that owners should attend meetings in person – after all, they will be directly affected by the matters under discussion, such as levy increases.
Proxies and non-profit companies
Where a homeowners’ association is set up as a non-profit company, it must comply with the provisions of the Companies Act (Number 71 of 2008). This legislation contains the specific right to appoint a proxy, as long as the appointment is made in writing.
The automatic length of a proxy appointment is one year, although the homeowner making it can adjust this, and can also revoke it. There are further provisions in place for instances where the appointed proxy themselves cannot attend a meeting.
In short, proxies are permitted in certain circumstances, and can even be beneficial as discussed above. However, especially in the case of HOAs, there is a case to be made for owners rather than proxies to attend meetings – the people most invested in a situation are the ones most likely to work to find a solution.
Disclaimer: Kindly note that the above article is merely for information, and is not intended to be comprehensive nor to provide legal advice. Solver Property Services, its employees and agents can in no way be held liable for the accuracy or otherwise of the contents of this article, or for the consequences of any action taken or not taken by any person or organisation based on the contents herein.
For more information, please contact 010 822 2882. Solver Property Services has a team of experienced Property Managers that can assist you. We have 100+ complexes that we manage across Gauteng (Alberton, Bedfordview, Greenstone, Boksburg, Benoni, Midrand, Sandton, Lonehill, Roodepoot, Pretoria, Kempton Park, Riviera, Edenvale, Vaal Triangle etc are just a few areas that are covered). Solver Property Services are largely considered Gauteng’s preferred managing agents.