Developers of multi-unit sectional title residential developments all too often find that, having gone to great lengths to hand over their scheme, along with its communal facilities and its gardens in a near-perfect condition, the project begins to deteriorate soon after the handover and snag rectification period is complete.
"Unless you have been a developer yourself, it can be difficult to imagine just how demoralising this is," says Paul Henry, Managing Director of Rawson Developments, one of the most active of Cape developers - they have five sectional title schemes coming on stream this year.
What is it that causes this almost instant decline in the look and appeal of a new residential development?
"One of the main problems," says Henry, "is the appointment of incompetent managing agents. It has been said that, as in other fields, only 20% of managing agents are truly competent. Quite often such applicants as unsuccessful estate agents who worked previously on selling the scheme, an unqualified relative of the conveyancing attorney or a retired small time bookkeeper will get the job - despite having minimal experience in property management, maintenance, insurance and the like."
Such managing agents also, he says, frequently lack the all-important people handling skills required to ensure that difficult residents toe the line.
Before a managing agent is appointed, says Henry, checks should be made, not only on his past track record, but also to ensure that he (or she) is a registered member of the Estate Agency Affairs Board and of the National Association of Managing Agents.
"Quite frequently," says Henry, "one hears of cases where the managing agent visits a development only occasionally or where the monthly accounts for the trustees are simply not delivered. There have even been instances where, illegally, no AGM took place or was held long past the stipulated period."
The financial affairs of managing agents, adds Henry, should be closely watched at all times because big thefts from trust accounts have occurred, which have had serious consequences for the members.
Also likely to lead to problems on sectional title developments, says Henry, is the "unfortunate tendency to accept as trustees people who, again, lack experience in this field and who take on the job simply to do the chairman a favour or to join a friend already on the board."
"This type of lacklustre trustee often has no real interest in the development at all. If he is a buy-to-let investor he may well be completely ignorant of the conditions in the project itself and may have only one aim, i.e. to keep down the levies."
Trustees, says Henry, should not only demand regular accounts from their managing agent but should also insist on monthly tours of the entire complex.
"The best trustees, in my experience," says Henry, "are those who actually live in the building and whose welfare is therefore affected. It has to be admitted that being a trustee is a rather thankless job, but this is no excuse for people accepting the position and then totally neglecting their duties to other trustees and members. Instances have occurred where trustees were only interested in their own apartments or homes and simply did not understand that they have to act and make decisions on behalf of all the owners."
Fairly frequently, says Henry, in order to see that the development does not deteriorate, at Rawson Developments, he or one of his fellow directors will buy one or more units in the project and make sure that they are trustees of the body corporate. Under such conditions, he says, schemes can be handled in such a way that they appreciate in value month-by-month and year-by-year.
For further information contact Paul Henry on 021 658 7100 or email paul@rawson-developers.co.za.
