Warning for trustees in complexes and homeowners associations in South Africa

Trustees at community schemes such as sectional title complexes, homeowners’ associations, retirement housing schemes, share block companies and housing cooperatives are often unaware that they can be held liable and even sued in their personal capacity for failures in governing a community scheme.

Speakers highlighted provisions of the Sectional Title Schemes Management Act and the Community Schemes Ombud Services Act where trustees could be held liable, including where there is gross negligence, a fraud conviction, or a breach of their fiduciary duties of care, diligence, impartiality, and acting in the best interests of beneficiaries.around half the roughly 70,000 community schemes in South Africa have not done.

“When rules and scheme governance documentation is not submitted to CSOS, it creates a state of confusion, uncertainty and a lack of transparency. A state of inadequate governance may trigger CSOS enforcement. “Sometimes when I have to make findings in terms of an adjudication, I find myself having to tweak an order in such a way that my explanation for getting to the order does not result in somebody following further on that order by taking legal action against a trustee, because it can easily happen.

Source: Law Daily Report (lawdailyreport.net)

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