Ensuring a smooth trustee handover in sectional title schemes

Trustees play a pivotal role in the government, administration, and financial management of complexes, flats and estates around South Africa. Sometimes these individuals resign or retire, which is why a proper handover is indispensable to ensure continuity, compliance, and transparency. Below is a practical guide for trustees making the transition.

Trustee elections, removals, and replacements are governed by the Sectional Titles Schemes Management Act (STSMA) and the Prescribed Management Rules (PMRS), which establish the legal foundation for the handover process. The following is outlined:

• Removal and replacement of trustees requires an ordinary resolution at a properly convened general meeting (not a special or unanimous vote).
• PMR 7(2) governs nominations, and states that only owners may nominate a trustee, must submit written consent, and nominations must reach the body corporate at least 48 hours before the AGM.
• PMR 7(6) confirms that trustees must serve until the next AGM, where they may retire or stand for re-election.
• PMR 7(7) permits the filling of vacancies by trustees between AGMs, as well as the temporary appointment of alternate trustees.
• Crucially, PMR 6 allows non-members to be trustees, and managing agents or employees of the body corporate or managing agent may not serve unless they themselves own units.

When a trustee resigns, it is important that they submit a written resignation to the body corporate. Suppose the resignation of one trustee results in fewer than two trustees remaining. In that case, the remaining trustee must either co-opt a replacement or call a general meeting for the election of new trustees.

Should all trustees resign simultaneously, the body corporate (i.e., the owners collectively) remains the governing entity. The owners must act promptly by:

• Convening a special general meeting (requiring 14 days’ notice, called by owners with at least 25% participation quota if trustees don’t act).
• At the meeting, owners may elect new trustees via ordinary resolution, who will serve until the next AGM.
• Alternatively, the body corporate may opt to appoint an executive managing agent through a special resolution or CSOS application; such an agent steps into the trustees’ roles and has fiduciary duties, inspection, and reporting obligations.
• In extreme cases, a court may appoint an administrator following an application by a qualifying party, although this is costly, rare, and generally a last resort.

Proper handover ensures that incoming trustees step into an organised, well-informed position; therefore, a trustee handover must include a comprehensive transfer of:

• Corporate documents (minutes, resolutions, meeting notices, and trustee records).
• Financial statements and records (administrative and reserve funds, levy statements, outstanding debts).
• Contracts and agreements (service providers, managing agent, contractors).
• Insurance policies (details of cover, renewal dates, and claims history).
• Communication logs (issues in progress, disputes, owner communications).

Not only is this good practice, but proper record keeping is an obligation in terms of the Sectional Title Schemes Management Act.

Outgoing and incoming trustees should maintain clear and documented communication to avoid any gaps. Owners, managing agents, and relevant stakeholders should also be informed of trustee changes, and all resolutions, notices, and transfers related to the handover must be recorded and filed meticulously.

Trustees are the cornerstone of proper governance in sectional title schemes. When a trustee resigns or retires, following a structured, legally compliant handover ensures continuity, mitigates risk, and keeps the body corporate functioning smoothly. Where trustee transitions become complicated (e.g., disputes, incomplete documentation, or ambiguous nominations), seeking expert legal advice is strongly recommended to ensure compliance with STSMA, PMRS, and to safeguard the scheme’s interests.

At STS, we specialise in providing legal advisory support for trustee handovers, complex transitions, nominations, and compliance with municipal, financial, and sectional title regulations. For tailored advice or further information on trustee processes, reach out to us today, as we’re here to help your scheme navigate every step with confidence and clarity.