Trustees should choose a managing agent with a ‘big brother’

Another case of trust fund mismanagement by a sectional title managing agent has underlined yet again the advantages for trustees in appointing an agent who has the backing of a reputable national real estate group.

So says Jan Davel, MD of the RealNet franchise group, in response to the recent report of the Estate Agency Affairs Board (EAAB) concerning its investigation into Cripton Property Services and its principal, Catherine van Zyl.

The investigation followed a complaint laid with the EAAB by the body corporate of a Pretoria sectional title complex, and revealed that payments which Cripton alleged it had made on behalf of the body corporate to the City of Tshwane had in fact not been made; that records suggesting that Cripton had made certain payments to the City of Tshwane appeared to have been falsified and that there had been irregularities involving Cripton’s trust account.

The EAAB then secured a High Court order withdrawing the Fidelity Fund certificates of both Cripton and Van Zyl and preventing them from rendering any further services as estate agents or dealing in any manner with their trust accounts. A curator was also immediately appointed to take control of the trust accounts.

“Coming on top of the Constantia case, in which more than R18m worth of sectional title levies are believed to have been misappropriated, this is a most unhappy situation for the real estate industry,” says Davel.

“However, the swift action taken by the EAAB is encouraging, as it indicates that the actions taken by Human Settlements Minister Tokyo Sexwale to ensure the proper functioning of the board are having the desired effect.”

It is also fortunate, he says, that the agency in question was registered and in possession of a Fidelity Fund Certificate, which means the body corporate should in due course be compensated for any financial loss arising from its actions or those of Van Zyl.

“But prevention is always better than cure, and while I’m sure there are many superbly run independent agencies, a great number also appear to be completely oblivious as to what is required of them in many respects, especially with regard to the Consumer Protection Act, the National Credit Act, the FICA legislation and so on.

“In addition, the global recession of the past five years has had a significant impact on the SA property market and on estate agents’ cash flows. And while no policy or procedure can absolutely protect one from an estate agent who is determined to be fraudulent, the property management information systems, financial management and disciplines of a reputable franchisor can go a long way towards prevention.”

Davel says that RealNet conducts regular internal audits, and ensures that all its franchisees are fully compliant with all applicable legislation, regulations and the new industry training requirements.

“We do this partly to protect our trademarks and corporate reputation, of course, but primarily to provide clients like the trustees of sectional title schemes with more peace of mind because they know that there is a ‘big brother’ supporting and monitoring their managing agent.”

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