Property (mis)management company

This week the Property Poser panel addresses a reader’s issue with a property management company.

He writes that he ended his homeowners’ association’s (HOA) mandate with the company, which was responsible for administration and accounting services.

The HOA had become dissatisfied with the service provider and, despite efforts by the company to improve, the situation became untenable. The relationship was terminated in order to appoint a new property manager.

Unfortunately, says the reader, the paperwork handed over to the new person was in an absolute mess. Nothing had been reconciled and all documents were simply placed in a box and delivered.

Wanda Hayes - Huizemark

Wanda Hayes – Huizemark

He says the new accountant is unable to reconcile the information provided in this fashion. Despite contacting the former service provider’s superiors, no effort has been made to assist.

The reader is concerned that his remedies against the errant company will be frustrated as its management is closely involved with the National Association of Managing Agents of South Africa (Namasa).

Namasa does make provision for a complaint system by way of a complaint referral, says Wanda Hayes from Huizemark Jeffreys Bay.

“It does, however, sound like the body has been approached for assistance but to no avail.”

As a Section 21 company, Hayes says Namasa’s members would merely have to abide by its rules and, as such, it would probably “lack the teeth” to assist him.

“This could become a civil matter against the property management company as it’s a case of failure to perform under a contract.”

Hayes says the HOA would have placed the property management company on terms to perform, failing which notice of cancellation of the agreement would have been given.

“If the contract makes provision for an arbitration clause, and assuming this clause is still valid despite the contract being cancelled, it could be used to settle the matter without taking it to civil court.”

This is why the terms and conditions contained in the agreement will be of utmost importance, says Herman Pieterse from Jan Visser Attorneys in Jeffreys Bay.

“Hopefully it made provision for what happens at the termination of the agreement, and how and when the management company is to return the information and paperwork belonging to the client.”

Herman Pieterse - Jan Visser Attorneys

Herman Pieterse – Jan Visser Attorneys

According to the client, the association had paid its fees up to December. “Yet, they are in no position to determine what their position is regarding the financial year-end. This may be an indication that their work was not up to date.”

The HOA may therefore need to appoint a more specialised person in order to reconcile all information and enable the new accountant to proceed, says Pieterse.

“The costs incurred could be recoverable by taking steps, whether civil or by way of arbitration, based on the breach of contract caused by the underperformance of the previous management company.”

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