 perhaps tell us about what is your a finance you know effectively is I know that complexes can also you know tap into it what exactly is this option that conferences in the states are able to find themselves so to be able to at least solve this problem in the event where they find themselves in it okay so Zama you know that idiom you pay I pay we grow so that's like the basic principle right the foundation upon which and of course the composition this evening is one that you're following social media I know you have already seen it because a lot of us get affected by it in the way we find ourselves living in the complex state looking at all you need to know about home earners association finance when I look at what it is what you need to watch out for before as a new age or a also there's a good corporate you approach different financiers going to be looking at how to also make sure you don't get yourselves to a position where you're insolvent and all the things that you need to know about what happens if you do find yourself in that position and who else to help us make sense of there's been some of the group deals with this very regularly just before we came on a was actually called somebody from one of the estate managers talking about this very thing and their services are not to be closed and they need to make sure that they negotiate with the municipality to make sure that that doesn't happen and that is it will probably because a real estate principal at properties and drug crime ever good evening and thank you so much good evening Zama and it's always a pleasure to be on this show thank you it's such a pleasure to have you with us it will I mean this this topic is is one that certainly been trending if we have to be honest in training because we saw when we started this COJ also then followed suit for closing different services with the big buildings right and and so many of us were like oh well you're not affected really but then they started going for the complexes they states we find that we're you know services weren't paid for for an extended period of time before we get to how we can avoid that what to do if we find ourselves in those positions perhaps tell us about what is your a finance you know effectively is I know that complexes can also you know tap into it what exactly is this option that companies in the states are able to find themselves certainly being able to at least solve this problem in the event where they find themselves in it okay so Zama you know that idiom you pay I pay we grow so that's like the basic principle right the foundation upon which community schemes and now for this topic home owners association finances actually all built around because at the end of the day we all living together and we've got a common interest we've got a common interest of making sure that our assets value grows now for us to be able to do that and to have some of the privileges that comes with living in a secure estate like security proper garden services we need to collect money together and to get this done and that's basically the principle that find or basically starts you guys collected money together to find their state I think that the big thing there becomes a we we've appointed a managing agent as the members of if it's a community of corporate members of the H8 you're paying your monthly levies but then for some other reason the money doesn't get to the municipality and I'm seeing an increasing number of these across different you know types of schemes and and I think it's it's it's quite the red flag because it's also you know demonstrating that it's either there is you know the directors or certainly that the trustees aren't doing their job or as far as they are concerned payments are being made but they've not been made and so the HLA or certainly the community scheme then runs itself in the raid so in the event where you're a member of the community scheme or you live in this particular state and you get the notice because they have been putting up notices you know in the various schemes what what can you do as a member because you're not a trustee and you're just thinking well I pay every month so you're up to date but then somehow these these seems to be issuing the system but the money is not getting to the municipality so so you know how how do we put this remember when you started earning your first bucks right the first thing that you got when you got maybe that 10 grand was here go buy sweets but don't spend it all well for me that was how it started my relationship with money it's the same thing within the estate the problem has been that unfortunately within the estate most of the time people have focused on the prestige of the estate more than the basic budgeting and the day-to-day living expenses so we are very quick to maybe put a big sign that you know when you're coming into the gate it's it speaks prominence it's great it adds value but it's repercussions if you cannot pay your basic see OJ slash a cruel any bills and your lights are off to what the vet what is the real value so bottom line proper budgeting is something that has been missing in in community schemes HOA specifically and the reason we have found is that the managing agents placed in these community schemes do not necessarily come from a finance background and oftentimes even when they claim to do your administrative in the financial side do not really understand the day-to-day running or the management of a value of around so that's where community schemes need to be starting from how do you budget properly how do you manage the money properly because if your budget is done properly and you make provision for eventualities you should not have your lights being turned off but now it's happened your estate is in a bad state and the lights are currently going off we found that the biggest thing I mean we we pride ourselves if you've listened to any of the shows we've been on we pride ourselves on picking up distress properties and actually managing them better it's like I breathe with excitement every single time I see a distressed community scheme because it says that you can put a footprint on getting things right so first things first phase the reality you don't have what you have it's okay now ours taught that when you don't have something the first way of starting off is going to wherever you owe and saying hey I'm sorry I owe you can we talk and be honest about it show your books right so there's a community scheme we just took over now in October and literally the managing agent there for 14 years and ran this estate into the ground and they could not even afford a hundred thousand per month whereas their basic expenses is 350 what did we do sit down with a crew lady and let a crew lady know you collect in a hundred thousand every single month and yet your expenses are 300 so therefore you make a commitment of 30% to come into them on a consistent basis with the view of adjusting as you're going along when you do that these people listen because now they are able to get a consistent inflow of income that's the first part then now that you have that you need to be honest and say as honest where can we really look at adjusting the actual levy bill and helping ourselves out and and then having that conversation and but then of course most of the time you also find that there's that somebody that's just basically never pays so we need to be honest about these people and say when you pay and I pay we grow so when I pay you don't pay we sink so therefore we need to really talk about you do you really need to love you and if you don't how do we ship you out and if you don't need to be shipped out how do we help you manage your finances better so it doesn't hurt the community as a whole I am in conversation this evening with a requirement is a real estate principle at properties.com looking at all you need to know about home earners association finance that's of course in the event that you find yourselves in that same situation as a woman's association where you do fall into financial trouble you want to look at what to avoid how to get out of it and of course how to budget properly and efficiently so that you don't have to get back into those troubling times and also want to find out from your at home if you've ever actually found yourself in a situation where your particular estate falls behind on its bills and you know whether that was an issue that ultimately got resolved and if so what did you do as the members because I think it's it's one thing where you are one of the members that is paying every month and you're always on top of your bills only to find that the people that you live in with are not doing the same all of course the other scenario is where the managing agent is not doing so and what I want us to look at the two scenarios but let's start with this is something that you mentioned that you might just find that somebody that lives in the same community or you know a state as you they're just certain people who don't pay it may be relatively easier to absorb this particular default when you're in a bigger state but we know that it's not a small alliance that is simply not possible the budget is so tight and when one person doesn't pay it is found what are the steps that can be taken for members who do not pay whether of course we're in a big you know community or a smaller one okay so so the first part is the managing agent if they weren't there so the first thing they would actually do is to engage this person on the personal level it starts off with that little message basically saying hey gents you've defaulted on this date and you need to catch up and following up with that phone call to say hey why did he not why did you not pay how can we help you resolve this issue if you started from there you able to really know what the problem is and when the person gives you stories I mean in the bank the first thing we ask for is your financial statement right so you need to ask for the bank statement sit down with the president look is he lying as he has lost his job if his losses job it's already indicating that he would never be able to pay going forward unless something drastically changes in their life so how do you then assist them to even sell the property if they must at proceeds you know sometimes we hold on and we think oh like we let you fall and because you have you were living in a grand estate and you had to move out no sometimes these things happen so you can actually reset your life and actually have more sometimes it's a smaller house that actually gives you that what do you call it that spring right to actually create better wealth so these things happen I think earlier on we're talking about school fees they happen so that you can learn how to we set yourself financially and move on from there so that's the first part and then of course it fails some people just don't listen to all these soft things and they just they just get entrenched in the law allows that basically if one doesn't pay their ladies that their their properties right can actually get attached that in the long run so if you follow the steps you make sure that they got the notices your you follow the articles of incorporation it said after 90 days for example that it that count needs to be handed over you handed it over you followed up with the lawyers you would be able to get it all the way to the must to the magistrate court and actually be able to do an attachment and once they had done it means that the property gets auctioned off and new people come in now there's the common view to say okay but wait are you not really creating or getting people to go backwards it all starts from the conversation letting people know the real consequences of the actions they make because if you get all the way to the point where your property gets attached it's not just the property that is getting attached it's your name that's getting attached because you're going to have a listing against your name having a listing against your name means that financially you actually fall out of this whole economic community that we are all in so you need to then at some point be able to lend yourself to reason so that you can be rehabilitated and I think that's such a great start important right that you especially right now we're living in the era of COVID where there are so many different circumstances that do have a financial effect and you know does impact your ability to make some of those payments and make them on time so starting it with the conversation in the event where somebody is in a race and in the event where they're not you know forthcoming and don't make the necessary arrangements then of course we do need to follow the necessary steps because the reality is you don't want somebody who isn't paying and also isn't being truthful about you know their inability to pay to ages enjoy the the services that everybody else is paying for but also I think this is probably the more alarming part to be jeopardizing those because the reality of a member not paying is that it does jeopardize everybody else and compromises your ability to be able to make certain payments but then we know that these the other side where the managing agent maybe the one that is at fault and I want us to address that one because in the slightly bigger you know communities or schemes you will find that yes there will be people who defaults but their collection rate is actually relatively high and even with the usual suspects who sometimes are maybe a month or two months late they still collected more than enough to even have you know put certain funds in the reserve fund but it's that the fault is with the with the managing agent how can we'll say unscrupulous or unprofessional or incompetent managing agents be dealt with I'm hearing so many stories of this and people are struggling to get their managing agents out and I think more than anything they don't know what the processes are they don't know what the law says and they sometimes just feel very disempowered because the managing agent has all this data doesn't want to hand over any files and doesn't essentially want to give up power sometimes even go to the extent of finding another managing agent that you actually want to take over your your estate but the one that is currently in power doesn't want to let go so how do they then at home deal with managing agents who are like that so I think it's part three of the search now title schemes management act the prescribed management rules right it speaks to finances within a community scheme and oftentimes I don't know but for some odd reason most managing agents I don't know whether they don't read or what but they hide behind like this new puppy thing that has come up and then everybody's hiding behind puppy you you sharing the financial information to the community members it's not disclosing anything about another person it is their right to know because the sectional title schemes management at the prescribed management rules does actually stipulate that you should have for each specific unit all their finances and when requested by the member in writing should be availed to them so the first part demand that they open the books if they don't write to me write to me I will deal with them for you you there's no managing agent that can hide behind puppy to not give you financial information when you're asking for it that's number one and now if you open the books you know sometimes financial and all financial statements are really great to read but reality most of us don't understand accounting we looking at assets non-current assets we don't really know what all these things mean but put a bank statement in front of anyone and one can see that's money in that's money out what's this money about so demand the raw data the managing agents are supposed to be keeping the bank statement in itself also as part of the books on a on a man-to-man basis as part of the general ledger so when you're asking for all these documents they're supposed to give it now when you're able to look through those if they be non-scrupulous you'll be able to pick it up now the section title schemes act right also speaks to the fact that the directors or in well it covers mainly the trustees but most of the time because the HOA's are being basically applying some of the sectional title schemes management rules most of those rules also then apply to them so if you looking at the directors and stuff the first thing is that they should be able to pass resolutions on core expenses I'm not talking about the day-to-day pay the gardener Tom that those are covered in contracts they they but if there's any contractual work that has been happening because that's actually where most of the money gets siphoned off it's Tom the Tom the director partnering up with Peter the managing agent and deciding to go and hire Tom's brother to come and do the garden which John would have charged 30,000 Rand but now because it's Tom's brother he charges 60 and then the 30,000 is being put off some way you need to ask them on what basis they have these contracts in place and and see if they cannot be reviewed as a first place and you find how much money you can save I mean on that's one estate that we took for example would that had 350,000 Rand worth of its cost but only collecting a hundred thousand these are some of the ways we've been able to shave off cost to the point that they are able to slowly now come to a point where they paying more on the outstanding's and getting better so rule number one open the books rule number two they can't hide open the books demanded demanded demanded rule number three once you've seen the books if everything is on point as owners come together decide how to negotiate negotiate negotiate and cut your bills down now if the managing agents is found wanting all managing agents are supposed to be covered by the another fidelity fund certificate of the now property practitioners act right so you need to of course report them people talk about managing agents and we get the question do you belong to Nama Nama is not by force you don't have to belong to it by force as per the act what you need to what everybody needs to belong to is the property practitioners regulatory authority that issues the fidelity fund certificates so request for that complaint against that and from there put in place measures to actually dismiss them because if I take one rent from you that is not mine I will take a hundred thousand rent from you very easily so do not compromise do not say oh shame they didn't know if they take what is not deers they need to go so get rid of them and move on find better managing agents who will basically take your funds into in as if it's their own and utilize it for your benefits without stealing from you and I think I want to echo what it was saying that reach out to to him especially in the event where the managing agent is giving you stories and I know that a lot of that happens I get to messages all the time that talk about the different stories that managing agents are giving people who live in different communities where they're struggling to get rid of their managing agents and that's something that we need to deal with effectively because you are able to put a managing agent on notice so if you have a one-year contract you are able to put them on notice just make sure that you understand the terms of their contract and you know follow of course you know what that content says and leave it where you want to change them well for myself I want to welcome Anna and the rest of the private property podcast team that's it from us this evening we'll be back on your screens tomorrow at 7 p.m. until then hoping you're staying home and staying safe