I am curios about whether the Managing agents have the rights to profit from sales of sequestrated flats as a result of the non-payment of levies which the trustees have the obligation to recover.

Is this not a conflict of interest when the managing agent earns commission for the sales of the property along with the estate agent and the lawyers handling the dispute? Are there remedies for the body corporate in case the managing agent is exploiting the situation to profit from sequestrated properties whilst the body corporate gets nothing? Shouldn't the body corpoarte decide on the price of the property to be sold?

Hi Den

Generally the only parties that should receive any payment from a sale of a sequestrated estate are the creditors whom have properly lodged a valid claim. Once all the debts have been settled any surplus should be paid over to the person who has been sequestrated (usually there is a shortfall and not a surplus in the case of a person being sequestrated).

For example the managing agents may be paid for clearance certificates, estate agents receive their commission, attorneys receive payments for their services, the auctioneers receive their commission etc.

Would you please let me know whether these payments were commission, or for services rendered, as all the people you have listed may render some service in relation to a sale of property?

If you give me a bit more detail on this situation, I would be able to give you a more complete answer.

The details I would require would be the reasons (if any) the people received payments, who lodged for the sequestration of the insolvent, which creditors lodged claims against the property, and the estate.

Regards

Grant O'Donnell
Stonewood Property

The auction did not take place at all. The property was some of the properties are bought by the attorney in charge of the sequestration and sold at a higher profit but it appears that he gets this at a bargain in collusion with the managing agent. Some are advertised and sold at whatever price (the trustees don't get to know about the process of sale until there is a new owner on the apartment). The auction does not take place since there are many buyers and investors.

Hi again Den

The managing agent shouldn’t really be involved, unless they are the estate agent as well.

I would think that the sequestrator (possibly the attorney), should ensure that the property is sold for market value, and the proceeds of this sale should be paid over to the creditors of the person who was sequestrated. This shouldn’t pose too much of a problem, if all the debts of the sequestrated person are settled, then any excess proceeds should be paid over to the sequestrated person’s estate.

The trustees usually are not notified of the sale, unless the body corporate has lodged a valid claim against the estate, then the sequestrator should inform the trustees of the sale, and of the dividend that will be received to settle the outstanding account.

If the attorney and the managing agents are colluding to the detriment of the sequestrated person or any creditor then a claim would need to be brought before the courts to rectify the situation.

Regards

Grant O'Donnell
Stonewood Properties