What is a Managing Agent?
The appointment of an agent is often confirmed by an agreement / contract. The contract specifies the duties of each party to the other. The contract by both parties could be verbal or written. The authority given to the agent could be implied or expressed.
Implied vs Written Authority
In the case of implied authority, it means performing what is deemed reasonable for the agent to do. This also depends on the common practice in the country. In the case of expressed authority, the agent is limited by the principal on what he / she can and cannot do. All these are written down in the contract. Often these limitations are spelt out in the agreement as scope of work.
The agent, when given the authority, is empowered to act on the principal’s behalf. Whatever contractual relationships the agent entered into would bind the principal to it. The agent is under the control and takes instructions from the principal. In return, the agent is compensated (normally but not necessarily with money) for the services. Also, if the agent acts within the authority given, the principal is liable to reimburse the agent for the expenditures incurred on the principal’s behalf.
The grey area is “Apparent Authority” where a third party may be given the impression that the agent is empowered to act on the principal’s behalf. If the agent acts as if he has the powers but in fact was not given the powers by the principal, then the principal is not bound by the actions of the agent. However, if the principal is present and aware of the exercise of powers but did not do anything to stop the agent, then the principal is bound by the actions of the agent.
Due to the trust placed on the agent, the agent has a fiduciary duty to the principal. This duty is the highest standard of care under equity or law. It is also both a legal and ethical requirement. For example, what this means is that the agent has to obtain the best prices or minimise the costs to the principal. In addition, the agent has to act aboveboard in all dealings for the benefit of the principal, not be corrupted , not be in position where the agent’s interest conflicts with the principal’s or profit from the principal’s dealings.
The Managing Agent is a sub-set of the wider definition of an agent, with the same responsibilities. A Managing Agent refers to the role of managing a principal’s asset (money, valuables, stocks, bonds, property or estate).
Normally Managing Agents who manage stocks, bonds and sometimes real estate on behalf of a principal are known are known as Asset Managers. These Asset Managers help the principals grow their money via investments.
Property is often referred to individual dwelling units, office units, retail shop units, warehouse unit etc. Estates are often blocks of apartments, condominium developments, clustered housings, office buildings, shopping complexes, warehouses or even industrial buildings. Estates are the superset of the property units. For property management, the Managing Agent is an appointed party to manage the individual units while for estate management, the Managing Agent is appointed to manage the estate.
In the case of estate, the principal is the Management Corporation of the estate. The Management Corporation is an organisation set up to run the estate and is governed by a council whose members are nominated during an Annual General Meeting. As the council is made up of volunteers, they do not have the time to run the estate. Hence, a MA is appointed to run the estate.