PROPERTY MANAGEMENT IN NIGERIA
Real estate/ property ownership and management in Nigeria is an integral part of the economy, it is an area which plays a prominent role in the assessment of the economy of a country. This is largely because everyone in the country is involved in one way or the order in property business either as a landlord, tenant or estate developer or an investor. We in PAN are interested in letting persons involved in the business of real estate to understand the basic requirements of property management and more importantly for property owners / investors to understand the need to involve professional managers/lawyers in their property management.
We shall be looking at property management from the perspective of what a property manager should know being the first partner of the owner of the property, in order to ensure optimal management of the property to maximize profit.
- Engagement of the property manager
- Regularization of documents with agencies
- Marketing strategies
- Management of tenants/purchasers
- Maintenance of property/budgeting
- Valuation of property
- Eviction & recovery of property.
- ENGAGEMENT OF PROPERTY MANAGERS:
The property owner will need to engage the property managers who may be lawyers or estate management professionals. There will be an agreement between the owner and the managers which will state the rights and duties of the parties; it must be well spelt out to avoid problems. Issues like the accounting; budgeting, repairs, maintenance and documentation should be well discussed.
The manager has to look at the documents of the property to ensure that the person(s) engaging the managers are the owner of the property. They should ensure that every area of conflict are resolve, e.g. some property owners in Nigeria will engage a manger and still want to determine who rents the home.
- REGULARIZATION OF DOCUMENTS WITH AGENCIES:-
The first thing a property manager should look at before taking over a property is to ensure that the relevant laws of the town planning authorities and other agencies of government are complied with regarding the property e.g. payment of development levies, tenant rates (land use charge as in Lagos) , proper documents for installation of electricity, water, dust bins etc. This is very important because in most cases the documents of ownership of the property are required by these agencies to process the levies/taxes. It may also bring conflicts between tenants and property managers on who should pay for some of these taxes.
The mangers should ensure that there is adequate security of the facility and that of the tenants. There should be good gates, electronic surveillance cameras, good lightening, fire fighting equipment, recreational facilities, well trained personnel, security agents and very importantly a channel of communication or education with the tenants on the management of security in the facility. A property manager should look at the issue of insurance of the facility; they should be in the position to engage a reputable insurance company in different areas of insurance. They should also be able to distinguish the types of insurance, the ones to be taken by the owners of the property and the ones to be taken by the tenant, depending on the business of the tenant.
- MARKETING & STRATEGIES:-
This area involves knowledge of good assessment of the property in terms of cost and worth in other to determine what appropriate rents to fix to maximize profit. Care must be taken to ensure that assessment and fixation of rents are made in comparison with other properties of the same class in the area and their going rates. The property managers should have unique ways of ensuring good sales by adopting excellent advertising and promotion methods to enhance sales of properties and attract tenants as the case may be.
- LEASE AND TENANCY:-
The managers should have a good knowledge of the laws guiding landlords and tenants. It is advised that lawyers are involved in tenancy agreements where managers are not lawyers. Good leases and rents should be secured and terms property defined in the various agreements. Due diligence should be conducted on tenants/purchasers before contracting with them and property managers should ensure that credible and financially viable tenants are secured. Issues of use of facility, mode of payments, repairs in the property etc. should be carefully agreed between the parties. The managers should ensure that the purchaser or tenants understand all the terms of the agreement (Interpreters should be involved where the tenants do not understand good English)
- MANAGEMENT OF THE TENENTS/PURCHASERS:-
The first thing to understand by the managers is that the “tenants/purchasers are the KINGS of property business” you should ensure at all time that your tenants are very happy, find out the needs of your tenants by listening to their complains and attend to them in good time to their satisfaction. The managers should always compare the services provided for the tenants in the facility to that of other properties of similar standard and ensure that their own services are on top. The managers should also monitor the activities of the tenants and use decent and acceptable means to ensure compliance to the rules & guidelines on the use of the facility. For property sales, all information concerning the properties should be cleared to the buyer. There should be no hidden charges.
Proper records of accounts must be kept in relation to all monies and expense involved in the managing of the property. Records of taxes, levis, and other expense for repair, maintenance etc. must be kept in a proper accounting method that meets professional standards. Also a manager of property should be able to understand the proper handling of client’s funds as stipulated by law. In this area honesty, integrity and professionalism is the key word. Funds collected for rents and sales of properties must be remitted to the account of the owner as stipulated in the agreement.
- MAINTENANCE OF PROPERTY/BUDGETING:-
Managers of a property must ensure that the property is maintained at all times. Culture of maintenance is a problem in all facets of our national life in Nigeria, therefore managers must ensure that the property complies with town planning laws that has made provisions for certain standards of maintenance e.g. regular painting, repairs of facilities like lifts, star-cases, air conditioners, fire fighting equipments, landscaping , planting of trees/grasses and flowers, provision of proper waste disposal facilities, drainage etc.
This also brings in the issue of budgeting. The reason why most properties are not being maintained is because provisions are not made for their maintenance. Managers of property must ensure that the issue of budgeting and provision of funds for facility maintenance are provided in the agreement. An agreed percentage of the rent or sales of properties (in the case of estate buildings) must be kept aside for the maintenance of the facilities and provision of new ones. This is very important as poor or non maintenance of property does not only infringe on the rights of the tenants, it also deprecates the value of the property which is not to the best interest of the investors in real estate.
Valuation of the property is to present the current value of a property within a period of time by a professional in that area. This is done by professionals who at all times will access the facility, looking at appreciation and depreciation of it in terms of the current market. They look at the value of land and other factors like the location, development of the area, accessibility and other sound economic & environmental issues which determines the value of the facility.
Valuation is very important for an investor in real estate because at all times it presents the investor the current assessment of the investment. Also it helps the investors to be able to plan their investments especially those speculative investors in real estate who may want to invest today and divest tomorrow. It is important for purposes of sale, acquisition, corporate recovery, taxes, management buy-outs, takeovers, insurance, garnishing processes, mortgages, liens etc.
- EVICTION OF TENANTS/RECOVERY OF PREMISES:-
This is a very important aspect of management of properties in Nigeria, it is an area that presents a lot of problem between landlords/ tenants, hence so many cases in the courts today. Property managers must ensure that where they are not lawyers, they must engage the services of good lawyers for this purpose. The lawyers should be involved at the beginning of the lease/rent agreements, Deeds of Assignment in case of estate houses to ensure that proper terms are included in the agreement. It is also very important that managers should ensure that the intending tenants understand very well the terms of the agreement and in the case of sales, the lawyers at the contract stage must explain to the intending buyer all the terms of the contract.
This is very important because experience has shown us in PAN that in most cases when there is an agreement between the parties, the tenants and intending purchaser always claim ignorance of some of the terms in the agreement when problem arises. The modern practice is to take time and educate your clients, especially those who may be illiterates and those who may be dealing with you on their own without a lawyer on the terms of the agreement before execution. This problem is more pronounced in the areas of estate properties in Nigeria where you find out that most times, the estate managers withhold a lot of information from their intending clients who may not be aware until problems begin to emanate after they have bought the properties or paid their rents as the case may be.
Property managers should engage well experienced lawyers to handle the eviction, however our advice in PAN is that anyone who wants to buy or rent or lease a property anywhere in Nigeria should first contact a lawyer. Experience has shown us as property lawyers that many persons in Nigeria do not see or recognize the need to engage lawyers in their property transactions until they run into problems.
Finally we in Property Advisory Network, advice that persons looking for good property managers in Nigeria should contact us for advice as a stitch in time prevents lots of patches much latter.