CHAPTER ONE
INTRODUCTION
- BACKGROUND OF THE STUDY
The management of real estate investment for optimum returns is one of the fundamental areas in real estate profession. These returns may come either as regular income streams, or a lump sum; depending on whether the subject property is put for letting or is sold outrightly. In order to achieve this sole objective of the investor, an adequate property management schedule must be put in place for such real estate investment. Property Management, according to Wikipedia, is the operation, control and oversight of real estate as used in its most broad terms. The word Management indicates a need to be cared for, monitored and accountability given to its useful life and condition. This is more akin to the role of management in any business.
One of the fundamental roles offered by Estate Surveyors as professionals is Property management. Other roles include valuation for all purposes, estate agency, facilities management, property marketing, property development appraisal, and environmental management. In practice, the estate surveyors carry on property management services which include selection of tenants, acceptance of rent, responding to and addressing maintenance issues, advertising vacancies for letting, reviewing rent and representing the landlord before courts of competent jurisdiction in ejecting defaulting tenants, amongst other services. In addition to managing income and expense related activities, estate surveyor manages construction, development, repair and maintenance of a property.
However, there are a couple of challenges in which property managers generally faces when discharging their professional duties. One of these many problems is tenants’ inability to pay their subsequent rents. This is known as Rent Default. Default occurs when a tenant does not pay the rent specified in the tenancy agreement. The default can also pertain to other breaks in the terms of the lease (for example, by adopting a dog when pets are not allowed). However, failure to pay rent is the most frequently committed breach by tenants and is the most common cause of eviction. According to Oni (2010), the rate of default in rent payments amongst the tenants in Ikeja metropolis is high. In a survey of 120 estate surveyors, 12 (representing 10%) stated that tenants usually fall into arrears for up to six months; 86 (about 72%) stated that default is between seven and twelve months; and 22 (about 18%) were of the opinion that rents are owed for more than twelve months. In other words, the study revealed that 90% of the respondents had the experience of default in rent for more than seven months.
It is important however to state that the success of investing in rental properties is determined partly by space consumers’ (tenants’) attributes. The cases of indiscriminate destruction of properties, breach of covenant and rental default are common in varied degrees and categories of lease (Gbadegeshin and Oletubo, 2013).
The property manager usually has the responsibility for leasing real estate in accordance to the terms of management contract, but his duties does not stop at that as he cannot avoid inconsistencies in the relationship or default from either of the actors i.e. the landlord and tenant, which are a common occurrence in the renting process. However, such differences could be avoided if parties become aware of the rights and responsibilities ensued to them under the lease. This coupled with being open and having clear understanding of each other’s objectives for the long and short terms can remove uncertainty, build confidence and trust, and in the main prevent conflict (Aina, 1998).
