Part 1 (Property Management in Nigeria)

Property Management
Practice in Nigeria

.
'

By

Peter C. Nwankwo

PELIN . LAGOS

ACKNOWLEDGMENTS

Copyright Peter Nwankwo

First published 1 995
Revised edition published April 2004

By:

PELIN Limited
P lot 932 ldejo Street,
Victoria Island. LAGOS
NIGERIA. Tel 01-4618742, 01-48064\6

Na ti ona l Library ofNi reria Cataloguing in Publication Data

Nwankwo, Peter Chukwuemeka, 1 939-
Property m anagement practice in Nigeria
I. Real estate management -Nigeri a.
2. Real estate business- Nigeria.
I. Title.

HD 1 394.5 N685 N992 2004 333.3.009669
ISBN : 978-30510-6-7 AACR2

Printed by:
B.G. Company
P.O. Box 6030, Fcstac Town. Lagos.
Mobile: 0803-376-3291

ii
In writing th is book I have utili zed in puts by knowledgeable
individuals and professionals who have given me the benefit of thei r
own practical exper ien ce. To them 1 hereby express my appreciat ion .
l than k Erhabor Ehondor for h is assistance in gathering the
initial information. r ackn owk:dgc the advice of U. V. Ogu ike, Elsie
Tkedionwu and G lad Obid igbo on insurance, A n th ony Anih for ti ps on
electri ci ty matters, C. 0. Martins on Agbara Estate and Steve Osime on
lega l matters. I thank t he staff ofP. C. Nwan kwo & Co for their untiring
legwork in gathering materials for the revisi on of the origina l book. F i
nally Ithank Albert Orizu, Emmanuel Omuojine and Fortune Ebie
for taking time off their busy sched ules to read through the ori ginal
manuscript and to make useful suggestions, and Eunice lgbosua for
proofreading the original scri pt.

PCN
Lagos.
Apri l 2004

iii

TABLE OF CONTENTS

To all noble colleagues

INTRODUCTION vii -xvii
The emergence of the professional estate manager. For whom this book is
written. Scope. The relationship between property management and facility
management

CHAPTER I
THERELEVANCEOFTHEPROPERTYMANAGER 1-9
Failure to seek advice at the initial stage. Wrong advice. Unsuitable site. Bad
builder. Unsuitable location. Choice of material. Turnkey projects.
Legislation. Taxation.
CHAPTER2
SOURCING OF BRIEFS
10 -19

The invitation to manage. Packaging. Competitive bid. Direct invitation.
Scouting for briefs. An ear to the ground. The decision to manage. Title to the
property. Does the property meet requirements? Other considerations.
CHAPTER3
THE MANAGEMENT AGREEMENT
20-26

Verbal instructions and correspondence. Executed but unstamped agreements.
The power of attorney. The management agreement. The appointee. The
appointor. The property. The duties of the agent. The fee. Dispute. Duration.
Termination.

CHAPTER4
PRELIMINARIES
27-37

Taking Control of the property. Office accommodation for the site staff. Living
accommodation. Electricity meters. Taking over on completion of
construction. Taking over from another manager. Determining lettable space.
Viewing by prospective tenants. Omitted features.' To Let'. Staff recruitment.
CHAPTERS
TAKING CHARGE
38-49

The manager's office. Getting the best deal. Enhancing the value of the
property. The client. The tenant. The expert. Third parties. Background that
limits expertise. The manager as a shield.
CHAPTER6
LETTING AND RENT
50-78

Dealing with ad-hoc letting instructions. Advising the client on rent. Factors
that may affect rent. Finding tenants or buyers. Tenant selection. The offer.
Acceptance. The rent. Remittance of rent. When to put the tenant in

v

occupation. Schedule of condition.

CHAPTER7
LEASES,TENANCIES AND REGULATIONS 79- 91
Leases and tenancies. Regulations. Enforcement. The courts. Re-entry.
Arbitration. Prompt action.

CHAPTERS
REPAIRS 93-J/4
Direct labour. Work orders. Contracts. The service contractors. Air-
conditioning. Generators. Boreholes and treatment plants. Swimming pools.
Pumps. Fire installations. General contractors. Cleaning. Pest erad ication.
Refuse disposal. Long term maintenance. Certifying repairs. Who pays.

CHAPTER9
SERVTCECHARGE JJS- 150
Defmition. The fixed service charge. Revisable service charge. Determining
the amount of serv ice charge. The service charge year. Collection of service
charge. Collect ion of service charge deficit. Collection of supplementary
service charge. Waiting till the end of the year. Management of service charge.
Diesel. Water pumps and tanks. CommoP. parts. The garden and refuse
disposal. Security. Emptying and eleaning'-bf septic tanks and soak-aways.
Fire-fighting equipment. Swimm ing pools, boreholes and treatment plants.
Other maintenance services. Other services that the manager thinks will be of
serv ice to the tenants. Staff. Organising the staff. Staff performance.
Accounting for service charge. Relationship between rent and service charge.
Tenants' Committees 0r Assoc iations.

CHAPTERIO
INSURANCE 151- 162
Valuation. Classes of insurance. Sinking fund. The insurance broker and his
role. Fire prevention and protection. Maintenance. Fire drills. Firemen. Fire
certificate. Fire!

CHAPTER II
REGULAR INSPECTIONS /63-171
Viewing the condition of the property. The vacant property. Compliance with
tenants' covenants.

CHAPTERI2
TENANTS' OTHR OBLIGATIONS 172-178
General rates. Water rates. Electricity. Telephone. The si tting tenant factor.

vi
CHAPTER 13 .
ACCOUNTS AND RECORDS. 179-190

Accounting records. Partnership and clients' account. A separate serv ice
charge account. Property information. Leases and subleases. Purchases. Staff.
Legislation and taxation. Files. Contracts and agreements. Installations,
equipment and store items.

CHA PTER !4
MA NAGEMENT OF'ESTATES 191-206
Govemment estates. FESTAC. Company estates. Other private estates.
Agba ra estate. Victoria Garden City.Crown Estate. UPDC Estate.

CHAPTER 15
THE FEE 207-208

QIAPTER 16
DETERMINATION OF MANAGEMENT AGREEMENT 209-213
The client has sold the property. The client is not satisfied with services. The
client wants to manage the property himself. The manager is guilty of grave
miscond uct. The client is dead. The manager has had enough.

CHAPTERJ7
SUMMARY 214-219

APPENDIX/
THEMANAGEMENTAGREEMENT 220 - 227

APPENDIX2
LETTER OF OFFER 228-230

APPENDJX3a
SERVICE CHARGE ACCOUNT 231

APPENDIX3b
SERVICE CHARGE ACCOUNT 232

APPENDJX4
APPORTIONMENT OFSERVICE CHARGE 233

vii

INTRODUCTION

Most Nigerians aspire to own landed property, wheth er thatched huts,
iron sheet sheds, mansions or magnificent plazas from which to collect
rents or simply to have roofs over their heads. In parts orN i geria a man
who does not own ahouseofhis own is regarded as a failure.
This ambition was, years gone by in the villngcs, rea lised by
gathering fell ow villagers to ass ist in erecting mud walls and thatching
the roof, a task that was completed in a matter or days. With the
discovery of cement the task _ was, and is still in many cases,
, accomplished by hiring a brick-layer to mould blocks. The aspiring
property own er may have heard that each bag or Cl:nl l'nt shou ld y iel d
twenty-five or thirty blocks but he may not hes i tate t o extract thirty-five
or forty blocks. Thereafter he employs labour, not rH.:ccssarily expert,
and often without approved drawin gs or proper ndvu.:c, proceeds to
bui ld his house, store or tenement block, as cheapl y as possible. Th is
procedure not only applied, and still applies, to some properties in the
rural areas but many tenement buildings in townsh ips were built, and
are still being built, like that.
However, with better education, en l ightenment und increasing
affluence, people are turni ng to the various proli;ssional disciplines
invol ved in real estate. The quality and qua ntity of'buildings improved
greatly from the time of the oil boom in the nineteen-seventies. But the
pace ofbuilding slowed down from the nineteen-eighties with Nigeria's
increasing economic problems and the rising cost or l and, building
materials and borrowing. The emphasis therefore shifted to
mai ntaining what al ready exists. The development of a maintenance
culture, a popular government jin gl e in the earl y nineteen-eighties
which, unfortunately, not much attention was paid to particularly by
government itself, is being forced on property owners. They are waking
up to the complications of property ownership, the need to seek advice
at all stages of putting up buildings, and afterwards, the need to
maintain the properties and keep th em in the condition to contin ue

viii
Property Management Practice in Nigeria

y ieldi ng income or adequately m eeting th e need for which they were
construted. They a re, therefore, avail i ng themse l ves of the services of
professiOnal property managers.

The emergence of the professional estate manaaer
"'
The pioneer private professional proper ty ma nager was F. G. Gl eaves a
clartered surveyor, who had come to Nige ria as property consultant
0

Nrcksn & Bo?' le ar.chitects in 1955 and, a year later, observing the
financtal possr brlrt t es 111 acti ng for property owners to obtain fair
compensation for slu m clearance areas from the Lagos Executive
Deve lopment Board (LEDB), founded the first private finn of F. G.
G eaves. Shortly after, he was joined by John Fox who had been a staff
wrh the LEDB and, in 1957, the firm, Gleaves and Fox came into
?emg. Their c l ientele, in addition to individual property own ers soon
rnclud ed.some of the banks and other expat riate trading companies and
soon the!l' phre of act.ivity extended beyond N i geria. By 1959 they
la nded th er r b r ggest c ltents, the National T nvestment and Property
Co1 1pa ny (NfPC), owned by the government of Western N i aeria
prOJect-managing their real estate development a nd renderina t he;
related serv ices. to

I. W. Ekenyorg, the first N igerian qualified estate surveyor
and valuer, obtatned h r s BSc. degree in 1954 and worked for the
gov-rnment of Eastern Nigeria. After him came others who initi ally
wotked for the LEDB or the government ministries. These included
Hope Harriman (elected professional associate of the Royal Institution
of Charte.red Surveyors in I 96 1 ), Kunle Oyewo, F. A l ufohai, J.
Oluwatudtmu (al l elected i n 1962), Ranami Abah and 0. Akindahunsi
(both el ected in 1963).

n th ose days other expatriates, qualified and unqualified,
w rkd m government or its parastatals. Mr. Scott worked in the
Nrgen an Ports Authority whi le Al an Shelley who had arrived in
December I 955 worked for the Nigerian Railway Corporation.

lX

- -- - - - - -'--
- - -
-

Introduction

Before 1960, apart from Gleaves & Fox, there were no other
properly organized, professionally qualified, private property
management firms but most fami lies owning landed property managed
them either directly or through caretakers many of whom were no more
than rent coll ectors. Some of the big foreign companies like John Holt,
Patterson Zochon i s, Leventis, Barclays Bank DCO, the Bank ofBritish
West Africa, the British and French Bank, etc, managed their properties
largely in-house. The United Africa Company and G. B. Ollivant had
subsidiary property companies hand ling their property matters wh ile
other companies and banks also brought in consultants from Europ
from time to time to adv i se on their property matters.
Federa l or regional governments had their Government
lh:sid .:n tial Areas (GRAs) and other residential, commercial and office
Jll opL'rty managed by various Mi nistries of Works and Housing or
I .IIHI'> and Surveys through both qualified and unqualified staff. The
t'OIJHII at ions and other parastata ls had their properties managed in-
hoi I'-ll' by l'Xpatriatc and indigenous staff.
;\...,at independence most of the major property development in
Nlgt.:J J,I Ia lon pl d to government or government corporations. These
Jill 1111lcd 1 Ill Ill\ L' tm .:nt llouse owned by the NIPC, the Federal Palace
111 .;1 "hIllI",,.,p1 L'\ iously cal l ed Victoria Garden Hotel, the hou ses of
Jloilli,,,,ll.lll IH1Ili in I npos and the regional capitals, th e large post
ollllt ., olht l ''}' tlllal gmernment buildings, the University College,
lh,ul.111 lilt I olkt.L...,of '\Jh.ScicnceandTechnologyinEnugu,Ibadan
and I,ul.t, IIH.:Il' "t:lt' .dso lhL Independence building in Lagos, Cocoa
1 Jousl' at I had an .tlul Wt ...,tl'lll I lou se in Lagos which had been
prograniiiiL'd f01 Ullllpll'tloll f'o1 J IH.
.. : independence celebrations but
were not quite conlpktL d n l.'llthollp.h an independence party was held
on th e terrace or Wcsle1n llousl' < >lhl'l than the NTPC wh ich was a
property company owned by thL: m l'lllllll'llt of' Western Nigeria there
was the African Real Estate owned by lhL' Oovcrnment of Eastern
Nigeria.
Major private development includcd thc old Niger House, the

X

Iddo Complex, Wilberforce House, Mcfver House, Gidan Goldie (in
Kano) Gidan N iger (in Kaduna), the African Timber and Plywood,
Sapel e, Biafra House in Port Harcourt. These and others belonged to
the United Africa Company. John Holt owned Ebani House, Waters ide
Properties in Warri, etc. They were al l foreign owned.
B u t from that time on t here has been a rapid transformation
with massive infrastructural and office, commercial, indust rial and
housing constructi on all over the country especially after the Civil War. In
Lagos, other government and parastatal structures and estates sprang up
like the NECOM House, NIDB (now Bank of Industry) House,
Stock Exchange House, the Eko Court Complex, the Federal
Secretariat, the 1004 flats, the Lagos State Deve lopment and Property
Corporation residential and industrial estates, the Central Bank Estates.
In other parts ofthe country are the presidentia l Hotel s in Enugu and
Port Harcourt, the Lake Tchad Hotel in Maiduguri, the Premier Hotel in
Ibadan, the various branches of the Nigerian Hotels, the various
Housing Corporation estates. Of course there are the massive Delta
Steel and Ajaokuta Steel complexes, the. Nigerian National Petroleum
Corporation estates and office buildings, the giganti c Federa l Housing
Authority Estate developments in Lagos, Abuja and elsewhere. The
massive development projects in Abuja resulted from the movement of
the Federal Government there with most m inistries and parastatals
being compelled to develop their headquarters almost overnight. The
unprecedented tra nsformation of Abuja has resu lted in private
companies and individuals jumping on the bandwagon to take part in
the building spree to benefit from the high rents and property values.
Privately owned structures have also sprung up and include, in
Lagos, Mandilas House, Freeman House, Commerce House, Wesley
House, Savannah Bank Building, Sheraton Hotel, etc. Elsewhere therc
are the Orosi House in Port Harcourt, the Canute House in Enugu,
African A lli ance and Gidan Badamasi in Kano. In Abuja, Port
Harcourt, Kaduna and indeed all over the federation there arc Iorge
private buildings and estates. The banks are not being left behind and

Xl

Introduction
most banks have built their own head offices. The list is not exhaustible.
It was clear that the government was aware early of the need for
----- -- -"tratned _ prop_ert}:_}nanagers to handle the rap idly increasing stock of
buildings and the intricacies of land and its proper administration and
use for it began in the nineteen-fifties encouraging the study of the
subject of estate management by means of scholarship awards to
citizens in schools abroad.
In 1957 local study was introduced in the then N i geri an
College of Arts Science and Technology, Enugu, which offered the
Royal Institution of Chartered Surveyors syllabus to intermediate
examination after which the students had to be sent to England for their
articleship and for the final examination. That course metamorphosed
into the estate management department of the University ofNigeria i n
1962. From then on interest in the profession has grown to the extent
that there are now as at 31st December 2003 thirteen Universities and
seventeen Polytechnics (information from the N igerian Institution of
Estate Surveyors and Valuers and Joint Ad missions and Matriculation
Board brochure for 2004) offering courses in estate management. As at
December 31st, 2003, there were one thousand seven hundred and forty
two corporate members of the Nigerian Inst i tut ion ofEstate Surveyors
and Valuers, two thousand four hundred and forty four probationers and
one thousand nine hundred and ninety ei ght student mem bers.
The Nigerian Institution of Estate Surveyors and Valuers was
formed in 1 969 after a futile attempt to have an umbrella body
embracing all the disciplines covered by the Royal Institution of
Chartered Surveyors. The late J. W. Ekpenyong was its first president.
Among its major objectives were, briefly,
I. To establish a high standard of professional conduct and
practice.
2. To secure and improve the technical knowledge of the
whole facet of the profession including liaising with the
U niversities to facilitate the acquisition of such
knowledge.

xii

3. To promote the profession and to maintain and extend its
usefulness for the public good by advising members ofthe
p bl c, government or other bodies on all matters coming
w1thm the scope of the profession and to initiate leaislation
relevant to the object i ves of the profession.
4. To enli ghten the pub li c on the role of the estate surveyor
and valuer in national economic development.

Decree 24 of 1975 gave the Niger ian Institution of &tate
Surveyo.rs and Valuers government recognition and the powers to
enforce 1ts. rules and regulations and to check the activities of quacks by
the establishm ent of the Estate Surveyors and Valuers Recristration
Board ofNigeria. o
Not only did government and private companies increasingly
emp loy professionals in-house but they began to contract out the
management of their properties to private property management firms.
. F llowing Gleaves and Fox which became Fox and Company
m 1963 With the departure of Gleaves came firms like J. W. Ekpenyong
& Co (196 1 ), Shelley & Co (1964) which a year later became Knight
Frank & Rutley, Oluwatudimu & Co (1966), etc. As at 31" December
2003, there were four hundred and seventy seven registered firm
managing major government and private commercial residential,
industrial and other properties all over the country. '

For whom this book is written

This book is written primarily for the estate surveyor and valuer. The
est te surveyor and valuer is defined as a person who has undergone a
penod of study of the prescribed subjects and, having acquired the
necessary practical train i ng, has been admitted into corporate
membership of the Nigerian Institution ofEstate Surveyors and Valuers
and registered by the Estate Surveyors and Valuers Registration Board
of Nigeria as qualified to practice the profession. But this book is

xiii
-

Introduction
simplified so that probationers, undergraduates, industrial attachees,
can J earn from it. Property owners and others who are not estate
su rveyors and valuers will find useful information in it.

Scope

To appreciate the scope of this book a look at the defi nitio n of estate
management by Michael Thorncroft in his book, 'Principles of Estate
Management' will be hel pful. He defines it as 'The direction and
supervision of an interest in landed property with the aim of securi"!g
the optimum return, this return need not always be financial but may be
in terms ofsocial benefit, status, etc.' From this defin i tion it is clear that
Mr. Thorncroft's book could very easily have been ti tled 'Princi ples of
Property Management'.
Property (Estate) management in its fu ll meaning involves
such wide areas as va l uation of property, feasi bi lity and viability
stud ies, report wri ting, sa les, l ettings, advice on al ternative use, project
management, etc, and day to day management and maintenance of
exi sting structures. This book i s being narrowed down to the day to day
management of exi sting structures erected on land with the aim of
securing the optimum return which need not al ways be financial bu t
may be in terms of social benefit, status, etc. Becau se the various
sections of estate management are so interwoven, you cannot really
dabble into day to day property management without at one time or the
other being invol ved in other sections of the profession. You will be
invol ved with Jettings and sales, for instance. The mere fact of
determining the rental value of a house or flat involves valuation,
main ly by considering comparables. You cannot really sell a property
you have been managing without carrying out a valuation. The property
manager writes reports, carries out stud ies. llowever, we are more
concerned here with his day to day property management duties.
It should be noted that land need not have a structure on it
before it needs managing. It could be an expanse offam il y land which

xiv
needs to be controlled a nd preserved or laid out for sale or development.
It could be a piece of land which can be let out for open storaoe car
b '
parking. It could be a forest with hunting rights. It could even be a
quarry. The land could conta i n a st ream with fishing rights, etc.
As has been mentioned before, during the l ast two decades of
the twentieth century there was this loud noise about insti lling a
main tenance culture i n the soci ety. Government was particu l arly
str iden t, gi vi ng the year 2000 as the magic year when that and ma n y
oth er utopian la nd marks were to have been reached . The target was not
met. As at th is year 2004 we are even worse off in many areas. A look at
our pothol ed a nd decrepit highways tells the story. Electr ici ty supply is
still irregular, water is in short supply, cost of building materials is
prohibiti ve. And government i s now si len t on the issue. It seems to have
found another pet j i ngle. Deregu lation!
That the scope of this book is being limited to management and
main tenance of existing structu res is therefore an attempt to keep the
issue of ma intenance in focus. Furthermore, the prob lem is being
looked at from the perspective of the estate surveyo r and va luer in
pri vate prac tice for the simple reason t hat t he procedures and practice
can be better i llustrated and high lighted than if we are to, say, treat
p roperty m a n agement from th e narrower perspective of the
professio na l em played in government or a corporation or even a private
m u l ti national.
In zeroing down to the management of existing structures,
Lagos is used as base. References are to residential and office
complexes which are used in illustrating the variety of problems that
are usually encountered i n looking after property, problems that exist in
vary ing degrees whether in dealing with singl e houses or large estates, a
conference hall, a multi-storey office complex, a bare site, a warehouse
and soon.
Reference wi ll be made, where necessary, to pecu l iarities of
managing simi lar properties outside the cho ice areas of Larros

. e '
mcluding the su burbs of Lagos and cities outs ide Lagos. Whether in

XV

Introduction

Lagos or outside Lagos, local statutes may vary but the principles
remain the same.

The relationship between property management and facility
management

This book is on property management. But comments must be made on
facility management which is gaining ground in N i geria. It origin ated
from the United States of America about a quarter century ago, took
time to be taken seriously in the United Kingdom and Nigerians began
hearing about it a few years ago. Today several practicing firms ot
estate surveyors and valuers have added 'facility managers' to their
headed paper. So have some professionals from other fields including
engineering, quantity surveying, architecture, etc.
What is a facility? The Advanced Learners Dictionary among
other things says a facility is' ... a building, a service provided for a
specific purpose. Chambers English Dictionary says it is' .. .anything
specially arranged or constructed to provide recreation, a service..
1

From these basic definitions it could be assumed that everything built is
a faci lity and at the same time a property. Vi rtually everyt hing is built
for a purpose! A tin sheet shed in which a squatter lives on some
govern ment land i s a facil ity. So is an ultra-modern b l ock of flats in
Ikoy i. So is a refinery, a research station, a stadium , a rail way station, a
pub l ic toilet, an incinerator, etc. So why is faci lity management a better
title than property management? Is it simply a name change?
IFMA International answered the question by defining facility
management as 'The Practice Of Co-ordinating The Physical
Workplace With The People And Work Of The Organisation. Integrates
The Principles Of Business Administration, Architecture And
Behavioural And Engineering Sciences.
1
This means that faci lity
management is not just managing the property but also the people, their
work and the environment. Recently IFMA International has furt her
evol ved this definition into 'a profession that encompasses multiple

XVI
Properly Management Practice in Nigeria

disciplines to ensure functionality of the built environment by
integrating people, place, process and technology.
1
Fari Ak hl agh i, head
of facility management research of the Sheffield Ha ll am University,
says ' FM is not synonymous with outsourcing. It is a discipline -
managing groups of support services to provide single point
responsibility. I ln effect, facility management i s w ider than property
management.
So, when does a property become a facility within the meaning
of I FM A [nternationa l defin i tion? The government ofN igeria recently
gave out i ts res id enti a l properties in Abuja for management. The press
ca ll ed the managers n ames ranging from agents, property mana gers to
faci l ity managers. What sh ould these managers be called? [s the firm
managing Apo l egislative vi ll age just managing the properties or i s it
also concerned wi t h integrating the people, place, process and
technoloKJ!? The firm is only contracted to manage the properties but it
would not be so wrong i f i t i s ca l led the fac ility manager because it is
en gaged in one of the component disciplines that ensure functionality
of the built environment.
l koyi C lub 1938 was built for recreation. It is a good exampl e
o f a ftc ility. The gen eral manager has the s ingle poin t responsibility of
managing the wh o l e faci I ity includin g look ing after membership and
the i r wel l -bein g wh ile th ere a rc other facilities within the facility, the
gol f cl ub, the tenn i s section , th e sw immin g section, th e squash secti on,
etc, meaning the su pport services each of wh ich has experts to ensu re
that they meet requi remen ts but these experts must be co-ordinated by
the maintenan ce manager who reports to the general manager. An estate
su rveyor and val uer would not norma lly be employed to manage the
Clu b. O u t he i s as qualified as anybody from any other profession to run
the C l u b since with h is kn owl edge of property management he has a
head start on anybody from any other profession except the person who
h as u ndergone a spec ia l i st course on facility management. Another
good examp l e of a faci l ity is th e Lagos U ni versi ty Teaching Hospital.
But th e vast m ajority of structures an chored on land in the

xvu
-
- --- -

Introduction

world are simply for shelter- houses and tlats, dormitories, tenement
blocks, residential estates. In fact one could guess that the great
majority of all structures on earth are living places, shelter, requiring
uncomplicated care. These with the common office blocks, industrial
and commercial buildings, form the overwhelming majority of
properties that often come to the care of the property manager. Is there
anything to gain by now calling the managers of these basic properties
facility managers?
Now the qualified estate surveyor and valuer can practice h i s
profession by taking up pai d employment in a major organization as
property manager or facility manager or whatever other name the
organisation designates. He will work within the framework of the
organization to the extent of authority given to him . As an insider he
will be able to practice facility management as defined above by the
experts as he may have unrestricted access to all nooks and corners of
the organisation. It seems that, in Nigeria, the people who may be able
to practice complete facility management nearly always have to be
employees or part of the organizations involved. The property manager
of the Union Bank of Nigeria Pic can provide the sort of service
described by the experts on facility management because he is part of
the bank and has full knowledge of the bank's requirements for its work
and staffing, and has access to all parts ofthe bank.
Alternatively, the estate surveyor and valuer may set up a
practice offering services to companies and individuals. But the private
property manager is restricted by the provisions of his deed of
appointment. If he manages a multi-occupied property in which a bank
is one of the tenants he will be concerned about common services and
will not be given the opportunity to practice full facility management
within the bank. But the owners of the multi occupied property may sti l l
want to call him their facility manager. The facility manager for a
hospital has to be within its work force. The facility manager for a
refinery will have to be a staff of the refinery or the organization owning
the refinery as there may be security implications in a private property
manager having ti ee access to all the installations. The facility manager
xviii

for a brewery will be in the employ of the brewery. Will the Nigerian
Government employ a private estate surveying and val uation finn to
manage the Murtala Muhammed airpo1t facilities? ln these days of
espionage and sabotage it is u nlikely that a private estate surveyor and
valuer will be called upon to manage the facilities of organizations like
the Kiriki ri prison, the lunatic asylum, the military barracks, the Mint,
the Central Bank building, etc.
If estate surveyors and valuers, property ma nagers, want to add
'facility managers' to their headed paper or their complimentary cards
they are entitled to do so. After all, what they have been managing all
these years are facilities. Whether they are called property managers or
fac il ity managers, whether they are employees of multinati ona l s or are
engaged in private practice, their activities will be limited by the
provisions in the agreements between them and thei r employers, on the
extent of the authority given to them.
Estate surveyors and valuers should understand the above
limitations and constraints. They should endeavour to continually
broaden their knowledge and keep abreast with modern trends. For ful l
specialisation in facility management there are universities in Europe
and the United States of America offering higher degree co u rses i n
facility management.

XIX

Chapter l

THE RELEVANCE OF THE
PROPERTY MANAGER

Why does one need somebody else to manage his property? There are
many reasons. Decisions taken on property have lega l , social, financial
a nd even moral impl ications. Whether it is the decision to build, the
choice of site, t he bu i ld i ng type or materials, each dec ision has
repercussions that may not be immediate l y appare t. Many property
O\\ ners are not aware of the problems associ ated with property..Many
of such probl ems are created by the owners themsel ves while others are
created by t hird parties or nan1re. Some p roblems exist on the site i tself
before a hole i s dug, others are created duri ng the course of bui Idi ng a nd
many others after the completion of building. Examples of some
decisions and factors that complicate property ownership include:

Failu re to seek advice at the initial stage

Expert advice is needed even at the idea stage. Is the timing right? Is the
finance available? Is there a demand? Will there be planning approval?
Having decided to build, the site owner should employ an architect, a
tO\\ n planner or an estate surveyor to educate him on the best
de\'elopment for the site. Quite often a site owner is aware that he

1
Prop!!rty .\Junagf!mf!nt Prac:tice in Nigeria

sh ould put up a n office block o r a block of flats on a s ite. But he may not
be aware of the optimum number of flats or office floors that vvill fully
exploit the potentials of the site. It is the professio nal that wi ll advise on
this taking into con sideration the type of planning approval he can get.
A property owner who does not know that he requ i res planning
approval before construction will have his building k nocked down and
l ose the money invested. An examp le is in FESTAC Town where a
trader bought a plot of land in one of t he Closes early in the year 2000
for th ree m i llion nai ra and commenced building without properly
consulting the appropriate professionals and the Federal Housing
Authority (FHA). There was a prolonged running battle with the FHA
who insisted on his obtai ni ng proper approva ls. He stopped buil d ing by
day and resorted to building by nigh t!Soon the house was decked. One
day the FHA moved in with th ei r bulldozers and knocked the building
to pieces. That rubbish rema ined l ike t hat, an eyesore, for months
before the rubble was cleared and construction recommenced. It is
assumed that the bu ilder finally d id the proper thing. No doubt the
developer l ost a lot of mo ney. The property owner who emp loys a brick
laye r to mou ld as many weak blocks as possibl e out of each bag of
cement will have problems w ith his build ing as long as it sta nds.
There is currently a sad case of a gentleman who, wanting to
take advantage of the lucrative property business in the Lekki corridor

'
paid over one hundred mi llion naira to a fami l y for a vast expanse of
land at the Lekki Beach only to now fmd that he cannot get a certificate
of occupa ncy covering the lan d. The area is zoned for tourism and
th ough the government is encouraging tourism by giving out land in the
zone, only a few hectares can be given out to each ind i vidual company.
The gentlema n is head ing for a huge loss that could have been avoided .

2
'

The Relevance Of The ProperttJ Manager

Wrong advice

Using draughtsmen instead of architects for designs sometimes creates
management problems and even collapse of the buildings. This is not to
suggest that buildings designed by architects never col l apse. Indeed a
house designed by one ofLagos' prominent architects in Victoria Isl and
collapsed a few years ago. So did a hoste l block in one of the
universities. It is not also to suggest that all buildings designed by
draughtsmen have problems. But a desi gn by a qualified architect Is
more likely to have inputs by other professionals like structural, civil
and electri cal engineers whi le the draughtsma n's work may go strai ght
to the contractor who may play the part of other professionals like the
structu ral engineer with, often, disastrous consequences.

Unsuitable site

Som e years ago a professor paid three years rent on an 'ideal' house in
the GRA, fkeja, and moved in. One day h e came home and was shocked
to see the house standing in what looked like a l ake w ith his furniture
floating in water that had reached ground floor window level. He
moved out in a hurry. In the dry season, at the time he took the property,
as a layman he could not notice that the house was in a depressed site. If
know ledgeable professionals had been em pl oyed on the design and
construction of that building that site wou ld have been sand-filled
before construction and during construction th e ground floor level
wou ld have been raised.

3
Pro perty Management Practice in Nigeria

Bad builder

A bad or dishonest bui lder could red uce the sizes of i ron rods prescribed
by the engineer or use wea k plaster o r renderin g or cheap paint thus
building in probl ems from the begi nning. Occasionally too, one v isits a
bu ild i ng and has to bend over to go up the stairs otherwi se he wou l d
b ruise his head . The sta irs ri sers may be of vary ing h eiahts t he wa lls
:;,
crooked. Th ese are results of using bad and unsupervised workmen.
Unsui tabl e location
Visi bl e from Badagry Expressway and situated som ewhere behind
ljanik in, far from other developmen t, is an uncompleted gigantic office
bui ld i ng that has been sta nding for over ten years. Why the building
was si ted there is u ncl ea r a nd t he reason for i ts being aba ndoned is n ot
relevant here. But one day, hopefull y, tha t bu i lding w ill be completed.
And the ow ners will discover the p robl em s associated wi th such a
l ocati on. ff it is for in vestm ent pu rposes it w ill not att ract the type o r
c l ass oftena nts a bl e to pay the sort of ren t tha t justi f-ies the outlay in site
acquisition, borrowing and construction. It may n ot even attract any
te nants for years. Even if it is ent ire l y for owner-occupation the
prob lems attaching to the l ocati on are many. Badagry Expressway is
often pot-holed and co uld get more congested with trading groups
rel ocatin g from Lagos Island to the International Trade Fair site. The
lin k road from the expressway to the development will have to be
constructed at great cost and services like electricity, water, telephone,
drainage a nd pu blic tra nspo rt will cost a l ot of money. There wou ld be
ser i ous security prob lems. C learly.' the devel opers never th oug h t of a II
these. They never took advice. The c h ances a re that the pro pe rty
4

- - - - - -- -

The Releuance Of The Property Manager

bel ongs to a governmen t agen cy where it seems no rmal to waste publi c
m oney withou t questions being asked.

Choice of material

U se of poor quality or wrong materi a ls bui ld s in managem ent
probl em s. Poor quality electric bulbs, paints, cemen t, de, pro liferate i n
th e market. Money w ill be saved initially but the re wi ll be regrets l ater.
Marble or mosaic finish is initially expensi ve but v irtua ll y maintena nce
free t hereafter. Simpl e long-span aluminium o n pitch ed roofs sh ou ld
present fewer problems than fel ted concrete sl a b roots or til es.
Sadly, many of the fitti ngs and equipment imported a nd used in
buildings perform so badly that one ca nnot help suspectin g that they
were merel y cleaned up second hand equ i pment. Otherw i se, how does
one explain l ifts and generators that break d own almost as soon as they
are i nstall ed.

Turnkey projects

The aim here i s not to disparage turnkey projects. They present many
advantages. But governmen t, in particular, mu st ensure th at the
contractors turn out structures adapted to l ocal conditions. Otherwise
the contractors may build the replica of buildings in Tokyo or
Washington, collect their money and are not concerned wi th sui tabili ty
to local social, econom ic, or climati c conditi ons or th e managem ent
prob lems that migh t occur thereafter. The Nationa l Theatre and the
Murta l a Muhammed internationa l a irport are examples of ot her wi se
remarkabl e structures that pay scant regard to ventilation when th e a i r-
conditioning breaks down. When the Natio n a l El ec tric Powe r
5


Authority (NEPA) cuts power su ppl y the National Theatre halls are in
pitch darkness.
Some years ago there was a row about red Verona marble
imported by a multi-national construction company and laid in a high
ped estrian traffic area in a first class office block on the Mar ina as the
marble degenerated rapidly shortly after being laid. It was eventual l y
agreed that red Verona is not su itable for hi gh traffic areas. The marble
had to be removed and a more durable type laid presum ably at
add itional cost to the property owner.

Legislation

The Land Use Act 1978- Laws of The Federation of Nigeria, Cap
202,1990.
Since 1978 the Land Use Act has been the general law govern ing the
acqu isition an d al ienation of an interest in la nd. The States have their
laws but where there is confl i ct the Land Use Act prevai ls by virtue of
its being part of the Nigerian Constitution. In each State all land i s
vested in the governor to hold in trust and ad minister for the use and
common benefit of all Nigerians as provided for in the Act.
It gives the governor's powers to grant rights or certificates of
occupancy and to fiX rents over them,. powers of revocation. It gives
powers to local governments to grant customary rights of occupancy
over non-urban land. It also provides that interest in land can only be
alienated with the consent of the governor. Such alienation includes
leases, long or short, and ass ignmen ts. The government may impose a
fee for its consent. The average citizen is not conversa nt with the above
includ ing procedures for obtainingcertificates of occupancy.

6

The Relevance Of The Property Manager

There are other State and local government laws, edicts,
guidelines that affect property. Since Nigeria has no unified land law
covering the whole country the property owner must know the law that
applies to the part of the country where he operates. In Lagos the
following are some of the laws and edicts that affect a property owner.

State Property Land Use Charge
The Land Use Charge Law 2001 (Law No. II) unifies land
based charges such as ground rent, neighbourhood
improvement charges and rates. Its lega lity was widely
challenged. But the organized private sector has relented in its
1
cou rt actions as the rate of the charge bas been drastically
reduced. Its legal ity has s'till not been fu lly tested in court but
this may happen if th e organizations wh o have not withdrawn
their court cases take the matter to the logical conclusi on. The
fonnula for ca lculating the charge remains con troversi al.
Lagos State Urban And Regional Planning .Board Law,
CAPL52.
It became operative in the year 200 I and contro ls developme nt
and use of land in Lagos State. It covers all land matters
including change of use of any land, seabed or structure,
subdivision or partition. For subsisting contraventions the
Ministry of Regional Planning still imposes annual fines
including sueing the offenders an d sealing up the premises.
Business Premises Permit.
You pay an initial N I 0,000.00 and an annual renewa l fee of
N5,000.00 to government to be in business at all in Lagos.
There is a l so a sanitation edict, a car parking edict providing
7
Pmperty Management Practice in Nigeria

for a charge ofN40,000.00 pe r slot per annum in the high rent
areas such as Victoria Island, Ikoyi, etc.

Local Government.
These vary from loca l government to local government. But
some ofthe heads i nclude:
Corpo rate Businesses Permit.
A dupl ication of the State charge.
Satellite Dish Tax
Etiosa LGA. Self exp lanatory.Currently N5,000.00.
Generator Pollution Per mit.
Etiosa current ly N I0,000.00 per annum.
Advertisement.
Even a name plate on an office door may cost an occupier who
is not aware of his rights. Apapa LGA in t he past forced
m otori sts to pay N5,000.00 for advertising the nam es of their
companies on their vehicles passing through the LGA!
Car Parking.
Overzealous officials will even attem pt to intimidate an
occupier i nto paying for parking withi n the confines of his plot
where the plot is not enclosed by a boundary fence. This was
t ried unsuccessfully at Awolowo Road and Ijora.

Taxation

Withholding Tax
Th is tax was in troduced by the Finance (Miscellaneous Taxation
Prov isions) Decree No 4; 1985. Its p rov isions were further
strengthened by the Companies Income Tax Act 1990. It compelled

8

The Relevance Of The Property Manager

tenants to deduct 15% of rent and pay direct to the releva nt tax
authority. The rate of this tax was reduced to 5% and later increased to
1 0%. Iftenants fail to deduct the property manager must deduct and pay
the tax. Stiff penalties are prescribed.

Capital Gains Tax
The Capita l Gains Tax Act of 1967 (Cap 42 of the 1990 Laws of the
Federation ofNigeria) provides that on purchase and resale of landed
property a tax is payable on the profit.

Capital Transfer Tax (known elsewhere as Estate Duty)
The Capital Transfer Tax Act of 1979 (Admini stration of Estates Law,
Laws of the Federation of Nigeria 1990) imposed a tax, grad uated
according to the val ue, on the estate of a deceased including tra nsfers
inter vivos.

Value Added Tax
Introd uced on 1.1.94 by decree No. 102 of 1993 it is of wi der
appl.ication than the Sales Tax Decree of 1986 which it replaced. It is a
consumption tax a nd in relation to property managem ent affects
purchases of maintenance parts, office eq ui pment, commerci al rents
and the manager's fees.

There are many other complications in property ownership but
since some will be discussed elsewhere in this book, suffice it just to
mention one or two other areas that complicate property management.
They include the attitude of other property owners and the general
. public to sanitation, pest eradication, misuse of installations and the
poor performance of public utilities.
The foregoing are just som e of th e reasons why governm en t,
private companies and individual s must seek t he services of
professiona l property managers.
9
Chapter 2

SOURCING OF BRIEFS

The invitation to manage

How does a n estate su rveyor and val uer in private practice get
instructed to manage a property that does not belong to him?

Packaging

This coul d date back to the time he was inst ructed to find a suitable site
and may include helping to assemble the array of professionals to be
i nvol ved in the develop ment includ i ng obtaining planning permission,
asibi lity and viability studies, raising of finance, selection of
c?ntractors, project-managing the development and letti ng and
managing on completion of construction.
Packaging explains why one or two firms seemed, in the
nineteen-seventies and eighties, to have a monopoly of the major
managed properties in Lagos. For reasons which are not rel evant here
these firms seem to have now lost many of such briefs. Such firms were
the first in.the field and, having in many cases assisted in finding the
s ites, raising bu ilding finance or project-managing, t heir continued
involvement up to managing the .completed developments became
formalities. Some buildings where pre-construction assistance to the
p roperty owners led to Jetting a nd management include the Bank of
10
- - - --

Sourcing Of Briefs

Industry (formerl y Nigerian Industrial Development Bank, NlDB),
building, Lagos Chamber of Commerce building, the Stock Exchange
building, Wema Towers (formerl y Chellarams House), the Eko Court
Complex, etc. This emphasises the importance of a credible track
record and experience. A beginner firm should not expect miracles but
must work hard at establishing and maintaining a reputation that will
help it keep existing clients and at the same ti me attract new ones.

Competitive bid

Proposals are submitted in reply to newspaper advertisements or to
written or verba l invitations in competition with other firms. Such
proposals will include details of properties on the firm's portfoli o which
the prospective clients can look at if they wish, the organizational
strength of the firm, the proprietor's and principal staffs reputation and
track record, their stand in g in the profession, and any other attributes
that will help sell the firm. The property owners may then short!ist and
invite the chosen firms to an interview from which one firm is chosen.
Of course the p1:operty owners are not compelled to hold an interview or
employ any of the applicants. They may engage a firm from criteria
which they are not bound to reveal. The invitation may even be a
smoke-screen and a party who may not have submitted a proposal may
be appointed. The advert may simply be to fulfill the board's conditions
and somebody may have been appointed even before the advert.

Direct invitation

Invitation could be by a letter in the post from a known or unknown
party who may have heard of the finn's suitability for the job. Under th is
11

heading will be an appointment by a court or the Administrator
Gen eral . The manager may also have helped purchase the property for a
client who then asks him to manage. Invitation could also be from a
friend or colleague. In one instance recently a lawyer walked into the
office of a firm and asked them to come and take over the man agement
of a block of offices. His company had heard many good things about
the firm.

fn the late nineteen-sixties and early nineteen-seventies when
the public was still largel y ignorant of the rel evance of pro ssional
property managers, obtaini ng instructions to manage properties was
difficult. Then, property managers had to persuade property owners,
even corporate bodies of the necessity for their services. The manager
had to make concessions sometimes including virtually managing free
of fee foe a period, or on the conditi on that fee be collected from the
tenants, or even further that tenants would be made to accept full
repairing and even full i nsuring leases. In many cases, especially where
packaging was involved, t he c lient did not understand why he should
pay fees at so many stages like fee for helping to purchase the site,
feasibi lity study, project management and finally, letting and
management.
The eager manger often had no choice than to charge lower fees
or even forgo fees for one or two stages so as to ensure instruction at the
crucial stage of letting and managing the completed development.

Scouting for briefs

Firms often have agency departments whose brief includes not just
getting properties to let but also to manage. Often, qualified staff are
assigned this job and given a target. Some finns also employ
12

----- ---------------------------------------
------------------- ------------------ ----

Sourcing Of Briefs

unqualified staff called runners either on full time or part tim e or
commission basis. They go to buildings under construction and
introduce their firms and their serv ices and are sometimes successful in
securing new instructions. Of course the line between this and touting is
thin. Some professionals, once in a while, resort to touting which is
against the ru les and regulations of The Nigerian Institution of Estate
Surveyors and Valuers. This phenomenon is being mentioned because
it occurs and not because it is condoned . Touts brazehly go to properti es
which they know are being managed by fellow professi onals and, one.
way or the other, persuade the owners that they can do a better job.
Some hang their 'To Let' boards on properties with or without the
property owners' approval. Sometimes a tenant shows up and it is
almost a fait accompli that the owner will ask them to manage th e
property. So, once in a while, a new star firm appears, employing
unorthodox methods to secure instructions and, inexperienced as i t
might be, gets its hands filled with management properties almost
'overnight'. Often, the result is that the firm, not havi ng the requisite
experience or staff strength an d structure, soon mishandles the
properties and loses most of them and sinks back to be one of the seven-
day-wonder firms which, once in a wh i le, hit the public and the
newspapers with a bang and soon sinks back into obscurity. Of course
some of these firms, in this anything-goes society, grow from strength
to strength and continue their unorthodox practice regardless of what
other members of The Institution think ofthem.

An t'IU' to the ground!

Au tntc smvt:yor and valuer needs to know what is happening. He
11 ll 111 IIIII\ c illllltlld, party as necessary, listen for opportunities, nose

13
Property Management Pn1ctice in Nigeria

around. Recently the Fede ral Government shared out thousands of
properties in Abuja to estate surveyors and va luers and property
compan ies for management in their monetisation policy. There was no
advertisement! No doubt some government officials gave out hints to
their friends who had offices in Abuja and the place was flooded with
a pplications. Most estate surveyors and valuers first heard of the matter
when th e President was seen on tel ev isi on ordering the Federal Capital
Development Authority officials to hand over Apo legislative village to
'the agents' on Monday! Government works i n mysterious ways and it
seems that estate su rveyors and valuers should a l ways have their ears to
the ground especially where governmen t is invol ved.

The decision to manage

Th e manager shou ld i nspect the property before accepting or declining
the i nvitation to manage. Whether he accepts or not depends on the
policy of the firm. The firm may specialize in t he management of
commercial properties in which case he will politel y decline invitations
to manage other types of properties. But, in the presc... young stage of
the profession in Nigeria, it is doubtful if there are such specialized
firms. Firms accept most types of properties. There are certain criteria
that should be considered in the decision to manage.

Title to the property
It is necessary to ascertain that the prospective client owns or has an
interest in the property. The manager shou ld i nspect the title document
and if in doubt consult his solicitors. He must be sure that the property is
free from encu mbrances that could hinder his effectiveness and know
the nature of the property and the restri ctions on it including other
14

Sourcing Of Briefs

interests and restrictions imposed by law. For instance, if a sub-lessee
for a term often years erected a building on land but failed to acquire a
valid title, a manager who commits himself materially or financially
cou ld incur losses. And the real owner could sue him for trespass. The
manager shou ld, therefore, be aware of the history of the property as
well as all legal and equitable encumbrances that could limit his power
and these should guide him towards the decision to manage or n ot to
manage.
The manager may relax his scrutiny of title in case of well-
known organizations like the banks, prominent corporations, major oi l
companies, etc, and may not see the title documents but it will be an
advantage if he does. After all, there may be encumbrances his cl ients
never knew about which he, as an expert, must point out to them . It is a
different matter with instructions from unknown companies, fami l y
estates and individual s. He should ascertain the veracity of their titles.
In the past, property managers had been embarrassed where different
factions of families surfaced to dispute their authori ty after they had
comm itted themselves financially and otherwise. Once in a wh il e
newspaper advertisements disclaimed their rights to meddle with
certain properties which they were already managing. The adverts went
ahead to state that the appointors were not the rightful owners of the
properties. There is the case of a famous family whose scion had been a
minister in the First Republic that has been entangled with court cases
till recently and whose agents did not escape the wrangling. Sometimes
people sell properties that do not belong to them and as a defensive
measure some owners write boldly on their buildings, 'This property is
not for sale.'
In the case of the estate of a deceased the manager will want to
see the Letter of Administration to ensure that those instructing him
15
Property Managemenl Practice in Nigeria

have the authority.

No doubt, practicing property mangers wi ll be aware that the
foregoi ng may be idealistic. Some property owners will not surrend er
photocopy of their title documents.
Property managers must be alive to the possibility that the issue of title
can still come up long after they stopped being man agers. They shou l d
therefore take interest in cases such as:
Suit No: ID/4SSM/99 ChiefJ.0. Adeyemi-Bero Plaintiff
AND
1. Knight Frank & Rutley (Nigeria)
2. L.S.D.P.C Defendants
The Lagos State government had acq uired the whole property
known as the Eko Court Complex from a company owned by three
people that included Chief Adeyemi-Bero in the earl y 1970s and
handed it over to the LSDPC who then appointed Kn ight Frank &
Rutley (Nigeria) as managers. In the early 1990s the government of
Ibrahim Babangida gazetted th e Eko Cou rt Complex among others as
properties released by government to thei r former owners. Chief
Adeyem i-Bero then sued the LSDPC and Kni i1L :'rank & Rutley
(Nigeria) who had stopped being the managers to render fu ll account on
the one block he was claiming. The case is sti ll on but managers can
learn from it.

Does the property meet requirements?
If a manager is based in Lagos and is invited to manage a property in
Enugu, about six hundred kilometers away, where he has no branch
office, he has to consider critically his ability to cope with both the cost
of travelling, the possibility of getting staff who he m ay not be able to
properly supervise, and the likely inabili ty to do a proper job. If the brief
16

Sourcing Of Briefs

is a major one he may use it as an opportunity to open a branch office. If
the job is a minor one he may politely refuse the job or he y
recommend a suitable finn practicing in Enugu for the job. Even w1thm
the same town the manager may decide not to manage properties in
certain locations.
The quality of the property is another factor that will be
considered. Is the manager, whose office is perhaps on Lagos Isl and or
Victoria Island, so desperate for a job that he is prepared to manage a
block of six flats in Shasha or Ajamgbad i with all the obvious problems
surrounding such properties? Initially, he wi ll easily, if the property is
vacant l et and collect rent one or two years in advance from eager
tenant. But what happens thereafter? It is clear that the tenants will
hardly repair anything or abide by many of the normal terms of offer.
Such tenants may not even sign any tenancy agreements. They may not
have heard about anything called service charge and may not pay. And
when it is time to renew tenancies the manager will need to work hard to
collect rent. He may also be dragged before the rent tribunal. He will
engage in endless correspondence with the tenants, spend enormous
time getting to the property, spend a lot of money on transport too.
The manager will spend more time dealing with such a

building than he would spend on a block of flats in lkoyi or Victor a
Island. In the end, assuming he succeeds in collecting rent yearly m
advance in Shasha, the maximum he may collect at, say, N200,000.00
per flat
IS
N 1
,
200
,
000
.
00
.
But from the block of six flats in Victoria

Island he wi ll, at a conservative N2,000,000.00 per flat per annum,
collect N 1 2,000,000.00. If it is assumed that he collects fee at 5% from
each property, he collects N60,000.00 from the Shasha block and
N600,000.00 from the Victoria Island block. In effect he will need to be
111 11 1
inp IL'n such blocks in Shasha to equate the fee from one block in

17

Victoria Island. What use is it for a firm based 1 n A papa or Surulere to
ma nage the block in Shasha when the cost of transport, manpower,
correspondence, etc may equal the fee that can be earned. It is realized
that somebody must manage these remote properties but.each firm will
have its own policy, perha ps set a minimum rent roll for the properties it
wi ll manage, or decide locati ons it wi ll not accept briefs from. But of
course there will be exceptions as in the case of a valuable client whose
block of flats is being profitably managed in Ikoy i. If such a person asks
the manager to manage his property in Dopemu, the manager may find
it difficult to refuse. If the manager's office i s cl ose to the property in
Shasha or Ajamgbadi he will be justified in taking the gamble.

Other considerations
The firm may have dealt with a certain property owner in the past and
may not want to repeat the experience. There could also be a break
down in negotiations for the terms of agreement, for instance, the fee. In
the early nineteen-eighties n egotiati ons for the management of one of
the major buildings on Broad Street broke down because the would-be
manager refused to sign a management agreement that required him to
guarantee that the lifts woul d never break down! The manager must not
accept impossible cond i tions just to secure the management of a
property. There could a lso be reasons of religious incompatibility, the
manager's inabili ty to co pe w ith new properties at a particular time,
politics, a nd so on. The m a nager, in accepti ng instructions, must ensure
that the term ination of the appointment of his professional colleague
who had been managing the property was properly done. He wou l d ask
to see the agreement between the parties. If he i s satisfied that th e
terminati on was not proper, he must educate the cli ent on the proper
way. This should not amount to touting because the property owner had
18

Sourcing Of Briefs

already taken th e decision to terminate the appointment.
Once the manager has decided that the property is the type he
would want to manage the next step is to discuss the contents of the
management agreement especially the fees and duration. The approved
scale of charges of The Nigerian Institution of Estate Surveyors and
Valuers i s avai lable for purchase at The [nstitution but the manager
must be aware that no property owner is compelled by any law to
appoint any professional property manager. He cannot therefore
dogmatica ll y insist on the scale fee. He shou l d negotiate if the owner
insists. If he does not negotiate the property owner wi ll appoint
somebody else. There are always competitors who are prepared to
I Chapter 3

THE MANAGEMENT
AGREEMENT

The management agreement is often called deed
o
t
appom
.
tment or

accept lower fees. However it must be stated that some property owners
power of attorney. But we will retain the na
me
,
management

are coming to terms with the new fee scale.
It should be noted that the manager does not have to wait until
the management agreement is perfected before taking action on a
property he ha ' J cided to manage. Del ay could result in damage to t h e
property i f tJ ,.._ manager waits till letters, draft agreements are sent
backwards an d forwards from sol icitor to client to the manager and so
on. There is indeed no guarantee that documentation wi ll be completed
before the expiry of the term as amendments are made here and there. If
the manager has an exchange of letters that confirm that he is the
manager, he should not wait. Many landlords also do not want to sign
anything and in some cases managers run properties for years without
anything in writing.
agreemen t'. As has been said, it is a vital document that spells out the
extent of powers given to the manager. Few management agreements
are_ executed and stamped early and, in many cases, are not completed
before the.end.of the term s intended. But as they govern what managers
do.fot heuclie nts they are being t reated here as managers are advised
to 111S i st on the execution of their agreements as one of their first tasks
on assJming t le management of properties. Many managers do not
appre late he .u portance of this and do not bother wh il e some clients,
especially mdividuals, on their side, do not insist on the agree t

b mens
emg s.Igned. It cou ld be either that those c lients themselves do not also
ap reciate thneed for formal agreements, or perhaps, that they may
eiievthat smce they did n ot sign they are not liable for anything,
I cludmg fees! So, managers carry on and, hopefully, there will be no
dJs utes. But, one day, there may be disputes and managers may then be
obliged to scramble to have agreements executed and stamped. Then it
may be too late.

Usually, by a ma11a
'o
e
men
t

19
20

agreement, a property owner
Properly Management Pmdice in Nigeria

The Management Agreement
atJthorizes an agent to manage his property and it is the nature of the
agreement and the extent of powers conferred on the manager through
noI t ava.il ab.le he may be u nabl e to take certai n dec isions. Di fficulty ma
a so anse I f t h e ma nager h as to make cIal.ms on hi.s c l.ient say f, y
;rongfu l term inati on of his appoi ntmen t or i f he h i m self,wan;s
the agreement that determines tlle manager's effectiveness in handling
er m m ate .the .a p poi n tmen t. The ma nage r may, one day face the
intervening probl ems without delay. The following are the types of
agreement under which properties are managed:
J. Verbal instructions
2. Exchange of correspondence
3. Executed but unstamped management agreement, deed of

appointment or power of attorney.
4. Executed and stamped management agreement, deed of
em bar rassm g Situati on whe re he i s to ld to h d '
w ithin a mo n th or even i m m . an over to somebody el se
.- ed ate l y. Pe r haps t hat pers isten t com
I mally succeed ed in persuad ing the cl ient that a stranger shou I d;t:;
mfn ag m g the property when he, h i s re l at i ve, i s starv i ng. The ex i stence
o
cli
a
e
s
t
tam
fi
ped
d
m a
.
n agem ent agreemen t may n ot dete
r some categon
.
es of

f'orl r e:fl:: i L:e:te st, he m jri ty of cli e nts have regard
. p ct t he prov i S ions of the agreement

appo intment or power of attorney.
a th'
Th
h
e fact
.
that some prop
er
ty
ownersareusual ly reluctantt
osian
n.yI mg t at b mds them legally may force m anagers to conti t:>

Verbal instructions and correspondence.

W
I
i t 10
.
U t agreem en ts
.
B ut t h.
I S means t h at their operati ons
nue
Where only verbal instruction is given the manager he should reply i n
r
1and l ca p p
.
ed
.
. A l t h
.
ough t he i ncidence of undo
c
.
umente
d
agreements
ar
i
e
s
writing statin g what was agreed. Such correspo ndence backed by the
actual fact of mana ging, collecting rents and h andin g over to the
appointor i s enou gh evidence of the exi stence of an agreem ent. Equity
will come to the manager's aid in court in the event of a dispute. If th e
'case is against a third party he can have an agreem ent prepared,
executed and stamped. But this wastes time and the manager or his
client could incur financial losses. Where the dispute is with his client
the client m ay refuse to execute an agreement and the manager can only
seek the protection of equity. Again, time will be lost and fin ancial loss
may result since his duties were not spelt out in an agreement and the
client may claim that he exceeded his a uthority. It will then be left to the
court or an arbitrator to decide what is reasonable.
Where no agreement details th e agent's duties his actions may
be challe nged by the tenants or hi s client. He w ill not be able to
auth oritati vel y carry out his duties and enforce covenants. Ifhis client is
21
.am. pant, f u rther dis.cuss ion oft he prob lem I.S not th o u ght necessar
I t I S ho ped t h at m anagers w i ll i nsi st wher ' bl y as agreem ents
executed d ' e poss l e, on hav i ng thei r
an stamped.

Executed but unstamped agreements
These are nearl y as good asstamped agreem ents but wh th
be tendered . . ere ey are to
a d th as pn mary ev i de nce m court they w ill need to be stamped
n ere may be a penal ty for l ate stamping.

The power of attorney
J ufst tas in m a na.gem ent agreem e nts, the powers gran ted u n der a power
o a to rney will be l i m i ted by wh at powers t he . .
prepared to gran t. proper ty owner IS

Th ere w i l l be no need to dwe ll much on th e power of attorney

22
b


which i s one of the alternatives to a managem ent agreement. But it must
be stated that a power of attorney cou ld be a more powerfu l legal d
ocument than the m anagement agreement, conferri ng powers to dea l
with the property as if the agent were the owner. lt ensures speed an d
efficiency a nd is used often where t he property own er is far away suc h
as an ambassador on forei gn assi gnmen t or a reti red person now liv ing
in the v ill age or an owner incapaci tated by i ll- health . Under it the
manaaercan sue or be sued on m atters deal i ng wit h own ershi p. I t i s also
0
often used where, for instance, a parcel of la nd covered by a Ce r t ificate
of Occupa ncy has been purchased and, to get round the prov isions of
th e La n d Use Act th at u ndeveloped l and ca nn ot be a lienated wi thout t he
consent of the state government, the purch aser secures an irrevocabl e
power of attorney over the land, develops i t at which stage a proper
tra nsfer can be done. B u t, generally, the average citizen is wary of
giv in g ou t h is proper ty on a power of attorney. Not too many citizens
trust ot h er citi zens that m uch these days as there have been cases of
people hold ing powers of attorney c l a i mi n g complete owne rshi p or
even selli ng th e p roperti es.

The management agreement

The rest of this chapter deals w ith the executed and stamped
management agreement. An example is at Append ix 1. The sampl e
agreement should be varied and wordings ch anged to suit the particular
pro perty or the cl ient's requ i rements and th e extent of powers th e
manager is gi ven . Many cl ients wi ll expunge C l ause 7 as they are wary
of vesti n g absolute powers i n the man ager. The agree ment sh ou ld
speci fy clearly thefollowing:

23

The appointee
The documen t should co ntai n his name, address a nd business. If it is a
partnership the names of all the pa r t ners wou l d be specified as an
a l ternative to l isting the names of one or two partners as acting on
behalf of th e partnersh i p.

The a ppointor
Th e nam e an d address of th e appoin tor sh o u ld be c lear ly specified as
well as t he nature ofhis i n terest in t he proper ty.

The prope1ty
The add ress a n d build ing type shoul d be spec ified.

The d uties of the aaent
Som etim es t he fu ncti ons of l etting an d managi n g are separated and the
documen t shou ld state clearl y t he fi rm doi ng t he l e tting and t he firm
do i ng t he m a nagi ng. Somet i mes an agent is on l y requ i red to prov ide
ma nage ment services as in the case of a property wholl y occupi ed b
tha ppoi n to r whe re no rent i s co llected. I n some cases the appoint
mt ght wan t to deal wi th rent co llectio n h i msel f. Some appoi n tors even
further l imit the agent to on l y supe rv i si ng the con tractors and collect
serv ice charge themse lves. The i m portan t poin t i s t hat duties are clearly
spelt out to avoi d future misund erstand i ng.

The fee
The agreem ent w i l l state the percentage of ren t or serv ice charge or
oth er am ount agreed as fee a nd m et hod of payment. P lease refer to the
fee sca le of for the N igerian I nstitu ti on ofEstate Surveyors a nd Va l uers.
Letti ng fee or fee for rent collection is usua lly deducted by the agent
24


before the rent i s remitted to the cl ient. Somet imes the agreement
provides otherwise. For instance, the client may insist that the rent
cheque be made out to him after which he will issue his own cheque for
the fee. Some clients do not want to lose even a single day's interest
while waiting for the rent cheque to reach them from thei r property
managers. The fee from service charge is collected in arrears when the
account i s prepared and is added on to the cost of services before
apportionment. There could also be instances where the fee is lump sum
collected yearly or half yearly.

may, during the term, seek to pull out even though this may be resisted
by the other party but it should be possible to do this.
The agreement should be carefully worded, engrossed.
executed and stamped with a copy sent to the client and a copy kept b;
the manager.
Obvi ousl y the foregoing is not a treatise on the law relati ng to
manage 11ent agreements. Each property manager is expected to retain
the s r:'Ices of a good solicitor, or, at least, have close relation sh ip wi th
a solicitor who shou l d be able to guide him as occasions demand.

Dispute
A clause will specify to whom disputes ari sing from the agreement will
be referred. Arbi tration is usual. Often the president for the time being
of The Nigerian Institution of Estate Surveyors and Valuers is specified
as the arbitrator or i s authorized to appoint an arbitrator.

Duration
Three years is normal but some clients may agree five years while
others may insist on shorter terms, even as short as one year.

Termination
The appointor reserves to himself the right to terminate the agreement
without notice if the appointee i s guilty of gross misconduct or fails to
account for the money. Sometimes some of the actions or inactions that
constitute gross misconduct are spelt out. Otherwise the client can
1L'1111 inate the agreement by giving the prescribed notice, usually six
1nnrrlh'>, nt the expiry of the first period of the agreement. The
,rppoirrll c, on hi s part, can terminate the agreement by serving the
p11: llil11.: d 11ntitc after the expiration of the agreed term of years.
A ltht tr Jh 11 11101 nnlmally s peci fied i t is possib le that the manager

25
26

Chapter 4

PRELIMINARIES

Taking control of the property

As has been stated earli er, the manager does not have to wait for the
m a nagement agreem e nt to be fu ll y documented before tak in g action on
the property. The management agreement was discussed in the last
cha pte r because, under norm al c ircumstances, it should be finalized
before the ma nager takes over t he pro perty. But, in most cases, that does
not happen. Ind eed, before t he agreement is concluded the manager
would be several m onths into the term of th e agreement. In effect, t he
preliminary matters discussed below should by now have been
. completed.
The manager should inspect the property in detail a nd m ake
notes for his own use a nd for the benefit of his clients. He w ill make a
sketch of the l ocation of the property for his file. This is relevant in a
large firm where the partner controlling a large portfolio does not ca rry
out the initial ins pections. And the staff who did could leave the firm
exposing the principal to the em barrassment of find ing out at a most
inauspici ous time that Oshodi Street is not necessarily in Osh odi but on
Lagos I sland! He must g i ve his clients written details ofthe cond ition of
t h l p roperty and the need for any n ecessary i mmediate works. He
hPu l d :ll'lo obta i n a ll necessa ry i nformati on available to h is clients for

27

his own records in cluding a complete set of archi tect ural drawinos if
one exists, plus a copy of his client's titl e d ocument if he ca n . :: '
The ma nager sh ould endeavo ur to kn ow the pro perty ' l ike th e
back of his ha nd ', its strengths a nd weak nesses. It could be an old
build in g with lou vre wind ows, ceme nt screed flooring and s urface
el ect rical wiring requi ri ng close monitoring. It could be a cheapl y
constructed build i n g i n which one th i ng or the oth er needs to be
repai red often, or a bad ly d esi gned buildi ng th at requi res a l teration . I t
cou l d be in a water-l ogged locati on a nd l iabl e to flooding at certa in
ti mes of the yea r a nd the septi c ta nk may t herefore be very often flooded
req uiring freq uent evacu ation. I t could be th e first bu ilding put u p i n th e
area and th erefore l ia bl e to floodi ng because ot her subsequent
stru ctures a nd the road a re on hi gher l evels and t he result i s th at all t he
storm water in the a rea flow into th e proper ty. It could be a m od ern
building sited in the middle of a s lum wi th th e con seq u en t probl em of
inability to achieve good re nt. It could be n ew thus requiring Jess
attention t han a n o ld building.

A n other reason why the m a nage r s h ould know t he buildin g is
to en able him keep his c lient informed a bo ut impendi ng action that
need to be taken so th at his client can pl an ahead for m ai nten ance
including sav ing money for future expen d iture.
In a n ideal situati on, if i t is a new buildin g, th e manager should
have project-ma n aged the construction or, at least, be in a posi tion to
ensure that certa in features or design matters that cou ld m ake
m a nagement easier a re incorporated. Regrettably, m ost often, th e
manager is not invo l ved earl y en ough to be a ble to m ake a n input at t h e
des ign or even constructi on stage. This i s a pi ty for someti mes t he cli ent
d oes n ot really know wh at he wa nts n or does he fully appreci ate wh at
has bee n d esigned by the a rchi tect. The resu l t is that, on ce in a whil e, an
28
"

- --

Preli minaries

other wise beau tiful design has not paid enough atten ti on to econ omy,
for exam ple, corridors could be unnecessarily wide, or some fanciful
but expensive features have been incor porated.
So metim es features are incorporated without regard to the
effect of the poor performance of public utiliti es. For exampl e, an
architect, about th e year 1980, forgot about t h e frequent NEPA power
cuts and inco rporated a mass transit conveyor in the desi g n of a
proposed new o ffice building in l koyi for an o il company. It was the
intervention by an estate surveyor and valuer and thc fact that the cli ent
was the listening type t h at saved the day and the particular feature was
removed . Naturally the architect was not pleased. But the man ager had
removed one area of huge futu re ex penditure and em barrassment.
It i s useful for the manager to be a ppointed if not at the
commencement of construct ion, at least six months before com pl etion
of con stru ction . He can then have a caretaker or e ngineer on si te m onths
before completion and hand over. The engineer can then co-operate
with the arch itect and the contractor to ensure that finishes meet with
th e provisi o ns in the drawings. At that stage any last minute chan ges
that wou ld facil i tate management can be mad e. For instance, most
generators come with very small diesel tank s. Th e manager sh oul d
persuad e his cl i ent to in stall a larger tank, i n the l arger bu ildings from
fi ve to thirty thousand li tres of diesel .. At t h i s stage the m anager should
ensure that other necessary features are attended to including:

Office accommodation for the site staff

I 1!1i o; o fH..: n omitted in architectural draw i ngs. I n a l arge complex there
, 1ild "''' o nl v b(.! a resident eng in eer or caretaker bu t a l so an assi stan t
11 111 1 ll!.,lllltl.it n'i electrical , m echan i ca l , air-cond i ti oning a

29

plumber, swimming pool attendant, cleaners, gardeners, security
guards, a typist, a store-keeper, etc. There has to be a place in th e
complex easily accessible to tenants, as opposed the manager's office
which could be several ki l ometers away, f rom where a l l the staff are
coordinated, where reports are lodged, where payments are made. [t
shou ld be a place wit h telephone, i ntercom, a store and a workshop.
Where th is was not provided for i n t he d rawings part of the garden or
car park may be carved out. Otherwise a maintenance office may be
crammed into the generator engine room. Otherwise it may be found
that part of the expensive lettable Space has to be converted to a
maintenance office.
The store would be for bulk-purchased items like electric
bulbs, fluorescent tubes, spares for the air-condi tioning and the
generator. Bulk purchase helps save service charge money but pilfering
must be checked.

Living accommodation

For large complexes, especially residential, living accommodation
may be provided for the engineer or caretaker on site and this would be
advantageous for quick action. Also a room or two would be an
advantage for the electricians who wou ld need to work shifts.

Electricity meters

NEPA usually feeds large complexes that draw power of over 1000
amps through one Maximum Demand (MD) meter. That raises the
problem of how to collect the correct charge from each tenant since
NEPA usually does not have enough meters to install for each flat i n a
30
-
----- I

Preliminaries

block of flats or eac h floor in an office block. The soluti o n is for the
client to install a check meter for each flat or each office floor. And once
a month when the bill comes the m anager apportions pro rata according
to the read ing on each check meter.
If n o check meters are installed the manager may co llect by the
number of li ght points in each flat or office. But obviously this method
is faulty. How do the number of sockets d etermine a particular tenant's
consumption? What of the tenant wh o has hi s ai r-conditioners on all
day and all nigh t as agai nst the one who hates air-cond itionin g, or who
has traveled? What of th e light industry in one corner of one of the
offices as aga inst a sma ll office that just uses some li ght points and no
air-conditionin g? Some managers base the charge on the area occupied.
This also cannot be accurate. Check meters m ake it easier to calcul ate
the consumpti on of each tenan t, and, if isol ators are installed a rapid
d isconnecti on of suppl y to any d efaulter is made possible.

Taking over on completion of construction

The m anger's and his en gineer's presen ce at hand-over wi ll enable him
ensure that the contractor has completed necessary fi nishing works
otherwise tenants could embarrass him with lists of works yet to be
carried out. They will be there when all the serv ices are tested and th e
certificate of completion issued. At this tim e when he is not beset with
tenants and their problems he will familiari ze himself with the buildin g.
That know ledge of the buildin g will be useful at the end of th e defects
liability period, usually six months, for his client and arch itect will rely
on his and his engineer's in put prior to issu i ng a certificate of final
completion . It is the engineer or caretaker who is there on a day-to-day

31

basis and will therefore be better placed to note d own in detail pro bl ems
that the contractor will need to take care of before the architect issues
him with the final discharge certificate.

Taking over from another manager

Where h e i s taking over an occupied and managed property it i s
assumed that, as a professional, he has ensured that the termin ation of
the agreement of the ex isting manager was done properly with th e
, appropri ate notice of termination served on him. Unfortunately, some
managers do not care for such niceties and gl eefu ll y move in. But su c h
managers must know that if they encourage cli ents to terminate other
agents' agreements improperly, they could suffer the same fate in
future.
The manager woul d have contacted the current managing
agent informing him of his appoi ntment and asking if he has any
object ion to the chan ge. There cou ld be an objection wh ere there i s a
dispute with the property owner. He will ask the former manager for a
schedule of tenants and leases or tenancies, deta ils of payments and
debts including s'ervice charge. The ou tgoing manager may a lso give
h im information on the peculiar ities of the property. But if the take-over
is u nfair the new m anager will not get the co-operation of the ou tgoing
manager and may have problems from the beginning. In a proper h and -
over the new manager will have enough tim e to line up his staffing.
Where necessary he will retai n some of the old staff for continuity but
may have to move staff from his existing staff pool. That way he w ill be
able to break any subsisting loyal ty to the old manager especially where
the takeover was n ot amicab le. At take-over, at wh i ch his representative
an d the old agent's will be present, h e will take detailed notes of th e
32

Prelimina ries
current condition of the property noting down anything that requires
attention.
Where there was no agent managing, the client will have to
hand over the bu i !ding plans, a schedule of existing tenancies or leases,
details of vacant units, insurance cover including the name of the
insurance company and premium, debts, liability for rates, electricity
charges, staffing, including his relatives who may constitute a clog in
operations and who the manager w ill have to persuade him to rem ove.
The manager and the client will agree on procequre, which of the
existing staff to lay off, wh ich contractor he can lay off i f not found
satisfactory, frequency of accounting, the extent of the manager's
authority to repair, the extent of his authority to negotiate tenancies and
leases includin g renewals without reference to his client, etc.
He will now prepare his records, obtain copies of existin g
tenancies, open separate files for rates, electricity, staff, insu ra nce,
major installation s like lifts and air-conditioning. As he lets the units he
will o pen a separate file for each letting.

Determining lettable space

The manager should ascertain exactly what he is letting. Sometimes
what is on the arch itectural drawing does not agree with what has been
built. The contractor may have increased or decreased the
measurements, perhaps accidentally or because he was unable to read
the drawing and was not closely superv ised by the architect, assuming
one was engaged.1t could also have been a case of the property owner
nit ing the measurements slightly at construction stage to suit his
\\hun The m anager must realize that the reduction or increment of the
lhll
11 1
nnu1 the bu ilding by a few centimeters can amount to a lot of
33

space overall. It is therefore necessary for th e manager to actually
m easure the space, especially where offices or commercial buildings
are concerned, to ascertain the exact letta ble space. If that is done he
will be saved the embarrassment of being called back, perhaps years
after, as has happened to one of the major firms of estate surveyors and
valu ers when the CDBL insisted, years after taking the lease of a
banking space in a building on Campbell Street, on re-measuring the
space. The space was found to be less tha n had been quoted in the initial
agreement. CDBL demanded a nd got a su bsta ntial refund from the
landlords.
Modern office construction is open plan a nd net lettab le space
is obtained by measuring the internal dimensions, outside wall to
outside wa ll, less toilets, lift l obbies, stairs, corr idors, and thicknesses
of solid internal walls, if any. Qu ite often, where wh ol e floors are taken
by singl e ten ants, such tenants carpet lift lobbies and position guards
and receptionists there. There i s a valid case for rents to be charged for
th e exclusive use of such l obbies.
Furnished l ettings are not common. But where lettings are
furnish ed the manager will take an inventory of conten ts and draw up a
sched ul e of cond ition and agree these w ith each tenant at the beginning
a nd at th e en d of the tenancy. Furnished l ettings are few perhaps
because investors do not consid er that the extra rents to be earned
justifY the cost offurnishing. Perhaps th ey are wrong. There are peopl e
on the l ookout for such accommodation as good a ltern atives to hotels.

Viewing by prospective tenants

At this stage the manager should be sh owing the property to
prospective tena11ts. A note of warning should be sounded here. ft is
34

_ ___ _--.::l __ _ - -
-- - - - -- - - -- - - - - - _ _ _ .
0
t Y m a
1
out force
f
u
It
y, som

Preliminaries
to a respective tenant to inspect the v acant
risky to hand over keys p b omebody to open the
There should always e s
property and return. . d lock up after. One manager has


To let'

The manager advertises the property by hangi ng a board on it. A 'To
place for the
.
teres
t d party to vtew an

, entleman' to inspect a

Let' board is very effective compared with newspaper ad verts which are

m e .
. h dmg over keys to a g

for years been regrettmg an . . . ' d look ing man with several
d t rn A dtstmgmst1e .
vacant property an re .u . d d up looking for a house m
t hts name ha turne
doctorate degrees . ld ve They were currently
h h d his famtly cou mo
A papa into whtc e an d tl1atmoney was no problem and he

expens i ve. But the appointor m ight be prepared to foot th e newspaper
advert bil l. But thi s is rare. C l ients would often ins ist t hat the agent pays
for the advert. After all, he will be well paid and it is in his i nterest that
the p roperty be let soon . Tf the cli en t dec id es to appoi nt another agent to
paying heav
1

1 ate\ He assure

. d manager handed over the
speed up l etting, the manager w il l co-operate w i th that agent to have a
cou ld even pay in dollars. The very tmpresse d
. l ke s to be returned that same ay.
keys on trust expectmg t 1e y k h k ys had not been returned.
B the close of wor t e e
y th had still not been returned. The
By the close of work the next day ey h d ved in with his whole
d t that the man a mo
manager soon fou n ou b t th's was enraged and insisted
fam ily. The c
1
.
n
t hen he heard a ou t ,
Tile manager organized a

suitable board designed and h ung. Tf th e l andlord al ready has his own
board there the agent should persuade him to remove it otherwise wh i ch
ever prospective tenant he takes there w i ll prefer to go to the landlord
and get a better deal'.

Staff recruitment

te , w

ve the trespasser.

that the manager must remo fh' ney throwing the intruders
., B ' nd spent a lot o t s mo
gang of Area oys a . . 'II I After all even a trespasser had
ethmg qmte 1 ega . '
d'dnotknowofthoserights.
so
.ghts But perhaps the trespasser 1
men

Omitted features

. . anacrer will also be supervising the ill:clusion of
During thts penod them t:> d d the appointor are necessary
any further features which heaperfsuha e rty Such may include a
1 I ttabthty o t e prope .
to enhance the va ue or e . h rt increasing the height of
tennts or squas cou ,
chi \dren's play area, a . h t for security. A borehole to
the boundary wall and strengthenmg t ega e
supplement the water supply could be sunk.

35

D uring th i s period the ma nager sh ould d raw up a l ist of staff requ i red
and recruit them with his client being informed . Some c lients cou ld not
be bothered about thi s but others wi ll wa nt to know. Staff should be
i ntroduced grad ually for it is counter-productive to assemble the staff in
one go. The manager must remember that somebody, his reluctant
cl ient, wi ll be paying their sa l ari es and meeting other expenses until the
property is filled with tenants who pay service charge. As tenants move
in gradually the client will still have to be paying the pro rata bills for the
unoccupied space or units.
The manager would have determined what calibre of engi neer
or caretaker or technician wou ld man the property. The more
sophisticated and the larger the bu ilding is, the more senior and
exper ienced the site staff shou ld be. If he has a large management

Preliminaries

property portfolio he will move existing experienced staff from
C hapter 5

existing managed properties to the new one and replace them with new
ones. [tis not advisable to employ all the staff new as they would not
understand the manager's procedures and it is therefore necessary to
mix old staff with new. If, however, it is his first management property,
all he can do is to attract good staff from other firms.
The property should not be overstaffed since the service charge
account will be overloaded . Also the manager must ensure that a
suitable engin eer/caretaker is engaged. This topic is dealt with in more
detail under Service Charge'.

37

...

TAKING CHARGE

Th e duties of a managing agent depend ent i rely on the terms agreed
with hi s client. They wou ld in cl ud e co llection of re nt and atten ti on to
recu rrin g i ssues like in surance, rates, and so on a nd dea l i ng w ith
main ten ance and ensuring that the tenants ab i de by the terms of thei r
tena ncy agreement.
It is not u nintentiona l that the first clause in t he management
agreement often deals w i t h taking charge, managing and controlling
an d generally dealing with all such m atters and things that are for the
good ma nagem ent of the property as the appointo r could do himself.

The manager's office

The manager cannot effectively take ch arge of a nother person 's
pro perty if h is own office is not pro perl y orga nized! For a manager with
a small portfolio the problem i s not of the m agnitude of that of a
m anager with a large portfolio. [ n a small office with very few
managem ent properties the manager cou ld probably do the managing
a lone w ith a typist and, perhaps, a messen ger. But with increase in
portfolio he will recruit staff and expand his organizati on to be able to
cope w ith the properties he h as or is a bout to take on.
A manager taking on more propert'i es w ithout at the same time
recruiting suitably q ualified staff i s rec i pe for fai lu re. The 'I can do

Takig Charge
everythin g by myself atti tude often l ead" to a situation where rents are
not collected wh en due, or, if collected, the manager may .be so bsy
that he does n ot remit the rent to his client w ithin the pern\ltted pen.od
and not o nly are the properties negl ected but the manager runs the nsk

oflosingthem. .
The preference of professio nals to run their own sol e practices
may be a result of their not being ab le to find suitable prsons to take
into partnership. On the oth er hand the manager may stmply want to
keep one hundred per cent control which is a con mon ph nomenon.
The result i s that each proprietor has to rely heav ily on paid staff for
those th in gs which he cannot do personally. Regrettably, these days,
many staff do not m erit th e salaries they are paid. They often go out
ostensibly on inspection or to see a client or tenant but end up elsewhere "'
doing their own private things. The manager, there ore, may not get the
best out of them and this limits the size of portfolto he may be able to

handle effectively. .
When the sole practitioner goes on leave or is sick there will be .
nobody in the office to sign cheques and take vital decisons. Indeed e
may not even be able to have a vacation for years. Ifhe.dtes the firm wtll
most likely fizzle out w ith dire consequences for chents and tenants
whose money or properties he m ay have been holding. For the purpose
of sharin g responsibility it seems that there should ideally.e anot er
ers with the authority to take vital decisions, sign
partner or par
tn
. .
important documents tha, bind the practice mcludmg cheques. h t
way one partner may go on vacation with full.onfid nce that thet e IS
snm ubody in the office ablto take vital deciswns, stgn cheques and
,l m:ra lly look after the firm's affairs. The sole practitioner must at least
"'al' ..,pccia l arrangement for chequ e signing in case the unexpected


On the other h a nd, partnersh i ps have not fared so well and
many have b roken up. The reasons for such break-u p are m any and
varied . On e partner alleges that the other is all the time engaged i n his
own private matters or diverting jo bs elsewhere or does not contribute
anyth ing to the partnership, does not bring in jobs. One feels the other
spends his t ime playi ng politics at the finn's expe nse wh ile he himself is
work ing himself to pi eces. I n some cases w i ves are allowed to i ntrude
into the affairs of th e partnership. In some other cases a partner's child
has qual ified as an estate su rveyor an d valuer and the partner wants to
have his own practice which his own child can in herit. It is a pity that
wh ile we hear so much about mergers for better competit i veness and
productivity abroad the sma ll fi rm s here are b reaking up because of
personality probl ems. With a partner, the manager w ill be sure that
there i s som ebody e l se shar ing responsibility, risks, introducing his
own ideas and bringing in his circle of friends, con tacts and
acquai ntances.
Some m anagers open m ore branch offices t han th ey can
su perv i se. Quite often a Lagos practice is so desperate to have an office
in Abuja, Port Harcourt or Warr i where it has been told t:,at th ere is a lot
business, that the m anager, with inadequate staff a nd full consideration
of the logistics, opens an office. He puts an inexperienced staff as
branch manager and gives him his stam p to use on va luation and other
reports. The chap then goes ahead to commit him. Since that branch
manager had no proper training and probably no morals he goes ahead
to make money by hook or by crook. He works for himself rather than
for h i s em ployer who keeps send i ng salaries from head office each
month. When he is ready he leaves to start his own practice. Within a
few months, as if by magic, he is rol ling in money. He no l onger needs
't t d dead or has simply traveled.

"'PI'l'll"lllld he t s tncapaci a e , ,
39
to hide the mon eyel had made in another person 's office!

40

N 1
h d
e mo
tm. . .n


Taking Charge
The foreooing is simply to il\.:strate the need for a properly
oroanized office :nd is not a lecture on partnership. A mall, pro_perly
o . d fil111 be it a one-man busi ness or a part nership can eastly be
orgamze ,
expanded as the portfolio grows.
On the issue of staffing, the manager must be aware that

. . d I . onomy offers a lot of opportunities and good
oena a eve opmg ec ,
o ' k ving ten per
professional s will not wait around for too long to eep recel ,
. t at the beoinning of each year or one months salary.
cent mcremen o .
bonus at the end of each year. If he is not careful his o ce wdl become a
staging post where staff come and gather exper ene needed for

. . t ll'p of The Nigerian lnstttutwn of Estate
electiOn to assoc1a es l .
Surveyors
and
Valuers before setting up their own practlc.es. The
h ld endeavour to tie down his best staff wtt goo
manager s ou . h
condi;ions of service, generous bonus and commtsswn sc erne or

productive staff. .

property trends in the loca lity. He will not allow his own personal likes
and disl ikes to colour h i s judgment. For instance, he may be a member
of a fringe religion that frowns at profit making and may not like the
idea of 'exploitation'. But he is in a capitalist service industry and
capital i sm is exploitation, in this case, exploitation of the potentials of
the property. The investor donot set ou t to exploit the tenant or the
purchaser even though that may be the end product of exploiting the
potentials of the property. This is just the same as the man who bought
thousands of shares ofNigerian Breweries and is earning the wonderful
dividends which shareholders are currently earning. But to make su ch
profit that enables them declare such huge dividends, the Brewery must
expl oit the full potentials of its products and will surely deny exploiting
beer and malt drinkers.
If a tenant was pay i ng a rent of two mi Ilion na i ra per annum on
an expiring two year tenancy on a flat in Victoria Island a nd similar flats
are now letting at three million naira per annum the manager must try to
achieve three mill i on naira per annum on renewal even though the

Of course
h .

t er 1s
. to a properly oroamzed office than

1e o . .

tenant will fight that amount of increctse. The agent and th e client will in
staffing. There is need for telephones, computerization, proVlS!On for

transport, good working environment, etc.

Getting the best deal

, Ihe manager is required to take the place of the appointe, handle and
the end give some concession in recognition of the sitting tenant factor.
He must disregard the tenant's argument about the unfairness of a fifty
per cent increment and insist on the market rent for that is what his
client would do. Of course the c lient has a right to step in and grant a
concession. But how many ever do? The client may rather insist that the
three million naira is too low! The moment a manager is unable to insist
. .
look nftcr the property as lf tt be
1
ongs to
h In lookmg after the
on anq obtain the market worth ofthe property because of ineptitude or
piopL tty h e will always be aware that a person who investhis m ney l
. . I . into the transportatiOn or tmport-

plillill' up a blllldmgrathert 1an gomg .
. t k nd shares went mto property
' "'Pnll hll sim:ss or deahng m soc s a .
u,. hl IH:Ii :vcs he will make more money from the property nd IS
h
1
f t or pnce to

IIIIIIn pl'l Ihi.! best whether in form o servtce, ren .
d 1111111 ih sa l!.!. Thi! manager must therefore be abreast Wlth

,p
for othreasons not acceptable to his client, that is when he stops
representing the interest of the appointor and should give up the
management of the property or wait to be relieved of that assignment.
Property management is not charity and the manager must be prepared
to step on a few toe. Getting the best from the appointor goes further
42

Taking Charge

than collecting good rents. It includes negotiating favourabl e dea ls
from suppliers, contractors, negotiating rates rebates, ensu ring
electricity bills are fair, protecting the client from exploitation and
generally taking actions that enhance the value or desirability of the
property.

Enhancing the value ofthe property

The manager must a l ways be on the lookout for measures to improve
the qualit y and th erefore marketability of th e property including the
need to adv ise his cli ent on modernization, conversi on, change of use
and so on . Ifthe construction of a swimming pool or a squash court w ill
lead to increase in rent he shou ld advise his client. The creation of a
ch ildren's play area, improvement in gardening wi ll also enhance the
value of the property. It i s important, at l east, that he maintain the val u e
of the propetty by ensur in g that the activities of the tenants d o not
detract from the va lue of the propetty. Furthermore, in applying the
service charge 1o prov id e serv ices for tenants, he must ensure th at s uch
services do n ot prejud ice the interest of hi s client.
To all intents and purposes the manager is the landlord, taking
decisions, making rules, enforcin g covenants, entering into contracts
except that he cannot sign tenancy agreements, subleases and any other
docum ents that transfer beneficial right to the property unless he has an
appropri ate power of attorney or has, in other legal ways, been
authorized to do so.

The client

Property management can be seen as a sort of partnership between
client and agent, the agent working to maximize th e client's profit and
keeping the property in a condition to earn more profit for as long as

43
Properly Management Practice in Nigeria

possible and at the e nd the client w ill be happy to pay his fee. It i s an
association based o n tru st. Unfortunatel y, once in a while, that trust is
breached by the manager who cou l d - be up to some tricks, or to be more
blunt, is a thi ef and could take action that could undermine hi s cl ient's
i nterest in his bid for qnick m o ney. On the client's part he, som etimes,
for reasons best known to himself, will not take the manager's expert
opini on. Some clien ts do n ot care what happens to th e agent and the
property once they h ave co llected th eir rent in advance. Entreaties by
the manager on the issue of l andlord's re pairs or other obligati on s fall
on deaf ears. But the manager must continue gi v in g ad v ice, i n writing,
preferabl y. He must keep his cli ent ful ly aware of what is happening in
his property and must warn him of the n ecessity for certain future
expenditure, and indeed pl an ahead w ith him for that purpose.
The manager must continu e to work und er constant pressure
from hi s client. The pressure could be either on the matter of earl y rent
collecti on, on the state of the property or o n the behaviour of t he
tenants. The manager must understand his client, his temperament, his
likes and dislikes, especial ly where it has to do w ith his rent or
expend iture from..i t. He would, from the beginni ng be aware that the
average c li ent finds it difficult to bring out money o nce he has collected
i t. But wit h good rapport and constant communication th e manager can
get the client to do what h e wants for the good of the pro perty.
The m anager must also take into accou n t his c li ent's other
disabilities, for instance, h e may be an ambassador several thousand
kilomete rs away or a retired m an li v ing in the village, or a widow whose
main interest is the money com ing from the property for feeding the
childre, or a property company out to make as much profit as possib le
for the shareholders. The client may even die but the manage r must
continue managing and preserving the property until there is a Letter of
Administration and executors are appointed. Even more important in
the cases above is the need for the m anager to maintain a high standard
of accountability.

44

Taking Charge

On the balance, the average cl ient is knowledgeable and that is
why he has engaged the services of an agent. He can foll ow closely
what the agent is doing and will take advice and co-operate with the
agent to m utu al benefit. He w ill act on expert advice and wi ll take
prompt action to im plement them.

The tenant

Pressure a l so comes from the tenant. But managers shou ld be aware
that the argumentat i ve tenant is on l y out to get the value of the rent he
has pai d. Whi le he i s there to ensure that tenants are abi ding by the
terms of the agreements a nd w i II insist on certain standards the manager
must not see tenants as enemies. He should be tirm but at the same time
recognize the need for mutual respect. Tenants wil l criti cize shoddy
performance just l ike the cl ient. No tenant wants to throw away his
money a nd wiIItherefore demand full accou n t of serv ice charge money. .
Managershould see the emergence of Tenants' Assoc iati ons
as a n inevitabl e development. Indeed, their existence could ass ist in
reducing the chances of bickering over serv ice charge expenditure or
othe r matters. If the tenants, or a selected com mittee of tenants, co-
operate with the manager and meet often with him, perhaps on a
monthly basis, controversies w ill be nipped in the bud since the tenants
will be aware of what the manager has been doing. The manager who
shuns his tenants will be repaid with non-co-operat i on, especial l y when
it is time to collect another rent or service charge. A ll the same the
manager must be able to identify bad tenants and advise the client to
initiate moves to remove them at the earliest time practicable. He will
take prompt action against defaulters for it is usually the bad tenarits
that cause the most problems and influence other tenants.
45
Pmperty Management Practice in Nigeria

The manager must always be aware that a tenant may own
property which he may need an agent for and his performance may be a
recommendation for appointment or may put this potential client not
just off him but off all agents. Even if the tenant does not own property
now he may in future or may have a friend who owns property and may
be looking for a manager.

The expert

The manager, having been through University or College of
Technology to become an estate surveyor or valuer now has this
constant reservoir of knowledge in the background from which
information flows almost unconsciously while the manager is
performing even the most simple everyday routine management jobs.It
is a n advantage he has over other people who decide to be property
managers. He has at his finge1tips valuable knowledge of law,
economics, building construction, statistics and so on. He is often said
to be a jack of all trade but some knowledge of so many subjects does
not make him master of none. He is a master of property. In being a
master of property the job of assuming the role of his client becomes
easy since he has the major advantage over his client ofbeing an expert.
I Ie must at all times use his qualification and training for the benefit of
the appointor. He should give unequivocal advice to his client.
As an expert he is aware that property management often
seems a thankless job. The client demands the best at all times while the t
ena nts are also looking for the best from their own point of view. A pat
on the back for a job well done does not come often. But, once in a
whi l e, he finds out that what he is doing is appreciated by virtue of
unot her instruction on the recommendations of one of his cl ients. It
r s
r
ee '
;:e
t Th

Taking Charge .
lient with whom he has been
h
avm
g a runnmc
o
r
could even be from a c p. erty manacrement requires
d I ed remittance ofrent. top o


tenants have used unqualified techn ic ians. Misuse by third parties
might also ground the lifts. The standby generator may be grounded by
battle over e ay
d lity the manage
.. day never ends for he
bad diesel from the suppliers.
long hours of work an 'm rea ' . a to be told that his
. tl early hours of the mm n me
could be woken up m 1e II th l"fts have broken down and
. , ty on fire or that a e I

Background that limits expertise
clients proper I S

' . b t t1r'ghts of stairs or that

e to c twen '
bl ltm Y
some infirm tenant IS una h H I s to d raa himself out of bed
b k 'ntoas op e1a e
some robbers have ren I t articular time even if it i s only
and take wh atever action he can at th. pI do about the lifts till
to tell the caller that there is nothmg 1e cak twenty-four hours.
. h j" ft vice people do not WOI
morn i ng smce t e I seJ I t that he is al ways right.
The manager must concede tot 1e c ten .
. . d there is a limit to which the manager can drsa ree
It rs hts property an . d. . to the client to accept rt or
. . H ill cr ive his advrce an It IS up
U nfortunately, some managers have problems to do with their own
backgrounds. How does a manager who lives in a slum where heaps of
refuse are his neighbours, where there is an open gutter filled with
refuse and stagnant water, where he shares his food with rats and
several varieties of cockroaches, and where there is no garden,
appreciate what the standard that som e of the tenants insist on in the
properties they occupy i n Ikoyi and Vi ctoria Island are? But with time
w rth h rm . e w e
th t the manger
fi Is that he can no longer
and exposure he wi ll Jearn. And that is why it is advisa ble that before a
not.Ifthings get to the stage a . d . I an seek to be relieved of
accept the way his client treats hts a vrce 1e c

the appointment.

Thil d parties

t i s often complt
.
cate
d b
y
tl
1
.
Ir
d parties
.
That the

Property managemen t b the fault of the manager but
lifts i n a building do .not work;ay li ts may also be grounded by
the fau lt of the servtce comp b nded by other actions
NEPA The hfts may e grou
power surges from . . . I'ft doors open because they are
of third parties such as forcmg closlmg I h l'tft call buttons or simply

manager begins to parade the establish m ents with proposals he should
have gained_valuable experience working under one of the established.
firms and have an office properly equipped to deal w ith the properties
wh ose management he is pursuing. Some properties are valued in
bi llions of naira and are n ot suita ble gu inea-pi gs for fresh 'managers' to
practice on.

The manager as a shield

The manager is also there as a shield for the land l ord, a buffer between
not patient enoug
11
to wa
t They a so punc

t' n of third parties

h im and the tenant or even outsiders. Often, the landlord insists on
Th also steal parts. e ac ro
lean on them. ey
1
lift operator for a lift that

outrageous rents and, even though the manager may not agree, he has to
try to achieve what his cl i ent wants un less h is disagreement is so

.

somet rme

c th manager to emp oy a
s lOrces e

. . 'ze damage from

perated to m m nn I
should normally be p s en.ger .o kin it may be because the
misuse. If the air-condrttonmg IS not wor g
47
extreme that he decides to gi ve up the management a rare occurrence.
Usual ly the manager obeys his cli ent but then he gets accused of being a

48

Taking Charge

'shylock'. They say he is on l y increasing t h e rent and exploiting the
tenants because his fee which is based on the rent w ill be higher! But
that is the life of an agent.
Very often the landl ord loses interest in the property
immedi ately after the rents are remitted to him. The manager's
o utstanding request for money to overhaul or replace vital com ponents
i n.thc lifts or air-conditioning is i gnored. But the manager will continue
taking the knocks for the grounded lifts or broken down generator. In
the meantime he will continue appealin g to his client to do the needful.
If it gets to the stage where he can no longer cope or his reputation is
sinking with the property he may seek to be relieved of the
management. But how often does that happen? After all, the property
may be the manager's mainstay and he may choose to continue earni ng
the very vital fee while absorbing t he knocks.

49
Chapter 6

LETTING AND RENT

The serv i ces of a property manager are in two major areas the agency
serv ice involving the initial letting of the property, and the continuing
management services involv i ng the maintenance of the property as well
as collecting subsequent rent. Separation of these two functions
happens when the investor, having borrowed heavil y to put up the
buildi ng, wants a quick letting and does not believe that one agent will
handle it fast enough. He then appoints two or more agents to handle the
letting. But since-somebody has got to manage the property even while
letting is going on he appo ints one of the agents to manage the property.
Al l the a-gents appointed wi ll have to work toget her within certain
gu i delines, the amount of rent, the amount of service charge, etc. What
should be in t he offer letters must have been agreed with the client so
that tenants are made similar offers.
One of the reasons a property owner appoints an agent to
manage his property is that he believes the agent can collect higher rents
than he himself can. This is not to suggest that property owners cannot
collect good rents. Many of them are as astute in that direction as
professiona l property managers. But most property owners need the
professiona ls to re l ieve them of that duty i n addition to other onerous
duties con nected with property management. Regrettab l y, many clients
are stil l not properl y educated as to the duties of professional property
managers and the extent of their serv i ces. This can be illustrated by the
so rt of letters agen ts often receive. /\n examp le i s, 'I have a block of
so

Letting And Rent

flats in Jjeshated o whi ch I want you to take over and manage for me. For
over three years the tenants h ave not been pay i ng proper rents and I am
tired of them. I want you to throw them out and get me a company who
can pay good rents three years in advance.' From this letter i t is obvi ous
that all this property owner wants is a way to remove difficult tenants
and collect the hi ghest rents and no more.
Obtaining vacant possession in su ch difficult cases is a
solici tor's job. B u t the above property owner is aware that qu acks are
everywhere offerin g ren t collection serv ices and obtain i n g vacant
possessi on i n record time throu gh illegal m eans, including removing
the roof, introduc i ng dan gerous animals or l epe rs into the premises,
p lay in g on tenants' superstition and so on. Were the agent to accept the
brief, and m any would, and succeed in getting rid of the tenants, the
collection of the first rents could be the end of his assignm ent as this
particular client may not be interested in other aspects of property
managemen t. This emphasizes the need for early formalisation of
management agreements.

Dealing with ad-hoc letting instructions

Quite often an estate su rveyor and valuer overlooks an opportunity that
exists where a client gi ves h i m an ad-hoc instruction to let his property.
Usually, the agent proceeds with the letting, collection of th e rent and
deduction of the agreed fee and forgets the property u nti l he is called
again to renew the tenancy two or three years l ater. Sometimes th e
proper ty owner never ca lls again and instructs another agent. Or ifthere
is a dispute with the tenant the property owner remem bers who foun d
the ten ant and seeks to put the blam e on him for bringing a bad ten ant to
h is proper ty. The agent shou ld n ot accept liabil ity. How could he know
51
Properly MCinagement Practice in Nigeria

what type of tenant that anxious house seeker woul d tu rn out to be?
A lternatively, th e tenan t vacates at the expiration of the term l eaving the
property vandal ized. Again t he property owner tries to bl ame the agent.
Agai n the agen t is not li ab le but there was a case where a fi rm accepted
to pay for su ch damage because it d id not wan t to lose another valuabl e
proper ty i t was han dIi ng for the same client.
Managers should fo l low up ad-hoc letting instruct ions by
convinci n g the cl ients to appoint them properly as managers. Even if
concession on fee has to be made, managing the property is to the
benefi t of th e estate surveyor an d valuer. Firstl y, h e can ensu re that h e
wil l be t he one to renew the tenancy or lease and earn the fee on that.
Second ly, if i t is a large property in m u l ti ple occu pation where h e
organizes the serv ices, he wi l l earn additiona l fee from th e serv ice
charge. As t he person m anagi ng the property h e will be aware of what
the tenan t is doing and will mi nim ize the i ncidence of vandalisation .
Property m anagers should do more i n educati ng their cl ients and
property owners on t he need for them to entrust thei r properties to estate
s u rveyors and val uers for managem ent.

Advising the client on the rent

Rent is paymen t for the use of property. To the tenant it i s often seen as
that payment he reluctantly makes to his 'shylock' land l ord for the use
of h is decrepit' house or office space. To the landlord i t could be h is
on l y m eans of livel ihood, a return for wise spending in years gone by, a
n.:tur n o n invest ment and t herefore th e h igher the better. A m a n who
borrows a certa i n su m of money repayabl e over a certain n u mber of
years at a rate of in terest to put u p abu ild i ng will obv i ously want a rent
Ihat covers his capi ta l and interest repayments p l us som e profit if h e
52

Letting And Rent

can. In the nineteen-seventies and nineteen-eighties many buildings
were put up by investors especially in Victoria Island, by taking leases
sometimes as short as ten years on bare land, borrowing money arid
building and letting. In some instances such borrowing was repaid by
_ _ collecting rent five years in advance and the rent for the remaining five
--;, as became pro1it. That was the time of contractor finance and many
buildings in Victoria Island were put up like that on leases mostly not
exceeding twenty-five years.
These days contractor finance is getting rare partly because of
high interest rates. Rents are now collected two or three years in
advance though some banks and blue chip companies favour l ong
leases for their branch offices with many years rent paid in advance.
The economy has great bearing on rents. In a buoyant
economy, the agent can ask and get virtually whatever the client wants.
Our economy was buoyant in the nineteen-seventies and landlords
made lohds of money, collecting rents for up to five years,in advance.
But from about the late-eighties depression set in, with properties
remaining vacant for ages, contractor-fmanciers disappearing, and
banks closing their lending shops and embarking on foreclosures.
Newspapers were filled with adverts on properties for sale or to let. The
situation did not change immediately democratic governance began in
1999. But from the year 2000 vacant properties were snapped up, the
tempo of buying and selling increased. Demand for residential and
office accommodation in preferred areas could no longer be met. Very
soon there were hardly vacant properties in good areas. Rents rose
sharply and are still rising. But in the midst of such rental explosion
there are still pockets of depressed or disadvantaged areas. Examples
are Lagos Island where some prestige properties have had v cancies for
years. The reason is poor parking facilities, the menace of miscreants
53

called 'Area Boys who harass other citizens, and street trading. Even
the prestigious United Bank for Africa building on the Marina took a
long time and generous rental concession to let. Offices in Jjora are
empty and decay ing because of bad access roads, very unsan itary
surround ings, flooding and a large population of Area Boys'.
One would have expected that with the high demand there
would be a lot of building going on. But that is not happening. Those
building are government agencies, property developers who are
build i ng main l y for sale, large companies and banks buildi ng their head
offices or branches. Very high interest rates and high cost of bui lding
materials have virtually ruled out individuals from build i ng. Many of
those that are building are doing so from their personal sources. Indeed,
banks hardly finance housing projects except for the categories
mentioned above or where co!laterals are fool proof.
With the above scenario it is no wonder that rents are currently
so high. And if an individual has surmounted all the obstacles
mentioned above and put up a building for investment it shou ld be no
surprise that he can ask for the highest possible rent.
Some tenants quarrel with their landlords for such ridiculous
reasons that include the one about the building having been bought or
erected as far back as 1962 for as low as three thousand pounds and the
land lord shou ld by now have recovered his investment many times
over. And he should not be asking for such exorbitant rent.
The landlord's answer would be the same as if he had used that
money to buy shares in the breweries or the oil companies as far back as
1962. It was an investment and he is only reaping the reward. And the
rental value of his house is what another willing and able tenant wou ld
pay for it, what the willing and able tenant is paying for similar
property, what rent he would achieve if the sitting tenant moves out.
54

Letting And Rent

The incoming tenant wants accommodation that meets his
requirements whether it was built in 1962 or 2003 and will pay what the
market dictates, what others are willing to pay.
The manager must know that, quite often, his client knows as
much as he does about the economic situation and what the rent of his
property should be. [tis his money and he naturally wants to get the best
out ofhis investment. With the manager's knowledge of the market and
study of recent lettings he advises his client, preferably in writing, what
rent to expect and how many years in advance. Here it needs to be
emphasized that a good manager must have good records and that
includes correspondence that can be referred to in future. Verbal
discussions and agreements can be forgotten, sometimes conveniently,
or denied in future ifthere is disagreement. Since he wants the best for
his client he tells him what the market says and advises an asking rent
which could be higher than the market rent b cause he knows that there
will be haggling and a lower rent may be achieved. It has to be
mentioned though that some landlords and their agents just decide on a
rent and stick to it, no haggling. Often they stick to the rent until they
find somebody to pay it or until they are satisfied nobody will pay it
before reducing it.

Factors that may affect rent or occupancy

Why is it that two identical properties, sometimes standing side by side,
may be commanding different rents and occupancy rates? Some of the
factors that affect rent include:-

Location
Although this has been mentioned previously, it cannot be over-

55


flogged. A property in Ikoyi will fetch more rent than an identical one in
Victoria Island which itself will fetch more than yet another identical
one in Ikeja. That wonderful property in the ORA at Ibadan will fetch
lower rent than one in ORA Ikeja and so on . It is simply a matter of
location, effectiveness of demand, the existence of the number tenants
who require such a building and who have the ability to pay the sort of
rent demanded.
Even within the same residential area there are narrower
locational reasons why one building will fetch more rent than the other.
One could be standing on a flooded site, or next to a user that the
average tenant wants to avoid. Such user could include a school, a
market, an ight club, an in cinerator, etc.

Quality of finish

A marble-floored house should fetch a higher rent than a cement
screed-floored house offering the same accommodation in a similar
location. A house with aluminium sliding doors and windows ought to
command higher rent than one with louvre windows. A house with
superior locks smooth plaster-work and quality paintwork will be
preferred to one with crooked walls, uneven stairs risers, gloss paint or
no paint-work at all.

Facilities

A property serviced by a generator, or air-conditioning or a swimming
pool and tennis court will command more rent that a similar property
without these.

Building's reputation

Often a property acquires a reputation, say, for good security or good

Letting And Rent

management, etc. It is likely to command higher rents and could be
I 00% occupied nearly all the time while a similar nearby property is
on I y 40% occupied most of the time. Such reputation cou ld be related to
the type of people occupying the building. For example, there is often
the tendency for people to want to live in close proximity with their kith
and kin. One building may be popular with Indians while another may
be popular with the Chinese. Another building may attract chief
exec utives of blue chip companies.

Malfunctioning installations
A bui lding in which, for exampl e; the lifts or the generator do not work
will not command the best rents or attract the best tenants. It may not
attract any tenants at all.

Poor quality of management
Poorly managed buildings also suffer from low rents and l ow
occupancy rates.

Exorbitant rents
This is another reason why a property may suffer low occupancy rates.
On the other hand, some buildings, because they have acquired a
distinctive character, popularity, a reputation for housing the best
people consistently attract rents that may be considered extra-ordinary
whil e similar buildings equally well located attract lower rents. But,
generally, where service charges and rents are too high the tenants will
naturally move to properties with more reasonable overall charges.

Age ofbuilding
Old un-modernised buildings also suffer from low rents and poor

57
Pro pert y Management Practice in Nigeria

occupancy rates.
Rent control
This obviously limits the rent that can be collected from residential
property. In Lagos, the Rent Control and Recovery of Residential
Premises Edict 1997 zoned the state into areas for which it fixed
standard rents, terms for which advance rents may be paid and the
percentage increase in the rent at the expiration of the terms. It set up
tribunals to handle cases brought by tenants and landlords. Very high
rent areas like Tkoyi, Victori a Island, the GRA's are excluded from the
Ed ict. However, where it is supposed to apply, the Edict is currently
largely ignored. There is no serious effort to enforce the provisions. It
comes into force where tenants drag their landlords to the tribunal to
prevent eviction or unacceptable rent increase or where the landlord
wants vacant possession and tries to rely on some sections of the Edict.
Other states have their Edicts and the property manager is
aqvised to be conversant with what obtains in his area of practice.

Other factors that could affect rent include government action
through the planning authority such as driving a major road through a
formerly sedate nei ghbourhood, change of zoning, introduction of an
incompatible user such as a market or a school, change of use of
adjoining property.
If the client agrees with the rent recommended, the manager
proceeds. But the chances are that the client may insist on something
higher. Sometimes he insists on something so high that the agent's 'To
Let' board stays so long on the building that it rots. The client's
insistence may hinge on one of two things; either he spent so much on
putting up the building that he wants a rent that, at least, covers the
interest he pays to the bank sometimes this is not achieved or he is so
sB

Letting And Rent

well off that he does not care how long he takes to get the sort of rent and
the sort of tenant he wants. Sometimes his insistence on a particular
type oftenant causes delay.

Finding tenants or buyers

Some of the ways tenants or purchasers of property can be found are:

Through newspaper advertisements
Very enlightened clients, when convinced that newspaper adverts are
necessary, will bear the cost of advertising in a widely read national
daily. For the time being the Monday Guard ian is the preferred
medium. Preferably the cost should be collected in advance from the
client except where the manager is holding funds on behalf of the client
and has his authority to deduct or where the manager is satisfied that it
would be an embarrassment to a valued client to ask for advance
payment. Sometimes the cl ient will ask the agent to deduct the cost of
advertising from the rent to be collected. That assumes that the agent
has the money for the advert in the first place and that he has a sole
agency or approved joint agency where the two parties are fully briefed
and co-operate. But in this sort of case the manager must know the type
of client he has as otherwise he may, after spending his own money
advertising, find that the client has let the property and he will find it
difficult to recover his money.
The average landlord these days will not pay for advertising.
He insists that the agent pays for advertising if he thinks it is that
necessary si nce it will help him to let the property quickly and collect
his fees. The result is the proliferation of little adverts, some of it hardly
legible, squeezed onto the pages of Monday G uardian. Whether these

59


adverts achieve the purpose is not clear. Cost could be reduced by
taking out omnibus adverts covering several properties and sharing the
cost among several clients. It is easy to pick out from the advert pages
the serious adverts paid for by clients or taken out by property managers
who are financially able to bear the cost especially where they consider
the properties easily sellable or lettable. Such adverts are usually bold
and larger. The majority of adverts are usually 'speculative' where the
advertisers may not really have direct instructions on the properties but
are taking the chance of attracting tenants who can pay their fees while
the clients of the agents with direct instructions pay their managers.
Newspaper adverts are expensive and often do not lead to lettings. In
this era of scarcity of certain types of accommodation they are useful
for t he letting of residential accommodation such as flats. Very often,
however, the units m ay already be taken before the adverts appear.
Adverts in the 'Castles'weekly property bulletin which is popular with
estate surveyors and valuers are quite effective and very much cheaper
than the Monday Guardian.

Bulletins
Handouts giving brief details of the properties are sent to companies,
property companies, firms of estate surveyors and valuers and
individuals on the manager's mailing list.

Writing to selected companies and preparing brochures
Letters are sent to selected companies or organizations some of whom
may have made enquiries in the past and whose names should have
been noted down. Colourful brochures may be prepared but this,
because of the high cost, may be used where the manager is sure that
either the client is bearing the cost or the property is of such high quality
6o

Letting And Rent

and value that the manager may believe the cost of a brochure a
worthwhile risk.

To Let' boards
By a 'To Let' board hung on a prominent position on the property the
agen t says whether he is letting an office, a house, a warehouse, etc, and
gi\ieS11is address, telephone, e-mail for easy contact. But where several
agents have instructions it is unsightly to have so many boards on the
same property and is against the rules of .the Nigerian Institution of
Estate Surveyors and Valuers. This problem is usually sorted out by
designing joint letting boards. The cost of the board is supposed to be
paid by the clien t but this hardly happens. The manager pays for it.
When the property is let the board is rem oved. Unfortunately some
firms forget their boards on properties. They stay there unt il they rot or
are blown down by the wind. Often the new tenant takes down the board
and dumps it in one corner until somebody uses it as firewood. Tattered
and discoloured boards are very unsightly and disgrace their owners
and the profession. Managers shou ld have a record of their boards, visit
the properties often and make sure that their boards still do them proud.
These boards are about the most effective means of advertising
property and should be placed in prominent, easil y visible positions on
the properties. Unfortunately, not many property owners who want to
sell their properties will allow their agents to hang 'For Sal e' boards on
them. There seems still to be this psychological aversion to such action
which probably dates back to the time people had it etched in their
brainsthat it is taboo to sell land and landed property.

Simple word ofmouth
The property can be mentioned to friends, in person or by telephone, to

61

people met at parties or other fu nctions.

Presentations
This new trend is used once in a while when journalists, selected
company executives and those who have made enquiri es in the past are
invited as a group and taken round p roperties which are for sale or to let.
Needless to say this may on l y be useful in advertising high value
properties.

Processing and consultation fee
Another i nn ovation is the collection of processing fee. Th is is not
common but those who use it justify i t by saying that those who pay it
are more likely to be serious since they only use it in marketing high
value properties to educated and discerning clients.
Unfortunately, one phenomenon that needs mentioning is the
practice of collecting'consultati on' or'registration' fees from intending
tenants. This is common with quacks who collect such money from
people who stray into their offices in search for accom modation. And
after col lecting the fee nothing else happens whi ch s uggests that such
agents make their living from such fees. Unfortunately, some
p rofessionally trained property managers are also into this practice.It is
an unprofess.'ional practice and is n o better than collecting money under
false pretences because, most of the ti me, these people have nothing to
l et offor sale!

Installmental payments and mortgages
Quite often the sale of a property is packaged through a bank that offers
mortgage faci li ty to the purchaser. Many of the estate developers
especia lly in the Lekki axis are now im proving their credi bil ity by
jointly packaging their developmen ts with banks and even the Lagos
62

Letting And Rent

State Property Devel opm e nt Corporati on. Some developers now offer
instalmental payment d eal s.

The internet
Details of properties for sal e or to let can be given to the whole world
through advert i sing on the internet. Many compan i es are currently
solicitin g listing on their web sites.

Tenant selection

In the boom years of nineteen-seventi es and early eighties it was easy to
pre-l et an office or residential complex before the building was past th e
foundation level. The pressure was so intense on property managers
that they, once in a wh ile, sent a list ofwould be tenants to their clien ts to
decid e whom they want. Si nce then thi ngs have changed. We went
throu gh a period when the economy was so depressed that properties
remained vacant for ages and hardly an y buil ding was going on. Th ese
days with the advent of dem ocracy, many foreign businesses are
coming in . Resi dential accommodation in good areas is scarce. So i s
good office accommodation . There are many te nants in a situ ation
where supply is l agging behind. It is a period in which the property
manager has to scrutinize the creden tia ls of tenants he lets properly' to.
Generally, well known companies like banks, the GSM and other blue-
chip compan ies, are preferred. Regrettabl y, professional firms,
especially firms of so lic i tors, as would-be tenants, are usually treated
with suspicion. They are believed to be difficult to d ea l with when it
comes to extracting money from them for serv ice charge, rates, and on
renewals. Th is could be because their fortunes fluctuate so wildly that
very often they are unable to m eet their payments. And there is the
63
Property MClnagement Practice in Nigeria

feeling that 'they know it all'. Th e trend i s that during t he last few years
many of them have been relocating to cheaper areas on the main land.
They also congregate in sma ll offices in poorly managed and poorly
maintained govern ment properties.
Some other categories of tenants requiring special mention are:

Embassies
They are selling their properties and relocating to Abuja, the federal
capita l. All the same they are usually good tenants except those from
the poorer n ati ons. But when there i s problem with them they cannot be
so easil y removed. They cannot be taken to court. A ll the manager can
do is to complain to the appropriate office at the Foreign Affairs
Ministry. Property managers should be carefu l in letting to embassies of
the poorer nations. The case of the embassy of one of the North African
countries that sat tight in a property belonging to the African
Continental Bank for years without paying rent comes to mind.

New companies
Nigeria's opening up of the economy and our quest to attract foreign
investments initially attracted mainly trading compan ies importing and
selling such mundane things as chewing gum, razor blades, fruit juice,
mosq uito coi ls, etc. They were the first to take advantage from the year
2000 of our new democracy experiment as they flocked into the country
and mopped up medium priced available residential accommodation.
For offices they took the cheapest accommodation availab le, often
poky little cubicles from which they transacted importation business
wort h millions of naira. In this category are some Indian and other
Middle Eastern traders who have now been followed by the Chinese. In
many cases these 'foreign investors' cram themselves u p to a dozen in a
64

Letting And Rent

flat. There is currently a tlat let to a Chinese couple in Victoria Island.
But it turned out that at least a dozen Chinese actually sleep in the flat
wh i ch they have attempted to partition! The agents made
representations to the couple and their reply, in their peculiar English,
was, 'Cdunt one to five, finish!' In the end the agent understood that he
was expected to watch when they come back from their shops in the
even.in gs and let in only five people! The agent has now persuaded them
to vacate when their tenancy expires in May, 2004. He is now waiting
and hopmg that they do vacate. Quite often these are one-man
businesses and at the least sign of trouble, such as being found out as
noft-ta:x paying or for fraud or other misdemeanor, the proprietors hop
on the plane and disappear, owing rents, bank loans, etc.
After these came the real foreign investors, including the
communication companies like the MTN and Econet, etc, who take
good class residential properties a nd snap up anything that comes onto
the market. There is a great scarcity of good class and well-located
property at the moment. Ikoyi, for instance, the highbrow residentia l
area in Lagos where company chief executives prefer to live in, cannot
be replicated. The result is that rents arc now out of control and any
property that comes up for sale attracts a price in hundreds ofm illi on.

Individuals
They can be problematic and agents should take great care. Perhaps
from past experience landlords do not want individuals but insist that
they want companies to take their properties. where possible, a single
company to take the tenancy of all the units in a block of flats. A
company is supposed to have a name to protect and the landlord may
not care which of their staff is in occupation since he can always hold
the company I iable for any breach. But in the case of the death of an
6s
Property,Mcmagement Practice in Nigeria

individual tenant occupier the manager may inherit a weepy widow
wi th the consequent difficulty in obtaining possession. Individual
tenants also have th is nasty habit of vanishing with all their be longings
wit h rents and service charge unpaid and sometimes vandaiizing the
proper ties. Of course they would leave no forwarding addresses! The
individua l may alS<f seek the protection of the Rent Td unal. .,ut sctme
companies are not wo rth more than their headed paper and are as bad as
individuals and shou ld be properly vetted. After all, what do s it take
for an individual to register a business name and have a compa.ny?

Client's pt eference
The client sometimes comp li cates issues with his prejudices. '[don't
want black peop le in my flat!' And he himself is charcoa l bl k. This is
as a result of the general belief that black people overcrowd 1\nd misuse
property. Some say, 'I do not wa nt f ndians.' This is ag l). as a result of
the allegation that they overcrowd the property and ?on t).l it tan
fndian colony. A fecent development i s 'T do not WaJ1t Tbos.' This is
blamed on the alleged intransigence in payi ng subseqnt r nts and
charges. Even when a company has been found the l dlord qtay still
want to control who the company puts in occupation. The manager's
exp lanation that anybody could be put in occupation provided the
compa ny puts the property into good condition on vacation may not
impress him. The client may prefer a bank but may prefer particular
banks. He obviously wants to be sure that the next rents.willbpaid.
\., i

The intended use
The manager shou ld ensure that the use to which the i)roperty is to be
put by the intending tenant is approved by the cli ent and is suitable for
the type of property and does not breach planning regulations. What
66

Letting And Rent

happens in practice is that many landlords do not care if the tenants
convert properties to uses other than what they were designed for as
long as the tenants pay high rents. Much of Awolowo Road in lkoyi and
parts ofVictoria Island and indeed properties in most conspicuous parts
of Lagos and major cities, previously zoned residential, are being
converted to commercial uses for the reason that they fetch better rents.
In Lagos the government is penalising property owners on these
conversions and change of use.

Ability to pay
Even at this stage regard should be had of the company's or person's
ability to pay another rent at the expiry of the initial tenn. The manager
must investigate the background of the intending tenant, his record
from his previous landlords. He must complete a questionaire and,
where practicable, obtain references.

Letting policy
For commercial property the manager must be aware of problems of
subdividing the property into too many little units. The more the
number of tenants the more the management problems, the increase in
the chances of default, etc. A single tenant is always preferable.

The offer

The standard letter of offer of a residential unit at Appendix 2 shows, in
skeletal form, the terms on whi ch the tenancy wi ll be based. The offer
will obviously vary depending on the type of property. For instance, a
single dwelling house is unli kely to attract serv ice charge payment. The
letter of offer is usua lly in two copies one of which the offeree will
67
Property Management Practice in NigeriCI

initial and return in acceptance. Some comments on the letter of offer
are as follow:

I. It should be marked 'subject to contract' suggesting that no
contract arises autom atically even if copy of the offer is
signed and returned wi th a cheque though the cashing of
the cheque and issuance of a receipt may commit the
client.

2. The offer shou ld be addressed directly to the prospective
tenant, if need be, care ofhis agent but not to the agent if he
is not the intending tenant.

3. The exact proper ty or area within a property must be
stated.

4. The amount of rent being demanded should be stated. If
future rent i s to be paid during the term the time within
which it must be paid shou ld be stated with a penalty
clause for late payment where the client insists on it.

5. Term may differ dependi ng on what part of the cou n try the
property is in. Tenancies of two or three years are
verycommon probably because most landlords will insist
on all rent bei ng paid in advance. Even in a few cases
where the landlord will accept one year rent in advance he
will likely insist that the term be restricted to one year or at
most two years. Many landlords will not understand why a
three year lease is offered and rent for only two year<;
68
--

Letting And Rent

collected. At the end of two years they may insist on rent
for the remaining year being renegotiated. Such del icate
issues should therefore be fully discussed with the clients.
Leases of thTee years and over are usually insisted on by
the banks and some major companies. This, in many
cases, suit the landlords since the banks often pay for up to
five years rent in advance and at the rent review the
property owners will still insist on rent in advance for the
whole of the review term. The offer must state the
commencement date of the tenancy. There could be
problems later if the commencement date is not clearly
stated. Furthermore, agents should be careful of the
phrase, or when the keys are handed over'. If
subsequently, that date is not clearly agreed in writing by
both parties there could be dispute. It is also not helpful to
make an offer, for example, 'Two years certain' without
stating the commencement date. If there Is no
commencement date how can the term be certain?

6. Option clauses are not very common these days. But the
manager should be aware that these cou ld be exploited by
some unserious tenants to delay payment of rent since the
effect of an option clause is that you must negotiate with
the sitting tenant until you have failed to agree terms
before you can think of entering negot ation with another
would-be tenant. Even then arbitration may arise. It is not
usual for a tenantto surrender his option.

7. It is usually to the landlord's advantage for there to be a

69

Property.Manager.nent Prac;tice in Nigeria

clause that insists that the landlord's so li ci tors prepare the
agreement. The leg;:1l fee will then be paid with the rent.
This then ensures that the tenancy agreement will be
prepared. Otherwise the tenant may accept the offer and
still not prepare the tenancy agreement because he does
not want to pay the solicitor's fee or stamp duty.

8. A redecoration clause will compel the tenant to repair and
redecorate the internal areas at the expiry of the tenancy. It
is assumed that the property i s being let in good condition
at the onset. Many managers put a sum as refundable
redecorati on deposit in case the tenant fails to decorate.
But the problem here is that the deposit may not be enough
and the landlord or even the agent may suffer a loss. It
must be said that many tenants wi ll vacate without
carrying out repairs and redecoration. AIIthe agent and his
client can do is to take legal action. But court cases last
years and, ve1y often, the landlord, having got a new
tenant on good terms, will have no choice but to carry out
the work himself.

9. For a property with many tenants there would usually be a
pamphlet or a set of rules and regulations which may not
be in the body of the tenancy agreement but wh ich are
treated as part of the agreement setting down the dos and
don'ts of the property such as prohibition of pets, where
not to hang washing, control of movement of outsiders,
etc. This document will be mentioned in the offer.

70

Letting And Rent

I0. Offer letters must be copied to the client with whom the
terms must have been agreed before hand.

Even in the letter of offer which will form the basis of the
tenancy agreement or lease, the manager will exhibit his knowledge.
He wi II show that he has not just copied another agreement as each offer
will differ from another in some respects. The manager must show his
understa nding of the various terminologies that often crop up in the
course of his business. The following terms need to be understood:
Subject to contract:
This has already been dealt wit h above.
Subject to client's approval: This simply means that the agent does
not have full authority and the offer still has to be approved by his client.

Duplex:There is confusi on arising from the use of this term. Chambers
English Dictionary says duplex (house) i s a house divided into two,
horizontally or vertically, and thus providing accommodation to two
different families. The same dictionary says duplex (apartmen t) is a flat
on two floors. Property managers must therefore be careful in their
description and the following are recommended:

Detached house: A self-standing single family dwelling on two floors,
that is, two storeys. This may still be called a duplex.

..Semi-detached houses (pair of semis) Two detached houses separated
by a party wall. Some managers describe them as twin duplex.

Maisonnette: A single family dwelling on two floors wi thin a large

71

block of maisonnettes or flats.

Terraced house:One of several houses joined by party walls.
Bungalow: A si ngle storey house.
Terraced bungalow:One of several bungalows joined by party walls.

Storey building:This is a mis used term to mean a house on two floors.
What is correct is that the grou nd floor is the first storey of any build i ng
while the first floor is the second storey. However, if the tenn 'floor' is
preferred, we have the ground floor, first floor, second floor, etc. A two
storey building is a building on two floors, the ground and the first.

Acceptance

The tenant will return a signed copy of the offer with or without the rent.
Confusion will usua l ly arise when several offers are made on the same
property and more than one party accept and return the letter of offer
signed w it h the rent. The agent can only accept one and disappoint the
other. This taints his reputation. And the landlord, seeing that there is
keen interest, may insist on the rent being raised. Again this is an
embarrassment to the agent. It is advisable therefore to make one offer
at a time giving the offeree a fixed time to accept and pay the rent.

The rent

When should rent be demanded?
This applies to existi ng tenants where a ll rents were not paid m

72

Letting And Rent

advance. For already agreed rents six weeks is reasonable. For bad rent
payers a longer period will be needed. But most rents are paid in
advance for the whole terms and the question should be when renewal
offers should be made. For the average tenants three months wiIIsuffice
but for other tenants it is advisable to allow a longer time. This also
applies to rent reviews. Some leases or tenancy agreements do give
tenants a period before expiry, often three months, during wh ich they
must indicate their intention to renew. If the tenant has not been a good
one the manager waits and hopes that the tenant misses the date and
quickly insists on vacant possession.

Interest for late rent payment
Some landlords do insist on interest for late rent payment, say, if
payment is not made within fourteen days. This is only feasible if it is
entered into the agreement that was executed. Otherwise it may be a
waste of time to demand interest on delayed rent.

Deductions from rent

There are some deductions which will be made from the rent and these
include:

Withholding tax
The background was explained in chapter I. The rate is I0% and is a
Federal Inland Revenue tax when the recipient is a company and a State
Inland Revenue tax when the landlord is an individual. The aim of this
tax is to ensure that the landl ord pays some tax on the rent from his
property. Otherwise he may not pay any tax on the rent at all.
Most offers demand rents 'net of withholding tax'. The

73
Property Management Prctctice in Nigeria

intention is that the tenant pays the tax to the appropriate authority as
agent of the landlord and sends the receipt with the rent to the agent. The
agent is then supposed to send the receipt to his client who is then
expected to complete the tax form declaring all his income including
this particular income and the withho!ding tax already paid on the rent.
In practice it is a battle to get tenants to pay withholding tax.
Very often they deduct the 10% from the rent and do not pay it.
Sometimes they pay to the wrong authority. Managers must guide the
tenants in the offer letters where to pay the tax and in whose name. The
law makes the tenant or the manager agents for collection and
rem ittance of the withholding tax so managers must insist that this is
paid. There is a hefty fine prescribed for default. The landlord's duty is
to make his tax returns and claim for the withholding tax already paid,
It does seem that the practice of demanding rent 'net of
withholding tax' i problematic for the manager and a more
straightforward procedure may be to demand rent gross. Then the
manager can, having educated his client fully on this, deduct the 10%
and pay to the appropriate authority and send the receipt to his client.
The manager must be aware that, for example, 'N2,500,000.00
per annum payable two years in advance 'net of withholding tax' does
not gross to N5,000,000.00 + 10%, ie, N5,500,000.00 but is
N5,555,555.56. If he wants to collect gross rent and pay the tax himself
he must know exactly what he wants to get for his clients before fixing
the gross rent. The fee shou ld be based on the gross ofN5,555,555.56
though no client will accept it! The manager will collect his fee based
on the amount he is actually receiving.

Value added tax
This also is a federal tax and the affects goods and services with certain

74
- .

Letting And Rent

exemptions like drugs, educational materials. The manager will be
affected wt1en he purchases building materials and collects commercial
rents. His fee will be affected in so far as he is expected to collect 5% of
it deducted from the rent and rem it to the appropriate authorities. He is
also expected to make monthly returns to the VAT authorities whether
there is anything to rem it or not.

Development Levy
In Lagos the state government imposed a development charge payable
on state lands. Very often the client gives the manager authority to
deduct this from rent and pay over to government.

Approved repairs and other payments
Sometimes the client allows the manager to carry out repairs wi th his
own funds and deduct when the rent is collected. Often too the client
asks the manager to make certain other payments from rent when
collected. These will be deducted. When there are no funds there may
be certain landlord's repairs within the units and the client allows the
tenant to fund it and deduct from rent. The rent will arrive less such
money.

Domiciliation
If the manager has been lax with his records he could fall into the trap of
paying the rent to the landlord in error! For example, the client may
have borrowed money from a bank and, with the manager, signed a
domiciliation agreement with the bank or an insurance or mortgage
company to collect and domicile the net rent with the bank or other
lender until the loan is liquidated. If the manager, by accident or design,
pays the money to the client he will be held responsible by the bank or
75

----- - --- --- - - --

lender and could be sued. He should be vigilant so that his client does
not go direct and collect the rent from the tenant. If his duty is to pay to
the Administrator General or the executors of an estate he must pay to
them. Where no administrators have been appointed and Letters of
Administration issued he must not pay the rent to anybody without
solicitor's advice.There may be exceptions where he is close enough to
the family to know who should be receiving payment. Even then he
must be prepared for any eventuality.
In addition to the rent the manager should receive one year's
service charge. He will also receive the legal fee if it was agreed and the
redecoration deposit.

Remittance of rent

Some managers forget to promptly remit the rent. Sometimes they may
want to earn interest on the money before remittance. They may also
spend part of the money intending to replace as soon as possible. Also,
unfortunately, the rent may have been swallowed up by the service
charge deficit and this has arisen because the rent and service charge are
in the same account. Managers should obey their clients' instructions on
the remittance of rent. Sometimes they are to use the money to make
payments elsewhere as directed. Sometimes they are given time within
which the rent must reach their clients. Remittance should be by cheque
or in the form instructed and sent with a covering letter including a
statement of authorized expenditure from it.

When to put the tenant in occupation

Keys shou ld not be handed over to tenants without approval of th e

Letting And Rent

client. Cheques must be cleared before the tenant is treated as having
. paid rent. Ifthe manager lets in a tenant on the strength of the cheque he
has issued and the cheque is not honoured he may have problems
collecting the rent or removing the tenant if in the end it is found that he
has no money. Banks say four working days are enough to clear
cheques but many banks still take up to five clear working days even
though the public was told that cheque clearing would now take two
days. The manager must be sure that the cheque has actually been
cleared by going to the bank.

" Schedule of condition

The manager or his representative and the tenant then conduct a joint-
inspection and take record of anything to be put right by the landlord,
keys will be checked, water taps and services tested.
The manager prepares a schedule describing the condition in
which the property is. For example, the schedule could report, room by
room, that the property is in good decorative condition internally, all the
fittings are in place and functional, that the keys are complete, that the
taps are in order with water running, and so on.The manager could even
take photographs or make videos though it is doubtful if anybody goes
that far in this country. Naturally the tenant should agree with the
sch dule, sign it indicating that he took the property in good condition
and retain a copy of the schedule. This would help the managerwhen
the tenant is vacating in insisting that the..tenant returns the property in
the condition he met it, fair wear and tear excepted. A schedule of
condition records the state of the property at any particular time but it is
particularly important when a tenant is about to move into occupation.
If the schedule of condition is made part of, or referred to in, the
I
Property Management Pract-ice in Nigeria

tenancy agreement, it may help the landlord's case better ifthere is later
court action because it is easy to compare what the recorded condition
of a property was two or three years ago with what it is now. It is
particularly useful in short tenancies, two or three years, but may not be
so useful in a long lease.
The tenant signs for the keys and completes the NEPA
consumer form so that bills wiIIbear his name.
77

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