Part 1( Property Management in Nigeria)

8/12/2019 Part 1( Property Management in Nigeria)

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Property Management Practice in Nigeria

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By

Peter C. Nwankwo

PELIN . LAGOS


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ACKNOWLEDGMENTS

Copyright Peter Nwankwo

First publish ed 1995 Revi sed edition pub lished April 2004

By:

PELIN Limited P lot 932 lde jo Str eet,Victoria Island. LAGOS

NIGERIA. Tel 01-4618742 , 01-48064 \6

Na ti ona l Libra ry ofNi reria Cataloguing in Publicati on Dat a

Nwankwo , Pete r Chukwuem eka, 1 939-Pr o pert y m anage ment practic e in Nig eriaI . Real estate management -Ni ge ri 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 . Co mpany P.O. Box 6030 , Fcstac Town . Lago s. Mobile: 0803 -376-3291

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In wr iti ng th is book I have utili zed in puts by knowledgeab leindividuals and p rofessio nals w ho hav e given me the be nefit of thei rown practical ex per ien ce. To them 1 hereb y express my apprecia t ion .

l than k Erhabor Ehond or fo r h is assistance in gathering theinit ial inf orma tion. r ac kn owk:dgc the advice of U. V. Ogu ike, El sie Tkedionwu and G lad Obid igbo on insurance, A n th ony Anih f or t i ps onelectr i c i ty matters, C. 0 . Martins on Agbara Estate and Steve Osime onlega l matters. I thank t he staff ofP. C. Nwa n kwo & Co for their untiri nglegwork in gathering material s for the revis i on of the o r igina l book. F i nally I than k Albert Orizu , Emmanuel Omuo jin e and Fortune Ebiefor taking time off their busy sched ules to read through the or i ginalmanusc rip t and to make usef ul sugg es tions, and Eunice lgbos ua for

proof r eadin g the or iginal scr i pt.

PCNLagos . Apri l 2004

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TABLE OF CONTENTS

To all noble colleagues INTR ODUCTION vii -xvii The emergence of the professional estate manager. For whom this book iswritten. Scope. The relation ship between property management and facility management

CHAPTE R I THERELEVANCEOFTHEPROPERTYMANAGER 1-9 Failure to seek adv ice 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 . Competit ive bid. Direct invitation. Sco uting f or brief s. 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. Theappointor. 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 staf f . Living accommodation. Electricity meter s. Taking over on completion ofconstruction. 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 be st deal. Enhancing the value of the

property. The client. The tenant. The expert. Third parties. Background thatlimits 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

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Introduc tion

Before 1960 , apart from Gleaves & Fox, th ere were no other properly organized, professional ly qualified, private propertymanagement firms but most fami lies owning landed prope rty managedthem either directly or through caretakers many of whom we r e no morethan rent co ll ectors. Some of the big foreig n companies like John Holt,Patterson Zochon is, Leven tis, Barclays Bank DCO, the Bank ofBritishWest Africa, the British and French Bank, etc, managed their propertieslar gely in-house. The United Africa Company and G. B. Ollivant hadsubsidiary property companies hand lin g their property matters wh ileother companies and banks also brought in consulta nts from Europfrom time to time to adv ise on their property matters.

Federa l or regional governments had their Government lh:sid .:n tial Areas (GRAs) and other res idential, commercial and office JllopL'rty managed by various Mi nistries of Works and Housing o r I .IIHI'>and Surveys through both qualified and unqualified staff. The

t'OIJHIIat ions and other parastata ls had their properties mana ged inhoi I'-ll' by l'Xpatriatc and indigenous staff.

;\...,at independence most of the major property development in Nlgt.:J J,I Ia lon pld to gove rnment or gove rnment corporations. These Jill 1111lcd1 IllIll\ L' tm .:ntllouse owned by the NIPC, the Federa l Palace 111 .;1"hIll I" ,,., p1 L'\iously cal l ed Victoria Garde n Hotel, th e hou ses of Jloilli,,,,ll.lll IH1Ili in I npos and the regional capitals, th e large postollllt ., olhtl ''}' tlllal gmernment buildings, the University C ollege,lh,ul.111 lilt I olkt.L...,of '\Jh.ScicnceandTechn o logyinE nu gu,Ibadanand I ,ul.t, IIH.:Il' "t:lt'.dso lhLIndep end ence buildin g in Lagos, Cocoa 1 Jousl' at Ihad 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 conlpktLd n l.'llthollp.h an independence party was heldon th e terrace or Wcsle1n llou sl' < >lhl'l than the NTPC wh ich was a

pr o perty company owned by thL: m l'lllllll'llt of' We stern Nigeria therewas the African Real Estate owned by lhL' Oovcrnment of Eastern

Nigeria. Majo r private deve lopment includcd thc old Niger Hous e, the

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Iddo Complex, Wilberforce House , Mcfver Hous e, Gidan Goldie (inKano) Gidan N ige r (in Kaduna) , the African Timber and Plyw ood,Sape l e, Biafra House in Port Harcourt. These and others belonged tothe United Africa Company. John Holt owned Ebani Hous e, Water s ideProperties in Warri , etc. They were al l foreign owned.

B u t from that time on t here has been a rapid transformationwith massive infrastructural and office, commercial, indu st rial andhousing construct i on all over the country especially after the Civil War. In Lagos , other government and parastatal structures and estates s prang uplike the NECOM House, NIDB (now Bank of Industry) House ,Stock Exchange House , the Eko Court Complex, the FederalSec r etariat, the 1004 flats, the Lagos State Deve lopment and PropertyCorporation residential and industrial estates, the Central Bank Estates.In other parts ofthe country are the presidentia l Hote l s in Enugu andPort Harcourt , the Lake Tchad Hotel in Maiduguri , the Premier Hotel inIbadan , the various branches of the Nigerian Hotels, the variousHousing Corporation estates. Of course there are the massive DeltaStee l and Ajaokuta Steel complexes, the . Nigerian National PetroleumCorporation estates and office buildings , the gigant i c Federa l HousingAuthority Estate developments in Lago s, Abuja and elsewhere. Themassive development projects in Abuja r esulted from the movement ofthe Federal Government there with most m ini st ries and parastatals

being co mpell ed to develop their headquarter s almost overnight. Theunprecedented tra nsformation of Abuja has resu lted in privatecompa nie s and individuals jumping on the bandwagon to take part inthe building spree to benefit from the high rent s and property val ues.

Privately owned structure s have also sprung up and include , inLagos, Mandilas House , Freeman House, Commerce House , WesleyHouse , Savannah Bank Building , Sheraton Hote l, etc. Elsewhere thercare the Orosi House in Port Harcourt, the Canute House in Enugu,African A lli ance and Gidan Badamasi in Kano. In Abuja, PortHarcourt, Kaduna and indeed all over the federation there arc Iorge

private buildings and estates. The banks are not being left behind and

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Introduction

most banks have built thei r own head offices. The list is not exhaustible. It was clear that the government was aware early of the need for

--- - - -- -"tratned _ prop _ ert}: _}nanager s to handle the r ap idl y increasing stock of buildings and the intricacies of land and it s proper adm inistration and

use for it began in the nineteen-fifties encou r ag in g th e stu dy of thesubject of estate management by means of scholarship awards tocitizens in schoo ls a broad.

In 1957 loca l study was introduced in the then N iger i an Co llege of Arts Sc ience a nd Technology, Enu gu, which offered theRoyal Institution of Chartered Surveyors sy llab us to intermediateexamination after which the students had to be sent to England for thei rart icleship and for the fina l examinat ion. That course metamorphosedinto the estate management depart ment of the University ofN iger ia i n 1962. From then on interest in the profession has grown to the extent that there are now as at 3 1st Dece mber 2003 thirteen Universities and

seventeen Polytechnics ( inf ormat ion from the N iger ian Inst itution ofEstate S ur veyors and Va luers and Joint Ad missions and Matr icula tionBoard brochure for 2004) offer ing courses in estate manageme nt. As atDecember 31st, 2003, there were o ne thousand seven hundr ed and fortytwo corporate member s of the Nigerian Inst itut ion ofEs tate S ur vey or sand Valuers, two thousand four hundred and forty four probatione r s andone thousand nine hundred and ninety eight student mem ber s.

The Nigerian Institution of Estate Surveyo r s and Valuers was formed in 1 969 after a futile attempt to have an umbrella bodyembr acing all the disciplines cove r ed by the Roya l In stitution ofChartered Surveyors. The late J . W. Ekpenyong was its first president.

Among its major object ives were, briefly , I. To establ ish a high standa rd of professional condu ct and

pract ice. 2. To secure and improve the technical knowledge of the

whole facet of the profession including liai sing wi th th eU ni versities to facilitate the acqui sition of suc hknowledge.

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3. To promote the profession and to maintain and extend itsusefulnes s for the public good by advising members ofthe

p bl c, government or other bodies on all matters comingw1thm the scope of t he profession and to initiate leaislation

relevant to the object ives of the profession . 4. To enli ghten th e pub li c on t he role of t he estate surveyorand valuer in national economic deve lopment.

Decr ee 24 of 1975 gave the Nige r ian Institution of &tateSurveyo.rs and Valuers gove rn ment recognition and the powers toenforce 1ts. rules and regulations and to check the activities of quacks bythe establis hm ent of the Estate Surveyors and Valuers RecristrationBoard ofNige ria. o

Not o nl y did government and private companies increasinglyem p loy professionals in-house but they began to contract out the

management of their pr operties to private pr operty management firms. . F llowing Gleaves and Fox which became Fox an d Companym 1963With the departure of Gleaves came firms like J. W. Ekpenyong & Co (196 1 ), Shelley & Co (1964) which a year later became Knight Fr ank & Rutley, Oluwatud imu & Co ( 1966), etc. As at 31" December 2003, there were four hund r ed and seventy seven registered firmmanag ing maj or gove rnment and private comme r cial 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. Theest te s urveyor and valuer i s defined as a person who has undergone a penod of study of the prescribed subjects and, having acquired thenecessary practical train ing, has been admitted into corporatemembersh ip of the Nigerian Institution ofEstate Surveyors and Valuersand registered by the Estate Surveyors and Valuers Reg istrat ion Boardof Nigeria as qualifi ed to practice the profession. But this book is

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Introduction

simp lifi ed so that probatione rs , und ergraduates, industrial attac hees,can Jearn from it. Property owners and others who are not estatesu rveyors and valuers wi ll find useful informat ion in it.

Scope

To appreciate the sco pe of this book a look at the defi nitio n of esta temanagement by Michael Thorncroft in his book , 'Principles of EstateManagement' will be he l pful. He defines it as 'The di r ection and

supervision of an interest in landed property with the aim of securi"!gthe optimum return, this return need not always be financial but may bein t erms ofsocial benefit, status, etc.' From this defin i tion it is clear thatMr. Thorncroft's book could very easily have been ti tled 'Pr inc i ples ofProperty Management '.

Property (Estate) managem e nt in its fu ll meaning invo lves

such wide areas as va l uation of property, fea s i bi li ty and viab ilitystud ies, report wr i ting, sa les, l ettings, advice o n al ternativ e use, projectmanagement , etc, and day to day management and maintenance ofex is ting structures. This book i s being narrowed down to the day to daymanagement of ex isting st ru ctures erecte d on land with the aim ofsec urin g the optimum return whic h need not a lways be financial bu tmay be in terms of socia l benefit , status, etc. Beca u se the varioussections of estate management are so interwoven, you canno t reallydabble into day to day property management without at o ne time or theother being invo lved in other sections of the profession. You w ill beinvo lved with Jettings and sales, for instance. The mere fact of

determining the rental value of a house or flat involves va luat ion,main ly by consider in g comparables. You cannot r eally sell a propertyyou h ave been managing witho ut carrying out a va luat ion. The prope r tymanager wr ites reports , carr ies out stud ies. ll owever, we are moreco ncerned here with his day to day pr ope rty management duties.

It shou ld be noted that land need not have a structure on it before it needs managing. It could be an expanse offam il y land w hi ch

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needs to be controlled a nd p r eserved or laid out for sale or development.It could be a p iece of land which can be let out for open storaoe car

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parking. It cou ld be a forest with hunting right s. It could even be a quarry. The land could conta in a st r eam with fishing rights, etc.

As has been mentioned before , during the l ast two decades ofthe twentieth cen tury there was this loud noise about inst i lling amai n tenance culture i n the soc i ety. Government was particu l arlystr ide n t, g i vi ng the yea r 2000 as the magic yea r when that and ma n yo th er ut op ian la nd marks we r e to have been reached . The target was notmet. As at th is year 2004 we are even worse off in many areas. A look atour poth o l ed a nd decrepit highway s tells the story . Electr ic i ty supply isst ill irregular, water is in short supply, cost of building materials is

prohibit ive . And government is now si len t on the issue . It seems to havefound another pet j i ngle. Dereg u lation!

That the scope of this book i s being limited to management and

main tenance of ex isting structu r es is therefore an attempt to keep theissue of ma intenance in focus. Furthermore, the prob lem is beingloo k ed at from the perspective of the estate surveyo r and va luer in

pr i vate p r ac tice for the simple r eason t hat t he procedure s and practicecan be be tter i llus tr ated and high lighted than if we a r e to, say, treat

p r o perty m a n age ment f r om th e narrower perspective of the professio na l em played in government or a corporation or even a privatem u l ti nat iona l.

In zeroing down to the management of existing structures,Lagos is used as base. References are to residential and officecom p lexes which are used in illustrating the va riet y of problems that

are usually encountered in looking after property, problems that exist invary ing degrees whether in dealin g with s ingl e houses or large estates, aconference hall, a multi-storey office complex , a bare site, a warehouseand soon.

Reference wi ll be made, w here necessary, to pecu l iarities of managing simi lar propert ies outside the cho ice areas of Larros . e ' mcluding the su burbs of Lagos and cities outs ide Lagos. Whether in

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Introduction

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

The relationship between property management and facility

management

This book is on property management. But comments must be made onfacility management which is ga inin g ground in N i geria . It ori g in atedfrom the United States of America about a quarter century ago , tooktime to be taken seriously in the United Kingdom and Nigerians beganhearing about it a few years ago. Today seve ral practicing firms otestate surveyors and valuers have added 'fac ility managers' to theirheaded paper. So have some professionals from other fields includingengin eering, quantity surveyi ng, architecture, etc.

What is a facility? The Advanced Learner s 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 isa fac i lity and at the same time a property. Vi rtually everyt hin g is bu iltfor a purpose! A tin sheet shed in which a squatte r lives on so megovern ment land is a facil ity. So is an ultra-m odern b l ock of flats inIk oy i. So is a refinery, a research station, a stadium , a rai l way statio n, a

pub l ic to ilet, an incinerator , etc. So why is faci lity manageme nt a bettertitle 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 PhysicalWorkplace With The People And Work Of The Organisation. IntegratesThe Principles Of Business Administration, Architecture And

Behavioural And Engineering Sciences. 1 This means that fac i litymanagement is not just managing the property but also the people, theirwork and the environment. Recently IFMA International has furt herevo lved this definition into 'a profession that encompasses multiple

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Properly Management Practice in Nigeria

disciplines to ensure functionality of the built environment byintegrating people, place , process and technology. 1 Fari Ak hl agh i, headof facility ma nagement 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 pointrespons ibility. I ln effect, facility management is w ider than propertyma nageme nt.

So, when does a property become a facility within the meaningof IFM A [nternationa l defin i tion? The governme nt ofN igeria recentlygave out i ts r es id ent i a l properties in Abuja for management. The pressca ll ed the manag er s n ames ranging from agents, property mana ge r s tofaci lity managers . What sh ould these managers be called? [s the firmmana ging Apo l eg is lative vi ll age just managing the properties or i s italso concerned w i t h integrating the people, place, process andt echnoloKJ!? The firm is only contracted to manage the properties but it

would not b e so wrong i f i t is ca l led the f ac ility manager because it isen gage d in one of the component disciplines that ensure functionalityof the built environme nt.

l koyi C lub 1938 was built for r ec r eat ion. It is a good exam p l eo f a f tc ilit y. The ge n er al manager ha s the s ingle po in t respo nsibility ofmanaging the wh o l e f aci Iity includin g look ing after membership andthe ir wel l - bein g wh ile th ere a rc other facilities wit hin the facility , thego l f cl ub, the tenn i s sec tion , th e sw imming sec tion, th e squash sect i on,etc, meaning the su pport services each of wh ich has experts to ensu r ethat they mee t requi r emen ts but these expe rts must be co-ordinated bythe maintenan ce mana ger who report s to the general manager. An estate

su r veyo r and va l uer wo uld not norma lly be empl oyed to manage theC lu b. O u t he is as qua lif ied as anybody from any ot her profession to runthe C l u b since with h is kn ow l edge of property management he has ahead start on anybody from any other profession excep t the person whoh as u ndergone a spec ia l i st cour se on facility manageme nt. Anothergood examp l e of a faci l ity is th e Lagos U ni ver si ty Teaching Hospital.

But th e vas t m ajority of structures a n cho r ed on land in the

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Introduction

world are simply for shelter- houses and tlats, dormitories, tenement blocks , residential estates. In fact one could guess that the greatmajority of all structures on earth are living places, she lter , requiringuncomplicated care. These with the common office blocks, industria l

and commercial buildings, form the overwhelming majority of propertie s that often come to the care of the property manager. Is thereanything to gain by now calling the managers of these basic propertie sfacility managers?

Now the qualified estate surveyor and valuer can practice h is profession by taking up pa i d employment in a major organization as property manager or facility manager or whatever other name theorganisation designates. He will work within the framework of theorganization to the extent of authority given to him . As an insider hewill be able to practice facility management as defined above by theexperts as he may have unrestricted access to all nooks and corners of

the organisation. It seems that, in Nigeria , the people who may be ableto prac tice complete facility management nearly always have to beemployees or part of the organizations involved. The property managerof the Union Bank of Nigeria Pic can provide the sort of servicedescribed by the experts on facility management because he is part ofthe bank and has full knowledge of the bank's requirements for its workand 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 ofappointment. If he manages a multi-occupied property in which a bank

is one of the tenants he will be concerned about common services andwill not be given the opportunity to practice full facility managementwithin the bank. But the owners of the multi occupied property may sti l lwant to call him their facility manager. The facility manager for ahospital has to be within its work force. The facility manager for arefinery will have to be a staff of the refinery or the organization owningthe refinery as there may be security implications in a private propertymanager having tiee access to all the installations. The facility manager

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for a brewery will be in the employ of the brewery. Will the NigerianGovernment employ a private estate surveying and v a l uation finn tomanage the Murta la Mu hammed airpo1t fa ci litie s? ln these days ofespionage and sabotage it is u nlikely that a private estate surveyor and

valuer will be ca lled upon to ma nag e the facilit ies of organizat ions likethe Kirik iri prison , the lunatic asylum, the mili tary barracks, the Mint,the Centra l Bank building, etc.

If estate surveyor s and valuers, property ma na gers, want to add 'facility managers' to their headed paper or their complimentar y cardsthey are entitled to do so. After all, what they have been manag ing allthese years are facilities. Whether they are called property ma nage rs orfac il ity managers , whether they are emp loyees of mul t ina tion a l s or areengaged in private pract ice, th eir activities will be limite d by the

provisions in the agreements between them a nd thei r emplo yers, on theextent of the authority given to them.

Estate surveyors and valuers should understand the abovelimitations and constraints . They should endeavour to co ntinua lly

broaden their knowledge and keep abreast with modern trends. Fo r ful lspecialisation in facility management there are universi ties in Eur opeand the United States of America offering highe r degree co u rses i nfacility management.

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Chapter l

THE RELEVANCE OF THEPROPERTY MANAGER

Why does one need somebody else to manage his property? There are

many reaso ns. Decisions taken on property have lega l, social, financial

a nd even mor al imp l ications. Whethe r it is the dec isio n to build, the

choice of s ite,

t he bu i ld ing

type or material s, each dec ision has

repercussio n s tha t may not be immediate l y appa r e t. Many property

O\\ ners are not aware of the problems assoc iated with property ..Many

of such prob l ems ar e created by the owners themse lves while others a r e

created by t hird parties or nan1re. Some p r oblems exist on t he s ite itself

before a hole is dug, others are created dur i ng the cou r se of bui Id i ng a nd

many others after the completion of building . Examples of so me

decisions and factors that complicate property ownership include:

Failu r e to seek advice at t he 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

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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 nu mbe r of fla ts or office floors that vvill fully

exploit the potentials of the site. It is the pr ofessi o nal that w i ll advise on

this taking into con sideration the type of planning approval he can get.A pro perty owner who does not know that he requ i res planning

app r oval befo r e construction will have his building k nocked down and

l ose the mo ney 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 r ee 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 batt le 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 nig h t!Soon the house was decked. One

day the FHA moved in with th ei r bulldoze rs and knocked the building

to pieces. That rubbish rema ined l ike t hat, an eyesore, for months

before the rubb le was clea r ed and construction recommenced. It is

assumed that the b u ilder finally d id t he proper thi ng. No doubt the

deve lope r l ost a lot of mo ney. Th e prope r ty ow ner w ho emp loys a brick

laye r to mo u ld as many weak b locks as possib l e ou t of each bag of

cemen t will have prob lems w ith his bui ld ing as long as it sta nds.

There is curre ntly 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 ly for a vast expanse of lan d at the Lekk i Beach only to now fmd that he cannot get a certificate

of occupa ncy covering the lan d. The area is zone d for tourism and

th ough the gove rnm ent is encouraging tou r ism by giving out land in thezone , only a few hectares can be given out to each ind ividua l company.

The gentlema n is head ing for a huge loss that coul d h ave been a voided .

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The Relevance Of The ProperttJ Manager

Wrong advice

Using draughtsmen instead of architect s for designs sometimes creates

management problems and even collapse of the buildings. This is not tosuggest that buildings designed by architects never col l apse. Indeed a

hous e designed by one ofLagos' promin ent architects in Victoria Is l 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 bydraught s men have problems. But a des i gn by a qualified architect Is

more likely to have inputs by other professi onals like st ructural, civil

and elect ri cal engineers whi le the draught sma n 's work may go stra i ght

to the contractor who may pla y the part of other profess iona ls like the

structu r al enginee r wi th , often, di sas trou s con se quences.

Unsuitable site

So m e years ago a professor paid three years rent on an ' ideal' house in

the GRA , fkej a, and moved in. One day h e came home and was shockedto 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 seaso n, at the time he took the property ,

as a layman he could not notice that the hou se was in a depressed site. If

know led geable professi onals had been em pl oyed on the design andcon structi on of that building that site wou ld have been san d -filled

before construction and during const ru ction t h e ground floor level

wou ld have been raised.

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Pr o perty Management Practice in Nigeria

Bad builder

A bad or di sho nest bui lder could red uce the sizes of i ron rods prescribed

by the engineer or use wea k plaster o r ren derin g o r cheap paint thus building in pr ob l ems from the begi nnin g. Occasionally too, one v isits a

bu ild i ng and has to bend over to go up the s ta ir s o the rw i se he wou l d

b rui se his head . The sta ir s r ise r s may be of va r y ing h eia hts t he wa lls :;,

cr ooked. Th ese are results of using bad and unsupervised workmen.

Uns ui ta b l e location

Visi bl e fro m Badagry Ex pre ssway and situated so m ew her e behind

ljanik in, f ar f r om other developme n t, is an unco mple ted gigantic office bui ld i ng that has been s ta ndi ng for over te n yea r s. Why the building

was si ted there is u ncl ea r a nd t he r eason f or its being aba ndoned is n o t

relevant here . Bu t o ne day, ho pefull y, tha t bu i lding w ill be completed.

And the ow ners will discove r the p r ob l em s asso cia ted w i th such a

l ocati on. ff it is for in vestm ent pu r poses it w ill not att r act the type o r

c l ass oftena nts a bl e to pay the sort of r e n t tha t justi f-ies the ou tlay in site

acquisit ion , borrowing and construction. It may n o t even attract any

te nants for yea r s. Even if it is ent ir e l y for ow ner -occ up ation the

prob lems attaching to the l ocat ion are many. Badagry Expressway is

often pot-holed and co uld get more congested with trading groupsr e l ocat in g fr om Lagos Is lan d to the Internatio nal Trade Fair site. The

lin k road fr om the ex pr essway to the development will have to be

constructed a t great cost and ser vices like elect r icity, water , telephone ,

drainage a nd pu bli c tra nspo rt will cost a l ot of mo ney. There wou ld be

ser i ous sec urity prob lems. C learly.' the deve l opers never th oug h t of a II

these . They never took advice. The c h ances a r e tha t the pr o pe rty

4


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- - - - - -- -

The Releuance Of The Property Manager

be l ongs to a gove rnm e n t age n cy where it seems no rmal to was te publi c

m oney withou t questions being asked.

Choice of material

U se of poor quality or wrong ma te ri a ls bui ld s in managem e nt

probl e m s. Poor quality electr ic bulbs , paints, cemen t, de , pro lif erate i nth e market. Money w ill be saved initially but the r e wi ll b e r egrets l ate r .

Marble or mo saic finis h is initially expen s i ve but v ir tua ll y ma intena nce

free t hereafter. Simp l e long-span aluminium o n pitc h ed roofs s h ou ld

present fewer problems than f e l ted concrete s l a b roots or til es.

Sadly, many of the fitti ngs and equipment impo r ted a nd used in

buildin gs perform so badly that o ne ca nnot help suspec tin g that they

were merel y cleaned up seco nd h and equ i pme nt. Otherw ise , how does

one exp lain l ifts and generat or s that bre ak d own alm ost as soon as they

are i nstall ed.

Turnkey projects

The aim here i s not to disparag e turnkey projects. They present many

advantages. But governme n t, in parti cular , mu st ensure th at the

co ntract ors turn out st ructure s adapted to l oca l co nditi o ns. Otherwise

the contractors may build the r e plic a of buildings in Tokyo orWa shington , collect their money and are not concerned wi th sui ta bili ty

to local social, eco nom ic, or c lim at i c co ndit i ons o r th e man age m ent

prob le ms that mig h t occur ther eafter. The Nationa l Thea tr e and the

Murta l a Muhammed int ernati ona l a ir port are exa mples of ot her wi se

remarkabl e struc tures that pa y scant r egar d to ve ntilation w hen th e a i r

conditio nin g breaks down. When the Natio n a l El ec tric P owe r

5


Autho ri ty (NE PA ) cuts power su pp l y the Natio nal Thea tre hall s are in pitch darkness.

Some year s ago there was a row abo ut r ed Ver ona marble

imp orte d by a multi-national construct ion compa ny an d laid in a high

ped estr ian traffic area in a fir st class office block on the Mar ina as the

marble degen era ted rapidl y shortly after being laid. It was e ventual l y

agreed that red Verona is not s u ita ble for hi gh traffic areas. The marb le

had to be r emoved and a more durable type laid presum ably at

add itional cost to the pr operty owner.

Le g islation

The Land Use Act 1978- Laws of The Federation of Nigeria, Cap 202,1990.

Since 1978 the Land Use Act has been the gene ral la w govern ing the

acqu is it ion an d a l ienatio n of an intere st in la nd. T he States have their

laws but where the re is confl i ct the Land Use Act pr eva i ls by vi r tue of

its being p art of the Nigeria n Const ituti o n. In each State all land is

ves ted in the governor to hold in trus t and ad mini ster for the use and

common benefit of all Nigerian s as provided for in the Act.

It gives the gove rnor' s powers to grant rights or certificates of

occupancy and to fiX rents over them ,. powers of revocation. It gives

powers to loca l governments to grant customary rights of occupancy

over non-urban land. It also prov ides that interest in lan d can only be

alie nated with the consent of the governor. Suc h alienation includes

leases, long or s hor t, and ass ignme n ts . The government may impose afee for its consent. The average c itizen is not conversa n t with the above

includ ing procedure s for obtaining cert ificates of occu pancy .

6


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The Relevance Of The Property Manager

There are other State and loc al government laws , edict s,

guidelines that affect property. Since Nigeria has no unifi ed lan d lawcovering the whole country the property owner must know th e law that

applies to the part of the country where he opera tes. In Lagos thefollowing are some of the laws a nd edicts that affect a property owne r.

State Property Land Use Charge The Land Use Charge Law 2001 (Law No. II ) unifi es land

based charges such as ground r ent, neighbourhoodimpro vement charges and rates. Its lega lity was widely

chall enge d. But the organized privat e secto r has relented in its 1

cou rt actions as the rate of the char ge bas been drastically reduced. Its legal ity has s't ill not been fu lly tested in court butthis may happen if th e organizations wh o have not w ithdra wntheir court cases take the matt er to th e log ical co nclu s ion . Thefonnula for ca lculating the charge rem ains con tro vers i al. Lagos State Urban And Regional Plannin g .Board Law,CAPL5 2 .

It became operative in the yea r 200 I and contro ls devel op me ntand use of land in La gos State . It covers all land mattersincluding change of use of any land , seabe d or structure,

subdivision or partition. For subsisting contraventions theMinistry of Regiona l Plann ing still impo ses annua l fi nesincluding sueing th e offe nders an d sea ling up the premises.

Busines s Premise s Permit.

You pay an initial N I0,000.00 and an annual r enewa l fee of N5,000.00 to gove rnm ent to be in business at all in Lagos.There is a lso a sa nitation edict, a car parking edict providin g

7

Pmperty Manag ement Practice in Nigeria

for a charge ofN40,000 .00 pe r slot per a nnum in the high rentareas such as Victoria Island, Ikoyi, etc.

Local Government. These vary from loca l government to local government. Butsome ofthe heads i nclude:

Corpo rate Businesse s Permit.A dup l ication of t he State charge.Sate lli te Dish Tax Etiosa LGA. Self exp lanatory .Currentl y N 5,000.00.

Generator Pollution Pe rmit.

Etiosa current ly N I 0,000.00 per annum.

Advertisement. Even a name pla te on an office door may cost an occupier whois no t aware of his rights. Apapa LGA in t he past forcedm otor ists to pay N5,000.00 for advertising the nam es of theircompanies on their vehicles passing through the LGA!

Car Parking. Overzealous officials will even atte m pt to intimida te an

occu p ier i nto paying for pa rkin g withi n the confines of his plotwhere the plot is not enclo sed by a boundary fence. This was

t ried unsuccessfully at Awolowo Road and Ijora .

Taxation

Withholding Tax T h is tax was in troduced by the Finance (M isce llaneous TaxationProv isions) Decree No 4; 1985. Its p r ov is ion s were furtherstrengthened by the Companies Income Tax Act 1990. It compelled

8


17/56

The Relevance Of The Property Manager

tenants to deduct 15 % of rent and pay direct t o the rele va nt taxauthority. The rate of this tax was reduced to 5% and late r increa sed to 1 0%. Iftenants fail to deduct the property mana ger mu st deduct and pa y

the tax. Stiff penalties are prescribed .

Capital Gains Tax The Capita l Gains Tax Act of 1967 (Cap 42 of the 1990 Law s of theFederation ofNiger ia) provides that on purch ase and resale of landed

property a tax is payable on the profit.

Capital Transfer Tax (known el sewhere as Estate Duty ) The Capital Transfer Tax Act of 1979 (Admini stration of Estat es Law,Laws of the Federat ion of Nigeria 1990) imp osed a tax, grad uatedaccording to the val ue, on the estate of a d eceased including tr a nsf e r s

inter vivos.

Value Added Tax Introd uced on 1.1.94 by decree No. 102 of 1993 it is of wi derappl.ication than the Sales Tax Decree of 198 6 which it replac ed . It is aconsumption tax a nd in relation to pr operty mana ge m ent aff ects

purchases of maintenance parts, office eq ui pme nt, comm e rci a l r ents

and the manager's fees.

There are many other complications in property owners hip butsince so me will be di sc usse d elsewhere in thi s book , suffice it ju st

tomention one or two other areas that com pli cate property management.They include the attitude of other proper ty owners and the ge ner al

. pub lic to sa nitation , pest eradication , misuse of in sta llations and the

poor performance of publi c utilitie s. The foreg o ing are just so m e of th e r easo ns why gove rnm en t,

private compa ni es and individual s mu st seek t he se r vices of

profe ss ion a l property managers. 9

Chapter 2 SOURCING OF BRIEFS

The invitation to manage

How does a n estate su r veyor and val uer in private practice get

instructed to manage a p ro perty that does not belong to him ?

Packaging

This coul d date back to the time he was ins t ructed to find a suitab le site

and may includ e helpin g to assemble the arra y of professionals to be

i nvo lved in the deve lop ment includ ing obtaining p lannin g permission,

asibi lity and viability studies, raising of finance, se lection of

c? ntractors , pr o jec t-managin g the development and lett i ng andmanaging on completi on of const ruction.

Packaging explai ns why one or two firm s see med , in thenineteen-seventies and eighties, to have a monopoly of the major

mana ge d properties in Lagos. For reasons wh ich are not r e l evant here

these firms seem to ha ve now los t man y of such briefs. Such firms we r e

the fir st in.the field and, h avi ng in man y cases assisted in finding the

s ites , ra is ing bu ildin g financ e or pr o jec t-ma nagi ng, t heir continuedinvolveme nt up to managing the .completed developments became

form al itie s. Some buildin gs where pr e-co nstructi on assistance to the

p r operty owners led to Jetting a nd management include the Bank of 10


18/56

- - - --

Sourcing Of Briefs

Industry (forme r l y Nigerian Industrial Development Bank , NlDB), building, Lagos Chamber of Commerce building, the Stock Exchange

building, Wema Towers (forme r l y Chellarams House) , the Eko Court

Complex, etc . This emphasises the importance of a credible trackrecord and experience. A beg inner 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 adv ertisement s 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 client s can look at if they wish, the organizationalstrength of the firm , the proprietor's and principal staffs reputation andtrack 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 o r

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

G e n era l . The manager may also hav e helped purchase the property for a

cl ient who then asks him to manage. Invitation could also be from a

friend or colleague . In one instance recently a lawyer walked into theoffice of a firm and asked them to come and take over the man ageme nt

of a block of offices. His company had heard many good things about the firm.

fn the late nineteen-sixties and early nineteen-seventies w he n

the public was still large l y ignorant of the re l evance of pro ssional

prope r ty manager s, obtaini ng instructions to manage properties wasdifficult. Then, property managers had to persuade property owners ,

even corporate bodies of the necessity for their services. The manager

had to make concessions so metimes including virtually managing free

of fee foe a perio d, or on the co nditi on that fee be collected from thetenants , or even further that tenants would be made to accept fu ll

r e pairing and even full i nsuri ng leases. In many cases, espec ia lly where packaging was involved , t he c lient did not understand why he s hould

pay fees at so many stages like fee for helping to purchase the s ite,

feasib i lity study , project management and finally, letting andmanagement.

The eager manger of ten had no choice than to charge lower fees

or even forgo fees for one or two stages so as to ensure instruction at the

crucia l stage of letting and managin g the completed development.

Scouting for briefs

Firms often have agency departments whose brief includes not just

getting propertie s to let but also to manage. Often, qualified staff are

assigned this job and given a target. Some finns also employ

12

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


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20/56

Sourcing Of Briefs

unqualified staff called runner s e ither on full tim e o r part tim e o r

commission basis. Th ey go to buildings under construction and

introduce their firms and their serv ice s and are sometimes successful in

securing new instructions. Of course the line between thi s and touting is

thin. Some professional s, once in a whi le, resort to touting which is

against the ru les and regulation s of The N iger ian Institution of EstateSurvey ors and Valuers. Thi s phenomen on is being mentioned becauseit occurs and not b eca use it is condoned . Touts braz ehly go to p r o pert i es which they know are being managed by fellow pr of es siona ls and , one .

way or the other, per suade the owners that they can do a better job.Some hang their ' To Let' boards on propertie s with or without the

property ow ners ' appro val. Sometimes a tenant shows up and it isalmost a fait accompli that the owner will a sk them to man age th e

property. So, once in a whil e, a new star firm appears, employing

unorthodox method s to secure instructions an d , inexperienced as i tmight be, gets its hand s filled with mana gement properties almost

'overnight'. Often , the result is that the firm , not havi ng the requi siteexperience or staff strength an d structure, soon mishandle s the

properties and loses most of them and sinks back to be one of the seven

day-wonder firm s which, once in a wh i le, hit the public and the

newspapers with a bang and soon sinks back into o bscurity. Of cour sesome of these firms, in this anything-goes society, grow from st r eng thto str ength and continue their unorthodox practice regardless of what

other members of The Institution think ofthem.

An t'IU' to the ground!

Au tnt c smvt:yor an d valuer need s to know what is happening. He 11 ll 111IIIII\ c illllltlld, party as necessary, listen for opportunities, nose

13

Property Management Pn1ctice in Nigeria

aro und. Recently the Fede ral Govern ment sha r ed out thousands of pr ope rties in Abuja to estate sur veyors and va lue rs an d pr ope rtycompan ies for man agement in their monetisation policy. There was no

advertisement! No doubt some government offic ial s gave out hin ts totheir friends who had offices in Abuja and the place was flooded witha pplicat ions. Most estate surveyors and valuer s first heard of the matterwhen th e President was seen o n tel ev is i on orde rin g the Federal Cap italDevelopment Authority offic ials to hand over Apo legislati ve village to 'the agents' on Monday! Governme nt work s in mys ter ious ways and it seems that es tate su rveyo r s and valuers should a lways have their ears tothe gro und especially whe re governmen t is invo lved.

The decision to manage

Th e man ager shou ld i nspect the property before accepting or decliningthe i nvitation to manage. Whethe r he accepts or not depends on the

policy of the firm. The firm may s pe ciali ze in t he management ofcommercial properties in which case he will poli te l y decline invitationsto manage other types of pr ope r ties . But , in the pr esc... young stage of

the profes sion in Nige ria , it is doubtful if there are such spec ia lizedfirms. Firms accept most types of propert ies. There are certain criteri athat should be cons idere d in the decision to manag e.

Title to the property

It is neces sary to asce r tain tha t the prospective c lient owns or has aninterest in the property. The manager shou ld i nspec t the title documentand if in doubt cons ult his solicitors. He must be sure th at the property isfree from encu mb rances that could hinder his effectiveness and know

the nature of the property and the r est r i ctions on it including o ther

14


21/56

Sourcing Of Brief s

interests and restric tions imposed by law. For instance , if a sub-lessee

for a term often years erec ted a building o n land but failed to acquire a

valid title, a manage r who commits himself materially or financially

cou ld incur losses. An d the real owner could sue him for trespass . The

manager shou ld , the r efore, be aware of the history of the property as

well as a ll 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 sc rutiny of title in case of well

known organizations like the banks , prominent corporation s, major oi l

companies, etc, and may not see the title document s 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 in struct ion s from unknown companies, fami ly

estates and individual s. He should ascertain the verac ity of their tit les.

In the past, property managers had been embarrassed where differentfactions of familie s surface d to dispute their auth or i ty after they had

comm itted themselves financially and otherwise. Once in a wh il e

newspaper advertisements disc laimed their rights to meddle with

certai n 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 defensi ve

measure some owne r s write boldly on their building s , 'T his property is

not for sa le.' 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 Managem enl Prac tice in Nigeria

have the authority.

No doub t, practicing pr ope r ty mangers wi ll be a ware that theforegoi ng ma y be idealist ic. Some property owners w ill not surr end er

photocop y of their title document s .

Property ma nagers must be alive to the poss ibility that the issue of title

can still come up long after they stopped be ing man agers . The y sho u l dtherefore take interest in cases such as :

Suit No : ID/4SSM/99 ChiefJ . 0. Adeyemi-Bero Plaintiff AND

1. Knight Frank & Rutle y (Nigeria) 2. L.S.D.P.C Defendants

The Lagos Sta te government had acq uired the whole property

known as the Eko Court Complex from a comp any owned by thre e

people that inc lud ed C hief Adeyemi-B er o in the ear l y 1970s and

handed it over to the LSDP C who then appointed Kn ight Frank &

Rutley (Nigeria) as manager s. In the early 1990s the government of

Ibrahim Babangida gazet ted th e Eko Cou rt Complex among others as

properties relea sed by government to thei r former owners. Chief

Adeyem i-Bero then sued the LSDPC and Kn i i1L :' rank & Rutley

(Nigeria) who had s topped being th e managers to render fu ll account on

the one block he was claiming. The case is s ti ll on but man agers can learn from it.

Does the property meet requirements?

If a manager is based in Lagos and is invited to manage a property inEnugu, about six hundred kilometers away, where he has no branch

offi ce, he has to consider critically his ability to cope with bo th the cost

of travellin g, the possibility of getting staff who he m ay not be able to

proper ly s upervise, and the likely inabili ty to do a proper job. If the brief

16


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Sourcing Of Briefs

already taken th e deci sion to terminate the appointment. Once the manager has decided that the property is the type he

would want to manage the next ste p is to discu ss the contents of the

management agreement especially the fees and duration . The approvedscale of charges of The Niger ian Institution of Estate Surveyors and

Valuers is 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 can not therefore

dogmatica ll y insist on the sca le fee. He shou l d negot iat e if the owner

ins ists. If h e does not negotiate the property owner wi ll appoint

somebody e lse. There are always competitors who are prepared to

I Chapter 3

THE MANAGEMENTAGREEMENT

Th e management ag r eement is ofte n called deed ot appom. tment o r

accept lower fees. Howev er 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 unt il

the management agreement is perfected before taking action on a

property he h a ' J cided to manage. De l ay could result in damage to t h e property i f tJ ,.._ma nager waits till letters , draft agreements are sent backwards an d forwards from so l ic itor 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 manage r s run properties for years without

anything in w rit ing.

agr eemen t'. As has been said, it is a vital document that spells out the

extent of powers given to the manager. Few mana gement agreements

are_ executed and stamped early and , in many cases, are not completed before the.end.of the term s intend ed. But as they govern what managers

do.fo t heuclie nts they are being t r eated her e as managers are advised

to 111S ist on the execution of their agreements as one of t heir first tasks

on assJmin g t le management of properties . Many managers do not

appre late h e .u portance of this and do not bother wh il e some clients , especially mdividual s, on their side, do not insist on the agree t

b mens emg s.Igned. It cou ld be either that those c lient s themselves do not also

ap reciate th need for formal agreements, or perhaps, that they mayeiievthat smce they did n ot sign they are not liable f or anythin g,

I cludmg fees! So, manag ers ca rry 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 exec uted and stamped. Then it may be too late.

Usually, by a ma11a'o e men t

19 20

agreement, a prope rty owner


24/56

Properly Management Pmdice in Nigeria

The Ma nagement Agreement

atJth orize s an a gent to manage his pr o perty and it is the natur e of the

agr ee ment and the e xtent of power s conferred on the manager through

noI t ava .il ab .le he may be u na b l e to tak e certai n dec isions. Di fficulty ma a so anse I f t h e ma nager h as to make c Ia l.ms on hi.s c l.ient say f, y ;ro ngfu l ter m ina tion of hi s app o i ntme n t or i f he h i m se lf,wan; s

the agre ement that d e termines tlle manager's effectiveness in handling e r m m ate .the .a p po i n tme n t . The ma nage r may, one day face the

int erv ening pr o bl em s without delay. The followin g are th e types of

ag reement und er which properties are managed:

J. Verbal instructions 2. Exc han ge of correspondence 3. Exe c uted but unstamped managem ent a gre ement , deed of

app ointm e nt or power of attorne y. 4. Exec ut ed and stamp ed mana ge men t a g r ee ment , deed of

em bar ras s m g Situat i on whe r e he i s to ld to h d ' w ithin a mo n th or eve n i m m . an ove r to somebody e l se .- ed ate l y. Pe r haps t hat pers isten t com Imally s uccee d ed in p ers uad ing the cl ient that a str anger shou I d; t:;

mf n ag m g the pr ope rty when he, h is re l at i ve, i s starv i ng. The ex i stence

oc li ae stta mfi ped dm a. n age m ent agreeme n t may n o t dete r some categon .es of

f'orl r e:fl:: i L:e:t e st, he m j ri ty o f c li e nts have regard . p ct t he prov i S ions of the agre ement

a ppo intm ent or power of attorney. a th' T hhe fact .tha t some pro per ty ownersareusua l ly r eluctantt osian n.yI mg t at b mds them legally may fo rce m anagers to conti t:>

Verbal instructions and correspondence. WI i t 10.U t agree m en ts . B ut t h.IS means t h a t their operat i ons nue

Wh er e o nly verbal in structi on is give n the mana ger h e s hould re ply in r 1and l ca p p

.ed

.. A lt h

.ough t he i ncidence of undo

c.ume nte

d agreement s

ar ies

writing statin g wha t was agre ed. Su ch co rr es p o ndence backed b y theactual fa ct of mana ging, coll ec ting rent s and h andin g ov er to the

a ppointor is eno u gh evidence of the exi stence of an a gr ee m ent. E quity

will c ome to the manag er's aid in court in the event of a di s pute. If th e ' ca se is again st a third party he can have an agr eem ent prepared,

executed and stamped. But this wa stes time and the manager or his

client could incur fin ancial los ses. Wher e the di s put e is with his client

the clien t m ay r efuse to execute an agr ee ment and th e man ager can only

seek the protecti on of equi ty. Ag ai n , tim e w ill be l ost and fin anci a l loss

may r esult s inc e his duties were n ot s pelt out in an ag r eement and the

clien t may c laim that h e exc eed ed hi s a uth ori ty. It will th en b e left to the

court or an arbitr ator to decid e w hat is r easo nabl e . Wh er e no agr eement d etail s th e age nt's du ties hi s actions ma y

be cha lle nged b y the tenant s or hi s c lient. He w ill not be a ble to

auth oritati ve l y carr y o ut hi s duties and enfor ce co ve na nts . Ifh is client is

21

.am. pant, f u rther dis.cuss io n oft he pr ob lem I.S not th o u ght ne cessar I t IS ho ped t h a t m anage r s w i ll i ns i st whe r ' bl y as agr eem ent s executed d ' e poss l e, o n hav i ng the ir

an sta mpe d.

Executed but unstamped agreement s

Th ese ar e nea rl y as go od as s tamped ag r eem ents bu t wh th be tend er ed . . er e ey are to a d th as pn mary e v i de nce m court they w ill n eed to be stamped

n ere may be a pena l ty f or l ate s tamp ing .

The power of attorne y J uf st tas in m a na.gem ent agree m e nts, the powe r s gran ted u n der a powe ro a to rney w ill be li m i ted by wh at powe r s t he . . prepared to gran t. pr ope r ty owne r IS

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

22


25/56

b

The Management A greement

whi ch is one of the alternat ives to a managem ent agr eem ent. But it mu s t

be stated that a p ower of attorney cou ld be a mo r e powerfu l legal d

ocument than the m anagemen t ag r eement , conferr i ng powers to dea lwith the property a s if the age nt were t he own er. lt en sure s s pee d an d

effic ie ncy a nd is used often where t he property own er is far away suc has an amba ssad or on fore i gn ass i gnme n t or a ret i red p erson now liv ing

in the v ill age or a n owner incapac i tated by i ll- health . Under it the

mana ae rcan sue or be sued on m atter s deal i ng wit h ow n er shi p . I t i s a lso 0

often u sed wher e, f or inst ance, a parcel of la nd cove r ed by a C e r t ificate of Occupa ncy has bee n purcha sed and , to ge t r oun d th e pr ov is ion s of

th e La n d Use Act th a t u nde ve lo ped l and ca nn o t be a lienated w i thout t he

consen t of the s tate gove rnm e nt , the pur ch ase r sec ur es a n irr ev ocabl e powe r of a ttorney ove r the land , deve lo ps i t at which sta ge a pr o pe r

tr a nsfe r can be done. B u t, gener ally, the ave r age c iti zen is war y o f

g iv in g ou t h is pr o per ty on a powe r of att orn ey. No t too man y c it ize nstrust o t h er c it i ze ns tha t m uch these days as ther e have been cases of

peo pl e hold ing power s o f att orney c l a i mi n g co mpl ete owne r s hi p o r

even selli ng th e p r opert i es .

The management ag r eement

Th e r es t of this chapt er de a ls w ith th e exe cut ed and s tamp ed

man ageme nt agr eement. An ex ampl e is at Ap pend ix 1. Th e sampl e

agr ee ment should b e va r ied an d wo rdin gs ch anged to suit th e par ticula r pr o per ty o r the c l ie nt 's req u i r ement s and th e ex tent of powe r s th e

manager is g ive n . M any cl ient s wi ll ex pun ge C l ause 7 as t hey are wa r y

of ves t in g a bso lute p owe r s i n the man age r. Th e ag r ee ment sh ou ld

s pec ify c lea rly the f o llowing:

23


The appointee

The d oc ume n t sh ould co nta i n hi s name, a ddr ess a nd bu siness. If it is a

par tner ship th e names of all t he pa r t ners wo u l d be s pecified as an

a l tern at ive to l is ting the na mes of one o r two pa r tners as acting on

behalf of th e par tners h i p .

Th e a pp oin to r

Th e nam e an d addr ess of th e a p po in tor s h o u ld be c lear ly specified as

we ll as t he natur e ofhis i n te r es t in t he p r ope r ty.

The pro p e1 ty The a dd r ess a n d build ing type sho ul d be spec ifie d.

The d u tie s of t he aaent

So m et im es t he f u nct i ons of l ett ing an d manag i n g a r e se par ated and the

docu men t sho u ld state c lear l y t he fi rm doi ng t he l e tt ing and t he firm

do i ng t he m a nagi ng . Some t i mes an agent is o n l y r equ i red t o pro v ide

ma nage ment ser vices as in the case of a pr operty who ll y occup i ed b

tha p p o i n to r w he r e no rent i s co llecte d. I n some c ases the appoint

mt ght wa n t to d ea l w i th rent c o llec tio n h ims e lf. Some app oi n tor s even

furth er l imit the agen t to on l y supe r v is i ng the con trac tor s and collect

ser v ice char ge t hemse lves. The i m portan t po in t i s t hat duties are clearly

s pelt ou t to avo i d f uture misun d er stand i ng.

The fee The ag r eem ent w i l l state the perce nt age of r e n t o r serv ice charge or

o th er a m oun t agree d as f ee a nd m et hod of payment. P lease refer t o the

fee s ca le of f or the N ige rian I ns tit u ti on ofEs tate Surveyo r s a nd Va l uers.

Le tti ng f ee or fee f or re nt collec tion is usua ll y deducte d by the agen t

24


26/56

The Manag ement Agreement

before the rent i s remitt ed to the cl ient. Somet imes the agreement pro vides otherwise. For instance, the clien t may insist that the rentcheque 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 interes twhile waiting for the rent cheque to reach them from thei r propertymanagers. The fee from service cha r ge is collected in arr ears w hen theaccount is prepared and is added on to the cost of serv ices beforeapportionment. There could also be instances where the fee is lump sum collected yearly or half yearly .

Proper t y Manag ement Pra ctice in Nigeri a

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 , engr ossed.executed and stamped with a copy sent to the client and a co py k e pt b;the manager.

Obv iously the foregoing is not a treati se on the law relat i ng tomanage 11entagreements. Each pr o perty manager is expected to retainthe s r:'Ice s of a good solicitor, or, at least, have close relation sh ip wi th a solicitor who shou l d be ab le to guide him as occas ions demand.

Dispute A clause will specify to w hom disputes ar i sing from the agreement will

be referred. Arb i tration is usual. Often the president for the time being

of The Nigerian Institution of Estate Surveyor s and Valuers isspec ifiedas the arbitrato r or i s authorized to appoint an arbitrator.

Duration Three years is normal but some clients may agree five years whileothers may insist on shorter terms, even as shor t asone year.

Termination The appointor reserves to himself the right to terminate the agreementwithout notice if the appo intee is guilty of gross misconduct or fails toaccount 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 ,rppoirrllc, on hi s part, can terminate the agreement by serving the p11:ll il11.:d 11ntitc after the expi ration of the agreed term of years.A ltht trJh 1111101 nnlmally s pecified i t is possib le that the manager

25 26


27/56

Chapter 4 PRELIMINARIES

Taking control of th e prop erty

As has bee n s ta ted earli er , the man age r d oes not have to wa it for them a nage ment a gr eem e nt to b e fu ll y do cumented befo r e tak in g action o nthe prop er ty. T he man age ment ag r eem ent was di sc usse d in the lastcha pte r becau se, under no r m al c ir cumst an ces, it should be fina lize d

befor e t he ma nager tak es ove r t he pr o per ty. But, in most c ases, that do esnot ha p pen. Ind eed, before t he ag r eement is co ncluded th e ma nag erwould be seve r al m on ths in to t he term of th e ag r eemen t. In ef fect, t he

pr eliminar y matters disc ussed below should by now have been

. compl eted. Th e manage r should in s pect the pr o perty in de tail a nd m ak e

notes f or his own use a nd for the benefit of hi s clients. He w ill m ak e asketch of the l oca tion of the pr o pert y for his file. Thi s is r eleva nt in a

la r ge firm wher e the pa rtner co ntro lling a large portfo lio does not ca rr y

out th e initia l ins pect ions. A nd the s taff w ho d id could leave the f irmex p osin g the p rincipal to th e em barrassment of fin d in g o ut at a m os t

inaus picious tim e that Oshodi Str ee t is not n ecessar ily i n Os h odi but onLagos I sland! He mu st g ive his cl ients w ritten deta il s ofth e cond ition of

th l p r operty a nd th e need for a ny n ecessary i mmediate w or ks. He

hPu l d :ll'lo obta i n a ll necessa r y i nfo r mat i on ava ilable to h is cli ents fo r

27


his ow n re cord s in cludin g a co mplet e set of ar chi tect ural dr awino s if

on e ex is ts, plu s a cop y of his client's titl e d ocument if h e ca n . :: '

The m a nager s h ould end eavo ur to kn ow the pr o perty ' lik e th e

back of his ha nd ', its str engths a nd weak nesses. I t could b e an old buil d in g with lo u vr e w ind ows, ce me nt screed floor ing and s urf aceel ec t rica l wirin g r equi r i ng c lose monit orin g. It could b e a chea pl y

co nstru cted build in g in which one th i ng o r th e o th e r n eeds to ber e pai r ed of ten , or a bad ly d es i gned buildi ng th at requi res a l tera tion . I t

cou l d be in a wa ter- l ogged loca ti on a nd l ia b le to f loodi ng at ce rta inti mes o f th e yea r a nd the sept ic ta nk ma y t heref or e be ve r y of ten flooded r eq uiri ng fr eq uent evac u at io n. I t co uld be th e fir st bu ilding pu t u p i n th earea an d th er ef or e l ia bl e to floodi ng because o t her s ubsequ ent

st ru ctur es a nd th e r oad a re on hi gher l eve ls and t he r esult i s th at all t hesto rm wa ter in th e a r ea flow into th e p roper ty. It could b e a m od e rn

buildin g s ited in th e middl e of a s lum w i th th e co n seq u en t pr o bl em ofinability to achi eve good r ent. It c ould b e n ew thu s r equirin g Jess attention t han a n o ld buildi ng .

A n o ther r eason why the m a nage r s h ould k now t he buildi n g isto en a ble him k ee p hi s c lient inf ormed a bo ut imp endi ng ac tion thatneed to be tak en so th a t hi s c lient ca n pl an ah ead f or m a i nte n ancein cludin g sav ing money for f u ture ex pen d itur e.

In an idea l s ituati on , if i t is a new buildin g, th e manage r sho uldhave p r ojec t-ma n aged the co nstruc tion or , a t least , be in a posi tio n toensur e that certa in f eatur es or des ig n ma tters t hat cou ld m a k e

m a nage ment eas ier a r e in corpora ted. R eg r e ttab ly, m ost often , th emanager is not invo l ved ea r l y e n ough t o be a bl e to m ak e a n input a t t h e

des ig n or eve n cons tr uct i on stage . Thi s is a pi ty fo r somet i mes t he c li ent

d oes n ot r eall y know w h at he wa nts n or d oes he f ull y app r ec i ate w h at has bee n d es ig ned b y the a r chi tect. T he r esu l t is that , o n ce in a w hil e, an

28

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28/56

Preli minari e s

o ther wise beau tiful de s ign has not paid enough atten ti on to eco n om y,

for exam ple, co rridor s could be unnecessarily wide, or some fanciful

but expensive f eature s have been incor po rated. So metim es features are inc orporated without rega rd to the

effect of the poor performance of public utiliti es. For exampl e, anarchitect, about th e year 1980, forgot about t h e frequent NEPA powercuts and inco rporat ed a mass tran sit co nveyor in the de si g n of a

proposed new o ffice building in l koyi for an o il company. It was the

intervention by an esta te s urvey or and va luer and thc fact that the c li ent

was the lis tening type t h a t saved the day and the particular f eat ure wasremoved . Naturally the architect was not plea sed. But the manage r hadr emove d one area of huge futu r e ex penditur e and em barr ass ment.

It is useful for the mana ger to be a ppoin ted if not at the

commencement of construc t ion, at least six month s befor e com pl etionof con s tru ction . He ca n then ha ve a caretaker or e ngineer on s i te m onths

before completion and hand over . Th e e ngineer can then co-operatewith the ar ch itect a nd the contractor to ensure that fini shes meet w ith

th e pr ovis i o ns in the drawings. At that stage any last minute cha n gesthat wou ld facil i tate management can be mad e. For in stance, mostgener ator s come with very small diesel tank s. Th e manager sh oul d

per sua d e hi s cl i ent to in stall a lar ge r tank, i n the l arge r bu ilding s fromfi ve to thirty thousa nd li tres of die sel .. At t h i s stage the m anager shouldensur e that other necessary feat ur es ar e attended to including:

Office accommodation for the site staff

I1!1i o;o fH..:n omitted in architectural dra w i ngs . I n a l arge complex the r e , 1ild "''' o nl v b(.!a res ident eng in eer or caretaker bu t a l so an ass i stan t

11 111 1 ll!.,lllltl.it n'i elec trical , m echan i ca l , air-co nd i ti oning a

29


plumber, swimming poo l attendant, clea ners, gardener s, securityguard s, a ty pist, a store-keeper, etc. There has to be a place in th ecomplex easily accessible to tenants , as opposed the manager 's office

which could be several k i l ometers awa y, f rom where a l l the s taff arecoordinated, whe r e reports are lodged, where payments are made . [t

shou ld be a place w it h telepho ne, i ntercom, a store and a workshop.Where th is was not provided f or i n t he d r awings par t of the garden orcar par k may be carved out. Otherw ise a maintenance office may becrammed into the generator engine r oom . Otherwise it may be found

tha t par t of the expensive le ttab le Space has t o be conve rted to amaintenance office.

The store would be for bulk -pur chased items like electric bulbs , fluorescent tubes, spares for the air-c ondi tioning and the

generat or . Bulk purchase helps save service cha r ge money but pilferingmus t be checked.

Living accommodation

For large complexes , espec ially residential , living accommodat ionmay be prov ided for the engineer or caretaker on s ite and this would beadvantageous for quick action. Also a room or two wo uld be an

advantage for the electricians who wou ld need to work shifts.

Electr icity meters

NEPA usuall y feeds large comp lexes that dr aw power of over 1000

amps through one Maximum Demand (MD) meter. That ra ises the

problem of how to collect t he correct charge from each tenant since

NEPA usually does not have eno ugh me ters to install for each flat in a

30

-

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29/56

Preliminari es

block of flats or eac h floor in an office block. The so luti o n is for the

client to install a check meter for eac h flat or each office floor. And once

a mont h when the bill co me s the m anager app ortions pr o rata according

to the r ead ing on each check meter. If n o c heck meter s are installed the manager ma y co llect by the

number of li ght point s in each flat or offi ce. But obviously this method

is faulty. H ow do the numbe r of soc k ets d etermine a parti cular tenant's

consu mp t ion ? What of the tenan t w h o has hi s ai r -con dition ers on all

day and a ll nig h t as agai nst the one w ho hates ai r-cond itionin g , or w ho

has traveled? Wha t of th e light industry in one corne r of o ne of the

offices as aga inst a sma ll office that j ust uses some li ght p oin ts and no

air-conditionin g? So me manag er s ba se the char ge on t he area occupied.

This al so cannot be acc ur ate. C heck meter s m ake it ea s ier to calc ul ate

the co nsumpti on of eac h tena n t, and , if iso l ator s are in sta lled a rapidd isco nn ec ti on of s uppl y to any d efa ulter is made possible.

Taking over on comple tion of construction

The m anger's and his e n gineer's prese n ce at ha nd-ove r wi ll e nab le him

ensur e that the co ntr acto r h as co mpl ete d necessary fi nishin g works

otherwi se tenants could emba rr ass him with li sts of wor k s ye t to be

carried out. They wi ll be the r e when all th e serv ice s are tested and th e

ce r tificate of comp let io n issued. At this tim e w hen he is not beset wit h

tenants and th eir probl em s he w ill familiari ze him se lf wit h the buildin g .

That know led ge of the buildin g w ill be useful at the end of th e defects

liability period , usua lly six month s, for his client and arch itect will r e ly

on hi s and his e ngineer 's in put pri or to issu i ng a ce r tificate of final

com p let ion . It is the eng in ee r or caretake r who is there on a day-to-day

31

Property Management Practice in Niger ia

basi s and will therefore be better placed to note d own in deta il pr o bl ems

that the contractor will need to take care of befo r e the archite ct iss ues

him with the final di scharge certifica te.

Taking over from another manager

Wh ere h e i s taking over an occ upi ed and managed property it i s

assumed that , as a professio na l, he has ensu r ed that the termin at ion ofthe ag r ee ment of the ex is tin g manager was do ne p r ope rly w ith th e

, appropr i ate notice of termination served on him. U nfortunate ly, so memanagers do not care for such niceties and g leefu ll y move in. But s u c h

mana ge rs must know that if they encourage c li ents to terminat e o the r

agents' agreements improp erl y, they could suffer the same fate in

future. The ma nager wo ul d have contacted the curr ent man ag ing

age nt informing him of his appoi ntm ent a nd asking if he has a ny

object io n to the chan ge . There cou ld be an objection w h ere ther e i s a

di s pute with the prop erty owner. He will ask the form er mana ger for a

sc h edul e of tenant s and leases or tenancies, deta ils of payments a nd

debt s including s'ervi ce c har ge. The ou tgoing manage r may a lso g ive

h im in formation on the peculi ar ities of th e prop erty. But if the take-over

is u nfair the new m anager w ill not get the co-operation of the ou tgo ing

ma nage r and may have problems from the beg innin g. In a prop er h and

ove r the new manager will have enough tim e to line up his staffing.

Where ne cessary he will r eta in some of the o ld staff for continui ty but

may have to mov e staff from his ex is ting staff poo l. That way he w ill be

able to br ea k any sub s istin g loya lty to the old manager es pec ia lly w here

the tak eove r was n ot amicab le . At tak e-o ve r , at wh i ch hi s representative

an d the old age nt's will b e presen t, h e w ill t ake d etailed notes of th e

32


30/56

Prelimi na ri es

current condition of th e property noting d ow n anything that r equire s

attention. Wh ere there was no agent managing , the client wi ll have to

hand over the bu i!ding plans , a sched ule of existing tenancie s or leases ,detail s of vaca nt units , insuranc e cover including the name of theinsuran ce company and premium, debts , liabili ty for rates , electricitycharges, staffing , including his relatives who may consti tute a clog in

operations and who the manage r w ill have to per sua d e him t o rem ove.

The mana ger and the client will agree on procequre , whic h of the

existing staff to lay off , wh ich contractor he can lay off if not found

sa ti sfactor y, frequ ency of accounting, the exte nt of the ma nager's

authority to repair , the extent of his authority to negotiate tenancies and

leases includin g r enewa ls without reference to his client , etc. He will now prepare his reco rd s, obta in copies of exist in g

tenan cies, ope n se parat e files for r ates , ele c tr icity, sta f f , insu r a nce ,

major installation s like lifts and air-conditioning. As he lets t he units he

will o pen a separa te file for each letting.

Determining lettable space

The mana ger should ascertain exactly what he is lett in g. Sometimes

wha t is on the a r ch itectural drawing d oes not agr ee wit h wha t has been

built. Thecontractor

may have incre ase d or de creased th e

measurements, perha ps acc iden tally or because he was una ble to read

the drawing and was not closely superv ised by the architect , assuming

one was e ngaged. 1t could a lso have b een a case of the prop er ty owne rnit ing the measurements slightl y at construct ion stage to suit hi s

\\hun The m anage r must r ea lize that the reduction or in creme nt of the

lhll 11 1nnu1 the bu ildi ng by a few centimeters can amount to a lot of

33

Property Managem ent Practice in Nigeria

s pace ove rall. It is ther efore necessary for th e man ager to actuallym easur e the space, especially whe r e offi ces or co mme rc ial buildings

are concerned , to asce rtain the exact letta ble space. If that is done he

will b e saved the embarras sme nt of bein g called ba ck, perhaps yearsafter, as has happ ened to one of the major firms of estate surve yors and

valu er s when the CDBL insiste d, yea r s after taking the lease of a

banking space in a building on Ca mpbell Street , on re-measuring thes pace. The s pace was found to be less tha n h ad bee n qu oted in the initial

ag r eement. CDBL demanded a nd got a su bsta ntial r ef und from the

landlords.

Modern office construction is open plan a nd net lett ab le space

is obtained by measur ing the internal dimen sio ns, outside wall to

outside wa ll , less toilets , lift l o bbies, stairs , corr idor s, an d thi cknesses

of solid internal wa lls, if any. Qu ite often, w her e w h o l e floor s are taken by sing l e ten ants , such tenant s carpet lift lobbies and position g ua rdsand receptionists there. There is a valid case for rents to be charged for

th e exc lus ive use of such l obbies .

Furni shed l ettings a r e not common. But where lettin gs are

furni sh ed th e manage r will take an invent ory of conte n ts and draw up a

sched ul e of co nd it ion and agree these w ith eac h tenant at the beg innin g

a nd at th e en d of the tenan cy. Furnished l ettings are few perhap s

becau se inve stors do not cons id er that the ext ra rent s to be earne d

ju stifY the cost offurnishing. Per haps th ey a r e wrong. There are peop le

on the lookou t for suc h acco mmodati on as good a ltern at ives to ho te ls.

Viewing by prospective tenants

At thi s stage the manager should be s h ow ing the property to

prosp ect ive tena11ts. A note of wa rning should be sounded he r e. ft is

34

_ _ _ _ _ --.::l _ _ _- --- - - - -- - - -- - - - - -

_ _ _ .


31/56


32/56

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

suita ble engin eer /caretaker is engaged. This topi c is dealt with in more

detail under Servi ce Charge'.

37

...

TAKING CHARGE

T h e duties of a m anaging agent d epen d ent i r ely on the terms agreed

wit h hi s clie nt. They wou ld in cl ud e co llection of re nt an d atte n ti on to

r ecu rrin g issue s like in s ur a nce , r ates, and so on a nd dea l i ng w ithma in te n ance an d ensurin g t hat the te nants a b i de by the terms of the i r

tena ncy ag ree ment.

It is no t u nintentiona l that the fir st clause in t he managementagree m ent ofte n dea ls w it h taking charge , m anag in g and controlling

a n d ge nera lly dea ling w ith all s uc h m atters an d thing s that ar

Part 1( Property Management in Nigeria)

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