Recovery of Rent Arrears and Treatment of Difficult Tenant in Residential and Commercial
CHAPTER ONE
OBJECTIVE OF STUDY
The aim of this dissertation is to examine the possible ways of recovering of rent arrears and treatment of difficult tenants.
The objectives are:
- To examine the root cause of default in rent payment
- To examine the prevailing method of rent recovery
- To investigate the issue of difficult tenants
- To make recommendation in eliminating problems identified.
CHAPTER TWO
LITERATURE REVIEW
WHO IS ACTUALLY A DIFFICULT TENANT
A difficult tenant can be defined as that tenant who by his acts, actions and general conduct makes the estate surveyors work much more difficult than what it would have been under ideal circumstances. We might also add that this tenant will generally be the black sheep among his co-tenants. He does not co-operate with other tenant such as contributing to the weekly or monthly refuse disposal charges, He does not abide by the terms of a tenancy agreement, instead, he enjoys doing those things that negates the covenants contained there in. He pays his rent in arrears without the courtesy of an apology, he is the one that will convert his apartment to other use without consulting the landlord or his managing agent and without having any taught of the effect of such actions having any thought of the effect of such actions on his co-tenants, he does not consult the landlord before subletting or assigning his interest in the demised property.
A difficult tenant will not carry out any of the repair habit trusted upon him by the terms of tenancy agreement, he will usually have a large bill of telephone, water rate and electricity unsettled. If NEPA officials disconnect his light, this tenant will go through the back door to have it reconnected without settle the bills. In a nutshell, a difficult tenant will usually ignore the landlord or the managing agents quit notice.
TYPES OF LEASES
There are different types of leases namely.
MONTHLY LEASES
These are leases where by rent are paid either in arrears or in advances monthly. This situation arises where there is excess supply over demand. It is usually for residential accommodation where the tenant has a short period of time to spend or as in rural where there is no competition for accommodation this usually obtains among low income earners settlements.
Even in the village there may be gratuitous leases where tenant doesn’t pay for occupying the premises only on the understanding that he keeps and maintains the house in the township. It is seen as a relief because of the short period, it is often seen to favor holiday markers, travelers, students, depending on how often they have clients
QUARTERLY LEASES
These are lease whereby rent is paid quarterly i.e every four months. This type of lease is often enjoyed by students who could not be accommodated within the school sessions or semesters.
Quarterly leases could equally be enjoyed by holiday makers who may prefer to enter into your month’s leases which are more economical than lodging in hotel.
BIANNUAL LEASES
Under this arrangement the duration is usually every six months and is largely experienced within the high density areas. This arrangement is often preferred by low income group in the society. The landlord and the tenants agree in principle on a particular rent to be paid biannually. Even in the hotels, suites are rented for a period of six months and above. The situation occurs where there is over supply.
Biannual arrangement gives relief to a tenant i.e gives tenant opportunity to attend to other financial issues. To low income earner biannual leases is good unlike the annual lease where a tenant is expected to pay for a period of 12 calendar months at once.
ANNUAL LEASES
These are leases whereby rent are paid annually this type of lease is not common at it often enjoyed by the income earners. Annual lease are usually executed in choosing area like brewery area, Oke – Opo G.R.A and Omo Olupe area of ilesa. This saves the cost of investment realization.
To an investor it is a welcome arrangement in the sense that ,he receives his rent annually, if not in advance of more than a year as the case may be thus however gives him the encouragement of re-invest, hence he has his rent in bulk.
LANDLORD TENANTS RELATIONSHIP
Relationship that exists between landlord and tenants can be very cordial if both parties adhere to the term of the lease agreement this however, will ensure a steady mutual understanding between the two parties. Apart from the above mentioned, there could be a continuum of servant squatter, tenant at sufferance and tenant at will indirectly or directly each element in the continue has a relationship with the landlord based on land, it is crucial to be aware of this fact, perhaps more crucial to know much about the relationship between landlord and tenant particularly in the Nigerian setting the object of landlord tenant relationship is land. Upon it depends by nature all divine and human made thing, therefore an examination of this relationship is necessary to understand land in its nature and uses. The person and position the rights and duties as well as the privilege and obligations of three major factors that needs to be examined, these factors are the tenants and the landlord and the estate agent.
CHAPTER THREE
INTRODUCTION
This research methodology tries .to explain how data are collected and processed together with the strategic employed in the course of carrying out the study to obtain information from various properties and how to get the data collected and further processing done so as to reveal the true other solution.
For this however, both primary and secondary sources of data collection are used.
This is done to give research through and comprehensive study of the whole exercise so as to obtain beautiful information that will assist in making an accurate in the issue.
THE STUDY AREA
The property located at no. 36 “Oke Opo” G.R.A ar Ilesa, a a block of flat with three bedroom in a medium density residential area of Ilesa. The other one which is situated at “Bolorunduro” area of Ilesa is two floor shopping complex which is located at low density commercial area of Ilesa, the .building were completed in 1992 and 1996 respectively.
The former manager of the property is “Sina Ajani & co Estate Surveyor and valuer” while later is managed by Ajilex property” both houses were constructed of sand crete blocks rendered smooth and painted on all sides the floor finished with terrazzo and sand cement respectively
The doors are mixtures of solid carved iron, wooden paneled and hollow core plywood flush types especially the windows are generally of NACO luvers blades, electricity and water supply are connected from the mains even though regularity of the services are not guarantee, the two properties are enjoying good accessibility and good drainage system.
DATA COLLECTION
Data is a raw fact collected about an object that need to be processed before, it can be meaningful or become informative there are two type of source of data collection.
Primary source of Data Collection
These are fresh data, they are collected by the investigator themselves or by someone on his behalf, for the purpose of solving an immediate problems.
Secondary Source of Data Collection.
These are data already in existence, they are not original not first hand information, they are only collected to solve a relevant problems, they appear in form of published or unpublished materials. They can be collected from text books, journals and estate surveyor and valuer relating to the topic and also magazines and newspaper and also .from internet e.t.c.
SAMPLE FRAME AND SAMPLE SIZE
The sample consist of a manger, four staff member and two clerk and seven industrial training students, in the study the population is people, the sample is 14.
CHAPTER FOUR
DATA ANALYSIS AND DISCUSSION
In this chapter, the analysis of the data and findings of the survey by personal and impersonal interviews were carried out. Question were administered verbally to individuals (landlords, tenants and estate and estate surveyor or agent), the total number of 40 questionnaire were administered out of which 37 (questionnaire) number were returned.
CHAPTER FIVE
SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION
SUMMARY OF FINDINGS
From the findings it was observed that some tenant are extremely difficult into the extent that they are too hard for estate agent to control more so a difficult tenant is the one who does not comply with the tenancy agreement.
Different tenant will not contribute to the weekly or monthly house clearing and he will not carry out any repair works having entrusted in him.
Managing agent or surveyor usually use some measure to treat or handle a tenant like, this such action is by charging them to court or by serving them a quit notice to vacate the premises so that another tenant can come in into the property but if you want to serve tenant a quit notice at least six months notice must be giving to such tenant so that he or she can get another accommodation between that six months.
Based on the previous chapters, we have discussed on the causes of problems that leads to rent defaults and also discussed about the aim and objectives of findings with the limitation of the study which covers the method of rent recovery and how to deal with difficult tenants.
Besides we have expansiate much on the types of leases that we have and also described who actually is a difficult tenants. This work will introduce you to the causes of rent default and also to let you know the source of data used for collection of findings and also the types of questionnaire used, with the method of data presentation and analysis used.
RECOMMENDATION
Apart from careful tenant selection, it is advisable to make it a tradition to collect at least 3 years rent or more than 3 years rent advance at the commencement of tenancies to hedge against possible future defaults upon renewal.
The argument is that compound interest on fix deposits acquire will be enough to compensate for the loss of rent and interest within a defaulting period of say six months, it is expected that this is enough time to replace the defaulting tenant with a new one. More so, income realized now has a higher value than a slightly higher rental income realized in few years time due to inflation and wrong national economic policies.
Court Action
Managing surveyors find to use legal redress to obtain judgment in matters like this, but then one should not forget the time lad its dragging tendencies coupled with the fact that land matter between landlords and tenants always favour tenant because of government policy.
To avoid these, effects should be made by surveyor to avoid court proceedings. Dialogue is always the best option or ways of settle matters like, its true that some tenants are extremely difficult, such that can still be accommodate by skillful and talented estate surveyor by settle any matter that arises between them amicably, but if the matter cannot be resolve amicably, then the surveyor can now use legal means to eject the tenant out of the property and doing so all the necessary discomfort measure must be employed to force the tenant out of the promises such as serving him a quite notice from a lawyer (from a landlord to estate surveyor to the lawyer). This very action can change a willing tenant if actually he wants to retain the property.
More so, serviced attached enforcement machinery should be contained in the tenancy agreement and deed of sub lease to be executed with future tenant, serviced attached endorsement machinery can be arranged so that the bill for electricity and water rate salted monthly through the managing agent and in-conjunction with rent in the month it falls due.
It should be made a condition that if the landlord want to increase the rent of the property at least six months notice must be given to the tenants.
CONCLUSION
The landlords should be advised to endorse the maintenance of a floating account for the fundings of minor repairs maintenance and payment requirement as at when required.
It is important also to enlighten the tenants and the public at large on the need to pay rent as at when due and not in arrears, hence the disadvantages involved in arrears of rent starts to be enormous. And this can be achieve through the effective use of the electronic and print media regular arrangement of seminars, workshop and conferences when the relevance of estate surveyors and valuer in the efficiency of property management will be explained.
Spirited efforts should be made by property owners to accord managing agents a free hand in the handling of the affairs of their properties particularly in the screening and selection of tenants such, freedom will enables the agent put their professional acumen and wealth of experience to bear, in the handling of the caretakers task of selecting responsible and valuable tenants that will enhance the realization of the landlords investment objectives and not the other way round.
Furthermore, in the pursuit of sound policies towards the eradication of arrears of rent and difficult tenants lease agreements should be properly drafted to avoid ambiguities.
In summation, if all that were suggested and recommended in 5.3 are employed in method of rent recovery and treatment of difficult tenants adequately, it will then go a long way in solving long lasting problems militating against methods and approach, there is no doubt that application of these suggested solutions and methods, but ever increasing challenges in future.
REFERENCES
- An Unpublished Thesis for Co-operate Membership of the Nigerian Institution of Estate Surveyors and Valuer.
- Lean W. and Godbelt .B (1977): Aspects of Land Economics, The Estate Gazette Limited London.
- Millimgton A.A (1976): An Introduction to Property Valuation the Estate. Gazette Limited London.
- Olukayode O. (1992): The Relationship Between Landlord and Tenants. Real Estate and Housing News Rent.
- Oraedu E. (1986): Effects of Locations on Property values.
- Olaniyan A.A (2009): Principles of valuation II
- Paper Presented at the National Conference on “Nigeria law of landlord and tenant” “Law of Landlord and Tenant”
- Than Graft M. (1984) Principle of Estate Management estate. Gazette Limited London.