RECOVERY OF RENT ARREARS AND TREATMENT OF DIFFICULT TENANTS IN RESIDENTIAL AND COMMERCIAL PROPERTIES

SOLD BY: Excellent Project| ATTRIBUTES: Title, Abstract, Chapter 1-5 and Appendices|FORMAT: Microsoft Word| PRICE: N2500| BUY NOW |DELIVERY TIME: Within 24hrs. For more details Whatsapp us on: 08055730284

RECOVERY OF RENT ARREARS AND TREATMENT OF DIFFICULT TENANTS IN RESIDENTIAL AND COMMERCIAL PROPERTIES

ABSTRACT

The study assessed the recovery of rent arrears and treatment of difficult tenants in residential and commercial properties The specific objectives include to examine the causes of rent defaults in Nasarawa town, identify the methods of rent recovery adopted in the study area, assess the factors influencing rent default and determine the effects of recovery of rent and treatment of difficult tenants on residential and commercial property management The research method used was survey design. The sampling techniques adopted for this study is the random sampling techniques. Statistical tools such as tables, percentage and descriptive methods were used to presents and analyzed the data. The study revealed that the causes of rent default are general economic conditions in the country, Non-payment of salaries as at the time their rent expired, Irregular flow in tenants’ income, un-foreseen circumstances on the path of the tenants’ and finally, some tenants bad characters and that rent default have negative impact on property management. The study recommended that Real Estate firms and landlords must clearly and unequivocally stipulate the consequences of refusing to pay rent and enforcement of relevant laws and regulations.

CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

The management of real estate investment for optimum returns is one of the fundamental areas in real estate profession. These returns may come either as regular income streams, or a lump sum; depending on whether the subject property is put for letting or is sold outrightly. In order to achieve this sole objective of the investor, an adequate property management schedule must be put in place for such real estate investment. Property Management, according to Wikipedia, is the operation, control and oversight of real estate as used in its most broad terms. The word Management indicates a need to be cared for, monitored and accountability given to its useful life and condition. This is more akin to the role of management in any business.

One of the fundamental roles offered by Estate Surveyors as professionals is Property management. Other roles include valuation for all purposes, estate agency, facilities management, property marketing, property development appraisal, and environmental management. In practice, the estate surveyors carry on property management services which include selection of tenants, acceptance of rent, responding to and addressing maintenance issues, advertising vacancies for letting, reviewing rent and representing the landlord before courts of competent jurisdiction in ejecting defaulting tenants, amongst other services. In addition to managing income and expense related activities, estate surveyor manages construction, development, repair and maintenance of a property.

However, there are a couple of challenges in which property managers generally faces when discharging their professional duties. One of these many problems is tenants’ inability to pay their subsequent rents. This is known as Rent Default. Default occurs when a tenant does not pay the rent specified in the tenancy agreement. The default can also pertain to other breaks in the terms of the lease (for example, by adopting a dog when pets are not allowed). However, failure to pay rent is the most frequently committed breach by tenants and is the most common cause of eviction.

According to Oni (2010), the rate of default in rent payments amongst the tenants in Ikeja metropolis is high. In a survey of 120 estate surveyors, 12 (representing 10%) stated that tenants usually fall into arrears for up to six months; 86 (about 72%) stated that default is between seven and twelve months; and 22 (about 18%) were of the opinion that rents are owed for more than twelve months. In other words, the study revealed that 90% of the respondents had the experience of default in rent for more than seven months.

Moss (2003) identified factors responsible for rent default to include: affordability, disputes over quality of housing units; confusion over the type of tenure and the prevailing culture of entitlement on the part of tenants amongst others. Also Salleh, Yosof, Johari and Talib (2014) in a study conducted in Malaysia indicated that only ethnic group significantly influenced the ability to pay rent in the study area. Similarly, Dabara, Ankeli, Oluwasegun and Odewande (2014); Ankeli, Dabara, Oyediran, Guyimu, and Oladimeji (2015); and Sani and Gbadegesin (2015) identified poor housing facilities, breach of tenancy agreement, unemployment, retrenchment, poor property maintenance, bad landlord/tenant relationship and harsh landlord’s policy as the major factors responsible for rental default. Without any iota of doubt, rent defaults often affect the nature of returns on real estate investment  

Recovery rent arrears and treatment of difficult tenants has been identified as a major set-back in property management. These aspects of management functions are being confronted with many problems because rent payment depends mostly on income earn from business carried out in the property. Alluding further to this, Maxwell (2003) stated that developing and maintaining good working relationships between property owner and tenant is one of the responsibilities and priorities of a property manager, this being crucial to successful achievement of the aspirations and objectives of all parties. Consequently, understanding the relationship between the property owner and tenant is germane to successful management of real estate without which the stakeholders may not derive maximum benefits from their investments. It is against this background that this study seek to  examine recovery of rent arrears and treatment of difficult tenants in residential and commercial properties

The process of rent collection in residential property has a lot of challenges. One of such challenges is delay in the payment of rent. Some tenants fail to meet up with the agreed deadline for payment. This could be as a result of delay in the payment of wages by their employers, increase in rental price, the effects of inflation, among other factors. Delay in the payment of rent often results  in some significant impacts on return on investment and could also lead to legal battles between the landlord and the tenant, which may lead to the forceful eviction of the tenant. The failure to pay rent and as when due is a major and the most frequently committed breach which rocks the landlord-tenants’ relationship. This accounts for the cause of most eviction in Nigeria (Oni, 2011). In a bid to forestall this, rental property owners as well their agents engage in scrutiny of prospective tenants within a set criteria through an adequate tenant selection process. As much as certain tenants’ characteristics are historical, there is possibility of change in behaviour over a period of time in some aspects, thereby making it difficult to blindly rely on past records of prospective renters. Olukolajo and Ojo (2016) identified rent related issues such as default in rental payment and its associated cost of recovery as a major contributor to conflicts between landlords and tenants and a risk to property investment. It is on this note that the research seek to assess the effects of rent default on return of residential property investment.

1. Statement of Problems

It has been observed that in recent times rental defaults on leasehold properties are on the increase. The process of rent collection in both commercial and residential property has a lot of challenges. One of such challenges is delay in the payment of rent. Some tenants fail to meet up with the agreed deadline for payment. This could be as a result of delay in the payment of wages by their employers, increase in rental price, the effects of inflation, among other factors. Delay in the payment of rent often results  in some significant impacts on return on investment and could also lead to legal battles between the landlord and the tenant, which may lead to the forceful eviction of the tenant. The failure to pay rent and as when due is a major and the most frequently committed breach which rocks the landlord-tenants’ relationship. This accounts for the cause of most eviction in Nigeria (Oni, 2011). In a bid to forestall this, rental property owners as well their agents engage in scrutiny of prospective tenants within a set criteria through an adequate tenant selection process. As much as certain tenants’ characteristics are historical, there is possibility of change in behaviour over a period of time in some aspects, thereby making it difficult to blindly rely on past records of prospective renters. Olukolajo and Ojo (2016) identified rent related issues such as default in rental payment and its associated cost of recovery as a major contributor to conflicts between landlords and tenants and a risk to property investment. It is on this note that the research seek to examine recovery of rent arrears and treatment of difficult tenants in residential and commercial properties.

1.3       Aim and objectives of the study

Aim

The aim of this study is to to examine recovery of rent arrears and treatment of difficult tenants in residential and commercial properties.

            Objectives

            The specific objectives of the study include:

1. Examine the causes of rent defaults in Nasarawa town
2. Identify the methods of rent recovery adopted in the study area
3. Assess the factors influencing rent default in Nasarawa town
4. Determine the effects of recovery of rent and treatment of difficult tenants on residential and commercial property management

1.4       Research Questions

1. What are the causes of rent defaults in Nasarawa town?
2. What are the methods of rent recovery adopted in the study area?
3. What are the factors influencing rent default in Nasarawa town?
4. What is the effects of recovery of rents and treatment of difficult tenants on residential and commercial property management?

1.5       Significance of the study

This study focused on the recovery of rent arrears and treatment of difficult tenants in residential and commercial properties. This is especially significant considering the rising wave of tenancy cases in law courts and the high rates of rent default in the country. This study will help to reduce tenancy cases by identifying the incidence of default in rental payment and proffering solutions to address these problems. By reducing the number of rent-related issues, there would be better and higher return on investment. Thus, further encourage investment in real estate.

The significance of this study will also be found in the area of reduction in forceful eviction of tenants. This will result from a better understanding between landlords and tenants. Furthermore, since rent collection and payment is an important aspect of property management, this study will enable property owners to assess the best possible way of collecting rent. This will help to save time spent on litigations and as well save resources which are scarce.    

This study will contribute to the body of knowledge that is available in public document, literatures, book, magazines and journals. Also it will serve as a reference material for students, scholars and other researchers.

1.6       Scope and limitation of the study

The scope of this study is limited to the examination of the effect of rent default on return on investment of residential property. Emphasis is placed on residential properties in Nasarawa town alone because of the importance of residential properties and it serve as a source of housing and also has the highest percentage of land use. This is because rent collection covers a wide range of property types, and delving into these will make the study too broad.

Limitations

The researcher faced various problems when carrying out this field study. Some of these challenges included:

1. Some respondents were unwilling to fill the questionnaires since they were suspicious about the study. Many perceived it as sharing very vital information which they were not ready to furnish the researcher with.
2. Delays were experienced from the respondents who took very long to complete the questionnaires and constant postponement of the picking date proved to be very frustrating to the researcher.
3. At times some of the respondents did not fill in the questionnaires adequately and ignored certain sections that required the giving of opinions which made it difficult for the researcher to make adequate conclusions.

Irrespective of the various challenges encountered, they did not limit the achievement of the stated aim and objectives of the research as well as the validity of the research.

1.7       Definition of Term

Landlord: A person or organization that owns property that is rented to tenants

Tenant: Somebody who rents a building, house, apartment, plot of land, or piece of property for a fixed period of time.

Real Estate: land including all the property on it that cannot be moved and any attached rights

Property Management: It involves managing landlords-tenant’s relationship

Covenant: a formal and legally binding agreement or contract such as a lease, or oneof the clauses in an agreement of this kind.

Lease: A Lease is an agreement that creates an estate in land.

Lease Agreement: It is a legal entitlement or agreement. Tenants and Landlords arebound either by an oral or written agreement in a lease.

Landlord- Tenant Covenants: A lease is a form of contract and so will contain aseries of undertakings by the parties which are known as covenants because it is by deed.

1.8       The study area

Nasarawa Emirate in Nasarawa State is located in the Central region of Nigeria. It is flanked by Keffi and the Federal Capital to the North. To the South, it is bounded by Benue River and to the west; it bordered the present Gadabuka and Toto Local government area which are of course, part of the Emirate. To the East, it is bordered by Doma, Lafia and Keana Local Government Areas all of Nasarawa State.

Physical Characteristics: The major things considered under physical characteristics of Nasarawa are, geographical location, temperature, rainfall, geology, wind, vegetation, humidity, soil.

Temperature: The temperatures are generally high during the day, particularly between the months of March and April. The main monthly temperatures in the state range between 20⁰C and 34⁰C with the hottest months being March/April and the coolest months being December/January.

Rainfall: The study area experience dry season without or little’s rainfall from November to March of about 95mm, which is wet season is from April to October of about 1.30mm,

Geology: From the Jos Plateau, this comprises of basement complex metamorphic rocks, granite and basalt of two or more ages. The basement complex is covered by shadow soil.

Wind: Nasarawa local government is determined by the seasonal movement on inter-tropical convergence zone [ITCZ], which represents the moving frontier between the moist Atlantic air from the south and the dry air from the north. In the dry season from November till March the north east wind are dominant. For the remaining of the year, the south-western winds are prevailing. Generally, the wind velocity is relatively low.

Vegetation: Nasarawa is situated in the Benue valley between the Benue river and Jos Plateau. This area lies within the part of southern guinea savannah. The vegetation of Nasarawa has, to a large extent resulted from extensive agricultural use of the land, the predominant vegetation type is partly savannah which is characterized by a discontinuous canopy, shrubs and grasses many areas are affected by man through bush burning during the dry season. Among the common trees are oil bean trees, locust bean free and isoberline trees.

Relative Humidity: The relative humidity is the measurement of deepness of the atmosphere which varies from place to place and different time of the day. The level of humidity in Nasarawa state in January is quite less that 40% which rises as from February to July to about 88%. By April when the steady rain commences it will be about 75% by August when the inter-tropical discontinuity is at it northern part, most position of the entire state will experience tropical marine wind and continues till December.   

Soil: The major soil units of Nasarawa belong to the category of oxisols or tropical ferruginous soils. The soils are derived mainly from the basement complex and old sedimentary rocks. Lateritic crust occurs in extensive areas on the plains while hydro orphic soils (limbic incept sols) occur along the flood plains of major rivers (Nyangba, 1995).Socio-Economic Characteristics: Nasarawa main economic activity is agriculture; cash crop, such as yam, cassava and egusi (melon). Production of minerals such as salt is also another main economic activity of people in the state; Nasarawa produces a large proportion of the salt consumed in the country.