Evaluation of the Problems of Rent Collection as an Aspect of Property Management

Evaluation Of The Problems Of Rent Collection As An Aspect Of Property Management In Enugu State (A Case Study Residential Properties In Enugu Metropolis)

METHODS OF RENT COLLECTION: The following methods of collecting residential property rent were identified by Okwuonu (2011):

  1. A) COLLECTION THROUGH ESTATE AGENTS

Rents on residential property can be collected through estate agents. This takes place when a landlord engages in a contractual agreement permitting an agency to act on his behalf. The agency through this agreement collects rent from tenants either monthly or yearly as agreed between he landlord and the tenants. It also performs other obligations s stipulated in the agreement between the agency and the landlord such as, renovation of property, admittance of new tenants and eviction of old tenants. The estate agent also notifies the tenants of increment in rental price when due. The landlord in turn pays commission to the agency as stipulated in their agreement.

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 B) COLLECTION THROUGH CARE-TAKERS

A landlord who is not resident in his property may appoint one of his tenants to act on his behalf. Such a person is known as a care-taker. The care-taker performs such duties as : the collection of rent, serving of eviction notices, notification of increment, and other duties delegated to him/her by the landlord. Sometimes however, this method is marked by non-compliance from some tenants who may find it difficult to comply with the direction of their fellow tenant, even though he is acting on behalf of the landlord.

  1. c) COLLECTION BY THE LANDLORD

In some cases, landlords collect residential rent by themselves without appointing any one to act as agent. The problem with this method is that, it leads to delay in the payment of rent by the tenants. This is because the tenants may plead with the landlord for more time in order to be able to pay, which may not occur in other methods.

 D) PAYMENT THROUGH THE BANK

Some landlords give their bank details to their tenants for the collection of rent. The tenants in this circumstance does not deal with the landlord or any agent, but pays to a designated bank. This reduces the stress involved in collecting rent by the landlord himself or through a care-taker.

Other ways of rent collection deals with the number of months or years the tenant pays for. For new tenants it is usually for a period of one year or two years as the case may be, depending on agreement with the landlord. For older tenants, duration may vary from one month to six months or at most one year depending on agreement.

 2.1.2 PROBLEMS OF RENT COLLECTION

Ozoagu (2011) during an interview highlighted some of the problems of rent collection experienced by landlords. These problems include:

1)    DELAY IN PAYMENT OF RENT

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Delay in payment of rent may sometimes be unavoidable considering the harsh economic times in which we live in. poor salaries and wages, delay in the payment of wages, inflation and increasing prices of goods all contribute to delay in payment of rent. Delay in payment sometimes leads to tenants being penalized by paying extra. It could also lead to legal battles and forceful evictions.

On the part of the landlord, delay in payment of rent reduces his ability to manage the residential property. This may account for the reason why some residential properties are poorly managed and are in bad condition.

  1. REGULAR INCREMENT IN RENT

This becomes a problem when inadequate time is given to the tenant before increment. Sometimes too, the interval for increment or even the rate of increment are not specified in the landlord-tenant agreement. This loophole often used by greedy landlords to increase their rent at outrageous rates or even by tenants to reject any increment by the landlord.

Another problem on the issue of rent increment is the fact that there are no corresponding increment in wages to supplement residential rental increase. This makes it difficult  for especially civil servants to pay when rent has been increased.

  1. ABSENCE OF A SIGNED AGREEMENT

Landlord-tenant agreements usually make provisions for the amount to be paid, when to pay, whom to pay to, and when to increase. The absence of any document or agreement between the two parties usually leads to disagreements after the expiration of the initial sum paid such disagreement is often settled at the law court after long legal battles, during which the tenant pays no rent to landlord.

 MODE OF RENT COLLECTION

Sometimes the mode through which rent is collected could lead to problems or difficulties. For example, rent collection through care-takers appointed by the landlord could be a problem. This is because the care-taker who may be a tenant like other tenants in the residence, making it difficult for other tenants to comply with the person.

In addition, collation of rent by the landlord himself could also be a problem. This is because some tenants may feel that they could delay payment by pleading with the landlord who may consider their plight, than when rent is collected by an Estate Agent or a bank.

  1. ON-GOING LEGAL BATTLE

During periods of litigation, rent collection becomes a problem. This is because of the court injunctions which may likely result especially when the landlord is the accused restricting the tenant from paying rent until the matter is determined by the court. And of course, many of such legal cases lasts for a long period of time.

In another instance, situations whereby a property is owned by more than one person, like a family house, rent collection could be difficult. This may happen when family members are having a disagreement as to who rent should be paid to. The tenant likely not pay rent until such a matter is determined either by the court or by the family

  1. PRESENCE OF RENT CONTROL LAWS
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Some states have laws which restricts landlords on how much to collect, when to increase, duration of advance to collect and when to evict. Such laws have  been argued by many to be in support of tenants against landlords. Some of these laws are so strict that it makes it difficult for landlords to charge the amount they desire as rent.

 2.2  SUMMARY OF REVIEW OF LITERATURE

2.2.1 RENT AND RENT CONTROL

In just about any lease, some of the most important parts are the rent provisions. The payment of rent is critical to botht he landlord and the tenant. It is what the tenant has to pay for the right and privilege to use the property and it is what the landlord charges to cover things like costs of maintaining the property, paying taxes and hopefully make a profit. In almost every lease, the parties agree on the amount of rent, and it is not uncommon for leases to set out if and  when rent will increase (or decrease) and by how much. But even when the parties agree on such things, some states and cities have ‘rent control’ or ‘rent stabilization’ laws that limit how often a landlord can raise rent and by how much.

It is important for every every landlord and tenant to know some things about the rent provisions of a lease, and if you are in an area with rent controls laws, it is even more critical. So, before signing a lease, be certain to check the landlord tenant laws in your area, or get some assistance from a real estate lawyer.

In most states, the landlord tenant laws control what has to be included in the rent provisions of a lease. The requirements vary from state to state, but generally the rent provisions need to include things such as:

  1. The monthly amount of rent
  2. The date on which rent is due
  3. The manner or method of payment such as by check
  4. When a payment will be considered late, such as if there was a mail delay, including any ‘grace’ period and late fees.

Also, many state laws provide that rent is due and payable without demand for notice at the time and place agreed upon by the parties. In other words, there is no need for the landlord to notify the tenant each month that rent is due.

 

2.2.2 RENT CONTROL AND RENT STABILIZATION

Rent control began in certain states and cities after world wars I and II as a result of increased rents in major U.S. cities, which was caused by the lack of housing. Many modern statues are called ‘rent stabilization’ laws, which are similar to but a  little different from rent control laws. Nevertheless, both rent control and rent stabilization laws generally:

  1. Limit how often a landlord can increase rent and by how much
  2. Allow the government to force a landlord to decrease rent
  3. Limit a landlords ability to evict a tenant.
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Rent control and stabilization laws are not very common. In some states, there are laws that bar a city from enacting such laws. In some states, rent control laws can only be enacted by the state and not cities. But, rent control is still in place in states with large concentrations of population in the U.S. such as California, District of Columbia and New York.

Also, not all rental properties are subject to rent control or stabilization even in areas where such laws exist. Usually, only buildings that were built before or after a specific date and/or house multiple tenants fall within the laws. So, for example, a single family home and condominiums are often not covered by rent control laws. And under many of the laws, landlords have to register rent controlled housing with the appropriate government agency.

Rent increases are typically determined by some administrative body, such as a rent control board. Increases typically range from 4 to 8% per year. These are “automatic” increases that a landlord can make without permission from the government.

Rent decreases typically  occur when:

There is a decrease in demand for rental housing in the area or a decrease in maintenance costs, as determined by the government agency.

If the landlord refuses or neglects to provide services and the tenant applies for rent reduction. “Services” include things like inadequate heat and/or hot water, unsanitary common areas life hall-ways and lobbies and insufficient security, such as broken or inoperable door and window locks.

Evictions are impacted by rent control and stabilization laws in that they usually limit the reasons that justify an eviction by specifically listing appropriate reasons. In other landlord-tenants evictions can occur for any reason listed in the lease or landlord tenant laws. Rent control and stabilization laws typically allow evictions only when, for example a tenant;

  1. Fails to pay rent
  2. Uses the property for illegal purpose
  • The premises will no longer be used for rental property
  1. The building is condemned

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