What property management means
Property management is the day to day running of a property for its owner.
The manager finds and vets tenants, prepares and manages tenancies, collects rent, arranges maintenance and repairs, administers service charge where applicable, handles tenant issues, and accounts to the owner.
The relationship is agency. The manager acts on the owner's behalf, owes duties including to account for money received, and must not profit from the position without disclosure.
It is used most by owners who cannot manage the property themselves: those living abroad, those with several properties, and those who own commercial premises requiring active administration.
The value is real. A well managed property is let, maintained and collected. A badly managed one deteriorates while the owner assumes it is fine.
The risk is equally real, and it concentrates in one place: money collected by somebody else on your behalf.
How it is used
A property management agreement should cover a defined list.
The property and the scope: letting, collection, maintenance, service charge administration, or all of them.
The fee: usually a percentage of rent collected, and whether it is charged on collections or on rent due.
Authority limits: what the manager may spend on repairs without approval, and what requires the owner's consent.
Tenant selection: whether the manager may let without approval, on what terms, and whether the owner approves the tenant.
Money handling: where rent is held, how often it is remitted, and whether it is kept separate from the manager's own funds.
Reporting: what statements the owner receives and how often, and access to records.
Insurance and compliance: who arranges what.
Term and termination, including what happens to deposits, keys, documents and tenant information on termination.
And indemnities, so the owner is not exposed for the manager's failures.
Key features
- Running a property on the owner's behalf under an agency relationship
- Covers letting, collection, maintenance and tenant management
- Usually paid as a percentage of rent collected
- Authority limits for expenditure should be stated
- Client money should be held separately and remitted on a schedule
- Regular statements and access to records are essential
How this works in Nigeria
The failure mode is consistent and it affects absent owners most.
An owner abroad appoints somebody to manage a property. Rent is collected. It is not remitted, or it is remitted partly, or it is remitted for a year and then stops. Repairs are invoiced that were never done. The property is let to somebody the owner never approved, on terms they never saw. Deposits are collected and never accounted for.
By the time the owner visits, the position is difficult to reconstruct because there are no records they hold.
The protections have to be built into the arrangement at the start.
Require rent to be paid by tenants directly into an account in the owner's name, or into a designated account with the owner having visibility. That single provision removes most of the risk.
Require monthly statements with copies of receipts and invoices, not a summary figure.
Set an expenditure limit above which approval is required, and keep it low.
Require the owner to approve tenants and to receive a copy of each tenancy agreement.
And instruct somebody independent, whether a lawyer or a family member, to inspect periodically and confirm what is actually happening.
The second Nigerian point is the service charge, which is a separate fund. Where a manager administers service charge for a building, it belongs to the contributors and should be accounted for separately, with statements showing what was collected and what it was spent on.
And for owners abroad, a power of attorney granting management authority should be defined narrowly, for management rather than for dealing with the property, because a general power of attorney over land is a serious document to hand to a manager.
Property manager vs estate agent vs caretaker
Three roles Nigerian owners engage, with different scope and different risk.
An estate agent introduces parties to a transaction and is paid a commission on it. Their involvement ends with the transaction.
A property manager runs the property on an ongoing basis, collecting rent, maintaining it and managing tenants, for a percentage of collections. The relationship continues, and so does the exposure to money handling.
A caretaker occupies or attends the property to secure and maintain it. They occupy with the owner's permission as a licensee, and their occupation is not adverse to the owner, which is why appointing one protects an absent owner's possession.
An owner living abroad frequently needs all three at different times, and each should be engaged on written terms defining scope, fee and authority over money.
Limits and risks
The arrangement depends on trust, and the owner is by definition not present to verify what is happening.
Recovering money that was collected and not remitted is also difficult in practice, whatever the legal position, particularly where records are held by the manager.
General property management is not a regulated profession in the way valuation is, so there is limited external accountability.
And a manager who is also the letting agent has a conflict on tenant selection, since they earn from letting rather than from letting well.
Worth knowing
Require tenants to pay rent into an account in your own name and insist on monthly statements with the underlying receipts. Nigerian owners abroad lose years of rent to managers who collected and did not remit, and the arrangement that prevents it costs nothing to set up.
Questions people ask
What does a property manager do?
Runs a property on the owner's behalf: finding and vetting tenants, preparing and managing tenancies, collecting rent, arranging maintenance, administering service charge and accounting to the owner.
How are property managers paid?
Usually a percentage of rent collected. The agreement should state whether the fee is charged on rent collected or on rent due, because the difference matters when a tenant does not pay.
How should rent be handled?
Ideally by tenants paying directly into an account in the owner's name, or into a designated account the owner can see. Rent held in the manager's own account is where most losses occur.
What reporting should an owner require?
Monthly statements with copies of receipts and invoices rather than summary figures, plus access to records and copies of every tenancy agreement.
Should the manager be able to spend on repairs?
Up to a stated limit, with anything above requiring the owner's approval. The limit should be low enough that significant expenditure is always visible.
What should an owner abroad do additionally?
Instruct somebody independent to inspect periodically, keep any power of attorney narrow and limited to management rather than dealing with the property, and require tenant approval before any letting.