What is an estate?
An estate is a legal entity donating the character and quality of rights that an individual or individuals possess in a property. Property can be defined as the interest, which can be acquired in an object or thing. The key words from the above definition are rights” and “interest” the concise oxford dictionary defined them as follows;
Interest: “a legal concern, title or right’’
Right: “a thing one may legally or morally claim”
Thus an estate can be described as the interest and/ or rights, which can be held over any object.
Various right and interest may exist at one and the same time over the same object can be held by different individuals. Each of these rights represents an “estate”. For instance, in a multi tenanted office block of eight (8) floors, the owner of the block has an estate in it; each of the tenant occupying separate area also has estate in the same property.
However, the right and interest in these estates are different degree viz:
The right of ownership, which is an absolute right and confers a freehold in interest on the holder.
The right of use, which is a limited right and confers a leasehold interest on the holder.
The freehold interest (estate) is an estate less than the freehold and it exists for a certain period i.e. It is a terminable interest.
It is pertinent to note that ownership rights and interests in property are rarely absolute. Some restriction and limitations usually exist over ownership rights to safeguard the overriding public interest. Such restriction fall under three broad categories viz;
Tenure (duration of ownership)
covenant (leases, license, easement)
estate legislation (rent control, and use act)
As a result of the above mentioned restrictions one can conclude that property ownership is made up of a collection of right thus property is usually described as “a bundle of right”
Characteristics of an estate
The characteristics of an estate can be summarized under the following;
Physical identity: an estate must be tangle thing, which can describe in terms of size, shape and location.
Economic identity: whether an estate is held for occupation or for investment purpose, it represents a financial investment, which is capable of yielding economic returns.
Legal identity: an estate presumes certain rights are enforceable at law and it is the character of these rights that determine the degree of quality of control, which the owner has over the estate.
Management character: each estate (interest) in a property represents a separate unit of control.
Land property concepts
Land is an essential to our lives and our existence. Its importance brings land into focus for consideration by lawyers, geographers, sociologists, and economics. As each of these disciplines relates to land and to uses of land, the societies and nations of our world are affected.
Valuation of land as if vacant or of land and improvement to or on the land is an economics concept whether vacant or improved. Land is also referred to as real estate. Value is created by real estate’s utility, or capacity to satisfy the needs and wants of human societies. Contributing to value are real estate general uniqueness durability, fixity of location, relatively limited supply, and the specific utility of a given site.
Property is a legal concept encompassing all the interests, rights and benefits related to its ownership. Property consist of the rights of ownership, which entitle the owner to a specific interest or interests in what is a physical entity and its ownership, which is a legal entity and its ownership, which is a legal concept. The ownership of real estate is called real property while the combination of rights associated with the ownership of real property is in some state, referred to as the bundle of rights.
The bundle rights concepts likens property to bundle of sticks with each stick representing a distinct and separate rights of the property owner e.g. The rights to sell, to lease, to give away or to choose to exercise all or none of these rights.
Ownership of an interest in terms other than real estate is referred to as personal property, the worlds property, used without further qualification or identification, may refer to real property, personal property or other types of property such as business and financial interests, or combination thereof.
Property valuers, asset valuers and appraisers are those who deal with the special discipline of economics associated with preparing and reporting valuations. As professionals, valuers must meet rigorous test of education, training competence, and demonstrated skills. They must also exhibit and maintain a code of conduct (ethics and competency) and standards professional practice and follow generally accepted valuation principles (GAVP).
Price change over time will result from specific and general effects of economics and social forces. General forces. May cause change in price levels and relative purchasing power of money, operating on their own momentum, specific force such as technological changes may generate shift in supply and demand, and can create significant price changes.
Many recognized principles are applied in valuating real estate. They include the principles of supply and demand, competition substitution: anticipation, or expectation; changes and other common to all these principles is their direct or indirect effect on the degree of utility of real estate reflects the combination influence of all market force that come to bear upon the value of property.
Real estate property and asset concept:
Real estate is defined as the physical land and those human made items, which attach to the land. It is the physical, tangible “thing” which can be seen and touched together with all additions on above or below the ground. Local news within each state prescribes to the basis for distinguishing real estate from personal property. Although these legal concepts may not be recognized in all states they are adopted here to distinguish important terms and concepts.
Real property includes all the rights interest, and benefits related to the ownership of real estate. An interest in real property is normally demonstrated by some evidence of ownership (e.g. A title dead) separate from the physical real estate. Real property is not non-physical concept.
Personal property includes interest in tangible and intangible items, which are not real estate. Items of tangible property are not permanently affixed to real estate and are generally characterized by their mobility.
According to terminology, assets are resources controlled by an enterprise as a result of past events and from which some future economic benefits are expected to flow to the enterprise. Ownership of assets is itself intangible. However, the asset owned may be either tangible or intangible.
The future economics embodied in an asset may flow to the enterprise in a number of way e.g. Through its use either simply or in combination with other assets to produce goods or service to be sold by the enterprise (international accounting standard).
What is Management?
Various definitions have been expostulated to describe the term “management” a few are outlined as follows;
Management is defined as the systematic process of planning, organizing leads and controlling resources (land, labour, capital and entrepreneurship) in other to achieved set of goals.
Management is the art and science of getting things done through people i.e. It is the co-ordination of all resources of all resources through the process of planning, organizing leading and controlling in order to attain stated objectives. The management practice in itself is an art while the organized knowledge underlying the practice may be called science. Both are complementary and that why management is referred to as an art and science.
Any time the word “management” is used to refer to the highest decision making group in an organization e.g. The management of abc & co. All organization is set out to achieve goals through the means of resources but only effective management of these resources can result in the attainment goals.
Function of Management
From the above definition of management, the key words, which define the functioned of management are:
However before any of the above function can be carried out there has to set down goals and objectives to be attained through the management functions will include; forecasting decision- making communication etc.
This is the process by which decisions concerning expected future events or occurrence are made and necessary action plans are put in place to make to take care of such events. For example, an economic enterprise involved in production of goods and services has to consider the future nature and level of demand of such products service before embarking on the activity.
Forecasting depend on planning to get its objectives right and for ensuring that the means of achieving them are available. It involves the process of determining what to do and how to do.
This is the process by which a course of action is chosen from available alternatives for the purpose of achieving a desired result.
This refers to the process by which ideals, decision etc. Are transmitted to others,communication can be formal or informal; verbal (oral) or written.
Activities that are necessary to achieve policy objectives are determined. Work is classified, divided and assigned to groups and individuals.
This is the function of management, which integrates efforts. Co-ordination is helped with the right kind of organisation with its built-in systems foe ensuring that each operating factor is relating to others. Effectively co-ordination depends to a large extend on adequate communication, balance and control within the enterprise
Controlling is the process of checks and balances aimed at ensuring that stated objectives are achieved. Control can be effected in a variety of ways; strictly, leniently, selectively formally or informally.
This is the process of actual guidance of various works elements towards the achievement of set goals and objectives.
What is estate management
Estate management may be defined as the direction and supervision of an interest in landed property with the aim of securing an optimum return. This return need not always be financial but may be in terms of social benefit, status, prestige, political power or some other goals. Estate management has also been defined as the art and science of controlling, directing supervision a development i.e the construction, the use and maintenance of land resources with a view to achieving optimum returns.
Land resources is the total solid crust of the earth with everything found on it which includes the forest, hills, valleys, water bodies, airspaces and anything found on beneath the earth surface.
The principle of estate management cannot be presented as a simple set of rules, partly because there has been too little research and methodical analysis of experience to formulate more than elementary generalizations and partly because attempts at such a statement would over simplify the complex problems inherent in estate management.
The practice of estate management can never be reduced to a mechanical process of applying the correct principle. Judgement, practical experience and specialist knowledge are also required as these are more effective. They operate within a framework of reliable criteria
Management function in relation to estate management
Estate management is the act of controlling, supervising and directing interest in land and landed property so as to achieve the set objective. In other words just likes in business management, estate management involved developing management principles that will be directed towards establishing team work and harmonizing the goals and objectives of the estate or property owner. Estate management is in effect a process.
The first step in estate management is to identify the owner’s goals and objectives. A property owner can hold a property for one or more reasons either as a home; place of business; for agricultural or recreational uses, as an investment e.g. An income producing apartment complex, shopping mall, office or a factory building etc. The reason for ownership of property will determine the aims and goal of management.
Thus for property occupied by the owner the objective of estate management would most likely be the need to ensure proper maintenance of the property so that it can continue to provide comfortable accommodation. However, where property is held as an investment, the goal of management is to ensure that the property and its resources are maintained in a way and manner that will enable it continue to generate maximum return (income or capital).
This maximum return could be through the additional tax/shelter they could derived, or as hedge against inflation or as a steady cash flow. After identifying the goals, the next step in the management process is to plan the best way to achieve them.
Preparing an estate management plan would involve collection and analysis of data. A typical plan is produced from the findings of the analysis and interpretation of all information relating to the property under consideration. Such analysis will include regional and neighborhood analysis, property analysis such as its location, finish accommodation details, analysis of the market and projected income.
The estate manager will look at the possibility for a better income and if there is a need for rehabilitation or modernization. To achieve this he would recommend the best procedure or alternatives that will achieve the owner’s objective.
With a proper plan in place the next step for management will be the need to establish an operation policy. The manager prepares an income/expenditure schedule and determines staffing requirement and posting; this is the organization/coordination aspect of estate management.
To establish control, performance against objective must be done periodically and t6he finding from here must be utilized in drawing up the management plan for the next period.
Estate management must also establish an effective communication between it and the owner by making available the periodic reports, possibly prepared on a monthly basis. Such reports should cover schedule of actual income, uncollected balances, disbursements and outgoings on maintenance, tenant list, eviction and the general condition of the property.
Following from the above therefore, management functions in relation to estate management can be classified as follows
Definition of goal and objectives
As already established an investor in estate may wish to achieve return on an investment or a social benefit and these are shaped by the needs and constraints e.g. If an investor’s objective is return, then he will receive capital and income ret5urn but if an investor is the occupier then his goals and objective will be proper maintenance of the property to provide a convenient and comfortable accommodation.
An estate manager needs to produce estate plans from fiscal and operational points of view. He will consider all factors affecting normal operation s of a building and its facilities. A typical plan will include:
Regional and neighborhood analysis such as location, finishing and accommodation details.
Analysis of market and projected income.
Need of rehabilitation and modernization of achieve the objective.
With an operational policy in place, an estate manager can now co-ordinate by:
Preparing an income-expenditure schedule
determined staff requirement and posting
Control must be done periodically. It may be quarterly, or monthly as the case may be. The findings from such control measure must be used to draw up management plan for the next periods.
Reports have to be communicated to property owners. There must be effective communication between the estate manager and the tenants; and the estate manager and the property owner.
Objective of estate management
To satisfy and economic or social need: an estate must have an economic function whether to provide shelter or land for growing crops. An estate may survive in the short run without making profits but looses its survival status if it looses its economic purpose.
For profit: profit maximization is one of the objectives of owning an estate particularly for private owners but this in not always the case in public ownership.
As in the case of private ownership, the occupier is ordinarily satisfied with the occupation of his house or shop or factory in lieu of the rent he would have received as an investment. The same position is also true for government houses, which is not necessarily built for the rental income but to satisfy the social need of the people. However, many investors and private owners establish estate solely for profit maximization of rent that are usually collected sometimes two or more years in advance.
Independence: owning an estate gives a sense of security and freedom. People like to be associated with the free holding of lands be it half plot to acres of land e.g. In the Lagos island, the desire to own land led to multiple ownership of very small holdings of event less than half a plot of land, but outside the island most land ownership runs from a plot of 120ftx60ft to several acres. Many companies like the UAC, john holt and etc also own vast land throughout the country. The desire to own land can be seen in the communal conflicts in some parts of the country.
Prestige and political power: land ownership no doubt confers a lot of prestige and powers on the owners. The larger the land ownership, the more the prestige and popularity conferred on such owners. Thus though economical / profitable or not, people like to acquire land.
Continuity: estate owners desire to keep their estate in perpetuity even after the death of the original owners. In Nigeria, land was always held as a personal/family property that is not marketable or transferable. Even though this belief is still wide spread particularly in the rural areas, the position has drastically altered in the urban areas since the early 1990s as land is now being sold in the open market. Elsewhere in the developed countries many large estate have been broken up because of the incidence of the estate duty or tax.
Social benefit: this is mainly associated with public estate ownership. Government may want to acquire land to meet the social needs of the people e.g government may decide to own land in the high brow areas of Ikoyi or Victoria island and put up blocks of flats of accommodation for its workers and other medium income earners.
Various dimensions of estate management
Estate management is the direction and supervision of interest in land and landed property with the aim of obtaining an optimal return on it. The job of an estate manager transcends mere rent collection. In fact, in the management of a particular estate, to achieve the aim above, there are various dimensions to the steps that an estate manager takes in the process. These dimensions are explained below.
This actually involves around the definition of estate management above. The aim of estate management is to yield optimal return from an investment in real estate. Thus the estate manager must be knowledgeable about the market. He should know the on going prices or rates; he must know those properties that are demand so as to be able to select properties into his portfolio or possibly relinquish some from same, in order to yield a high return. He must understand market cycles, analyze past performance and from there, make a forecast that will aid decision making towards achieving optimal return.
Here one is looking at the estate manager as a socialist. A proper and equitable distribution of land will promote cordiality and commercial existence.
Also an estate that is designed and manage in a way and manner that promotes continuous positive contact of members of the community will also promote cordiality e.g organizing parties at religious and cultural festivals, communal meetings and setting up or adopting such management technique that will encourage user to meet their social obligations.
This is a complex dimension of estate management. Various interests could exist simultaneously on a single parcel of land and each of these interests may offer different or overlapping rights to its holders (bundle of rights) the onus is therefore on the estate manager to be aware of the various interest which can be derived from estates; the accompanying rights and the implication of an existing right on another, so as to be manage these various rights without conflict.
Here, we are looking at the technicalities of the job i.e his job in the maintenance of equipment, fixtures and fittings in the estate he manages. He must have sound knowledge of engineering, building construction and architectures to be able to understand the various aspects of the property. This will assist him in advising the developer on simple and effective designs including equipment and fitting that will be easy to manage by him.
He must ensure that his estate is arrange in a way that does not conflict with environment requirements for instance he must not allow an estate made of tenement houses to degenerate into a brothel, he must understand the laws of land and abide by the same, for instance he must not build a residential structure in an industrial area.
He must ensure proper disposal of waste so as not to constitute a nuisance to others. He must also manage his estate in a manner that will promote neighborliness, aesthetics e.t.c.
Classification of real property
Types of real property
For the purpose of studying real property can be divided into five major classification
Residential property includes any type of property that is used for dwelling space. Residential property may be privately owned residence as well as government and institutional housing it is the largest source of demand for the service of professional property managers residential dwelling can be built in a large variety of configuration examples include the following:
Bungalow: this is a dwelling unit on a single floor/ground floor. A bungalow could be detached or semi-detached/duplex
detached (free standing): any house that is completely separated from its neighbours. It is a single accommodation unit existing on two floors (it is known as bungalow where the unit is existing on a single floor). Detached houses usually have the conveniences i.e., kitchen and toilet on the group floor as well as sitting and guest room. The bedrooms as well as family sitting room are on the first floor.
Semi-detached/duplex:two separate residences, by strict definition side-by-side, but incorrectly sometimes used to mean stacked apartments on two different floors. The duplex often look like two houses put together or as a large single home, and both legally and structurally, literally shares a wall between halves.
Flat houses: houses or building with 2,3, or flats, respectively, especially when each of the flats takes up one entire floor of the house. There is a common stairway in the front and often in the back proving access to all the flats
maisonette: an apartment/flat on two levels with internal stairs. A building containing maisonette will usually have several floors and every two floors will hold a maisonette. Example is 1004 flats on Victoria island.
Tenement building: a multi-unit dwelling, made up of several (generally many more than four to six) rooms on each side of the building. These rooms are facing one another. Tenement buildings can exist on one, two, and three and up to five stories. Generally, they exist on one or two floors. All occupants share the conveniences, which is generally located at the back of the building.
Commercial property includes various types of income-producing properties, such as office buildings, shopping centres, stores, gas stations, and parking lots a commercial property is generally considered to be a public accommodation a private entity that provides goods, services, facilities or accommodation to the public. Thus, even though commercial premises are privately owned, the public has certain rights to use them. Example of commercial properties include the following:
An office building, also know as an office block, is a form of commercial building which contains space mainly designed to be used for offices. Offices properties include low-rise buildings high-rise complexes, and office or business parks. The ownership and occupancy of office property varies widely, from one owner. Some office properties attract certain types of tenants, such as medical professionals financials consultants, and so forth.
Commonly referred to as a plaza, an office complex is often confused with an office building complexes are just one story, with extensive fields available in retail positioning, but primarily used for medical practitioners along with a stronghold potential for community development. This due to its non-exclusive company occupants, as opposed to office buildings that are technology focused.
Retail properties come in wide range, from free-standing building to traditional shopping centres. Shopping centres comes in many different sizes, including strip centres, neighbourhood centres, community centres, regional centres and super regional mall. Discount and factory outlet shopping centres also are becoming increasingly common.
The size of these shopping centres and their diverse tenant mix make professional management a necessarily. The success or failure of a shopping centre often hings on the property manager’s ability to assess the market, to conduct sales promotion and public relations and to act swiftly and decisively regional shopping centre management provides one of the greatest challenges to a professional manager’s skills.
Industrial property is defined as all land and facilities used for manufacturing and the storage and shipment of goods. Industrial property may be a large, individually owned and occupied property or large industrial park with several tenants. Various types of industrial parks, loft buildings, distribution facilities, mini-storage facilities and enterprise zones.
A distinction is made between very large industrial plants, such as steel mills, automotive plants and petroleum refineries, and smaller facilities. These plants must be accessible to transportation facilities, an adequate source of law materials, and skilled labor supply. Because property for heavy industry must be designed with the specific needs of potential users in mind, such plants are generally occupied and managed by the owner.
Assembly or warehousing, on the other hand, can usually be performed in smaller building that require fewer unique specifications. As a result, light industrial buildings can often be utilized by more than one type of enterprise a fact that has stimulated some real estate speculators to build this type of facility for future lease to industrial concerns.
The migration of the population away from the central city and the development of freeway systems to facilitate the flow of workers, materials and finished goods have stimulated the needs the need for industrial parks. Located in suburban areas, these parks, designed for lighted industry, have enjoyed rapid growth over the past years, while the number of urban manufacturing facilities has declined.
Some industrial tenants need extensive office space as an integral part of their facilities. Because of greater availability, industrial parks in suburban areas can provide the advantages of one-story plant and warehouse design, ample parking and extensive landscaping. These developments are often called business parks, particularly if they have high ratio of office spaces.
Multi-story, low-rent buildings, once used for manufacturing, are reminders of the former concentration of industrial activity in the central urban areas of older cities. They are now been converted unto various combination of manufacturing, office, residential and storage space. The thousand of square feet in loft building that remain to be converted and leased offer unique possibilities for the creative and ambitious property manager.
To relieve the traffic congestion of the central city, distribution facilities or warehouses are being built in suburban industrial parks. Although the larger warehouse are being built by investors for lease to industrial users with different space requirements. By the very nature of their use, warehouse require minimal management.
Depending on the terms of the lease, management responsibilities are often shared by landlord and tenant. Some creative property manager are converting many of the older warehouse in some central city areas into shopping malls, condominium apartment office space.
Rising construction costs and scarce land have contributed to another modern development, mini-storage facilities, storage areas not specifically designed to meet the needs of industry. The primary purpose is to provide extra storage space for homeowners and apartment dwellers.
However business may also rent space in mini-storage facilities to store flies, extra supplies and surplus requirement. As a result, many mini-storage facilities are now also located in commercial areas as well as near apartment projects. To provide security, onsite, resident managers for mini-storage are common.
Usually, these areas are created through state statutes, and are predominantly warehousing, light manufacturing or assembly zones. Local governments can grant certain tax concessions to business enterprises in return for the creation of new jobs. Some port cities have created free trade zones, where imported goods can be stored in selected warehouses until sometime in the future when import duties are paid.
Hotel, motel, clubs, resorts, nursing homes, theatres, schools, colleges, government institution and places of worship are considered special-purpose property. Their common denominator is the fact that the activity in these buildings is a special business or organizational undertaking that dictates the design and operation of the buildings themselves, thus, management of these properties is usually provided internally by members of the particular business or organization. These individuals must be skilled in the techniques of professional property management and knowledgeable in their specific fields of endeavor.
Some single-occupant property is often termed institutional particularly if the purpose served is religious or charitable. The designation is also coming into common usage to categorize property owned by pension trusts and life insurance companies. This is a result of referring to financing from such sources as institutional.
These are properties used for the cultivation of crops and rearing of animals e.g., farmland, farmhouse, ranches, orchard, e.t.c.
Land devoted to agricultural production; usually refers to the land comprising a farm, including tilable areas, untillable areas, and woodlots.
These are various designs, forms, and shaped but are often built to suit the nature of farming carried out, tools and equipment and/ or used. Storage house for farm inputs and produce as well as farmer residences all constitute farm buildings, likewise the drying and processing sheds.
A tract of rural devoted to agriculture; also, a tract of land or water used for industrial purposes such as a tank farm.
A small rural property, often a subdivision of a larger farm; often owned by a commuter (who works in an urban area) or a retiree seeking the amenities of rural life. Less than the full complement of urban/suburdan services and utilities are available. The small size of a farmette precludes use for commercial farming.
These are facilities used to artificially supply water to the soil for full crop production; used in arid religion or when rainfall is not sufficient. Examples include: irrigation canal, built reservoirs, sprinklers, canals e.t.c.
The concept of real property
The understanding of term real property requires distinction between land and real estate. These terms are used interchangeable, though they may seem to be describing the same thing, there are important subtle differences in their meanings.
The land is commonly thought of as the ground or soil, but from a legal standpoint, land ownership also includes possessions and control of the minerals and substance below the earth’s surface, together with the airspace above the land up to infinity. Thus land is defined as the earth’s surface extending downward to the centre of the earth and upward to infinity, including those things permanently attached by nature, such as trees and water.
The term real estate is much broader than the term land and includes not only the physical components of the land as provided by mature, but also anything that is permanently affixed to the land and by either natural or artificial attachment. Real estate, therefore, is defined as the earth’s surface extending downward to the centre of the earth and upward of infinity, including those things permanently attached by nature or by people.
The term real property further broadens the definition of real estate to include bundle of legal rights involved in real estate ownership. Thus, real property is defined as the earth’s surface extending downward to the centre of the earth and upward into space, including all things permanently attached to it by nature or by people, as well as the interests, benefits and rights inherent in its ownership.
The concept of real property ownership involves more than just right to use the surface of the earth, it also includes the rights to those things appurtenant to the land. An appurtenance is defined as anything that, by right, is used by the land for its benefit. Such rights include subsurface (mineral) rights, air rights, easements appurtenant, and water rights.