estate

1. WHAT IS AN ESTATE

INTRODUCTION

          An estate is a legal entity denoting 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 defines 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 interests and/or rights, which can be held over any object. Various rights and interest may exist at one and the same time over the same object and can be held by different individuals. Each of these rights and interest represent 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 tenants occupying separate area also has estate in the same property. However, the rights and interest in these estates are in different degrees viz:

·        The Right of Ownership, which is an absolute right and confers a freehold interest on the holder.

·        The Right of Use, which is a limited right and confers a leasehold interest on the holder.

FREEHOLD ESTATE

          The freehold interest (estate) is the highest form of ownership one can have over property.

LEASEHOLD ESTATE

          The leasehold 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 restrictions and limitations usually exist over ownership rights to safeguard the overriding public interest. Such restrictions fall under three broad categories viz;

i)                   Tenure (duration of ownership)

ii)                Covenant (leases, licences, easements)

iii)              State legislation (rent control, land use act)

          As a result of the above-mentioned restrictions one can conclude that property ownership is made up of a collection of rights thus property is usually described as “A BUNDLE OF RIGHTS”.

CHARACTERISTICS OF AN ESTATE

          The characteristics of an estate can be summarized under the following;

i)             Physical Identity: An estate must be a tangible thing, which can be described in terms of size, shape and location.

ii)          Economic Identity: Whether an estate is held for occupation or for investment purposes, it represents a financial investment, which is capable of yielding economic returns.

iii)        Legal Identity: An estate presumes certain rights are enforceable at law and it is the character of these rights that determine the degree and quality of control, which the owner has over the estate.

iv)        Management Character: Each estate (interest) in a property represents a separate unit of control,

2. 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 and supervising a development i.e. the construction, the use 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 and beneath the earth surface.

          The principles 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 attempt 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 principles. Judgement, practical experience and specialist knowledge are also required as these are more effective. They operate within a framework of reliable criteria.

Management Functions 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 like in business management, estate management involves 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 a 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 taxi shelter they could derive, 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 neighbourhood 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 operational policy. The manager prepares an income/expenditure schedule and determines staffing requirement and posting; this is the organization /coordination aspect of estate management.

3. FACTORS AFFECTING PROPERTY VALUES

          Property values are determined by the interaction of the economic forces of demand and supply.

          The factors, which affect property values are therefore the factors which can impact on either the demand and supply of landed property.

          The followings have been identified as factors likely to have significant impact on either the demand or supply side of landed property consequently affecting property values.

1. Location

          The actual location of a property has an over bearing influence on its value. People tend to be attracted to locations that are near to markets, hospitals, schools, places of employment etc. Properties in close proximity to these services thus have higher values than those that are far from the services.

2. Changes in population

          Population can influence property values either positively or negatively. An increase in population in a particular geographical area will undoubtedly result in an increase in demand with a corresponding positive impact on property values. Similarly, a decrease in population within a locality will result in a reduction in demand with a negative/low impact on property values.

3. Scarcity

          Scarcity occurs when the demand for landed property exceeds its supply. This situation tends to cause increase in the value of landed property. On the other hand, an increase in the supply of landed property without a corresponding increase in demand will result in decrease in property value.

4. Changes in technology

          Changes in technology can affect property values. Technological inventions such as central-air- conditioning system, central sewage system, lift system, modern design and decorations can impact significantly on property values. A building with modern facilities, equipment and installation will command a higher value than a similar one without those facilities.

5. Changes in taste and fashion.

          This factor is closely related to technological changes and innovations. People tend to be attracted to properties with modem architectural designs and fashionable facilities. Properties which meet this requirement are therefore highly demanded and their values higher than those without these modem facilities.

4. Enumerate and explain four factors that affect valuation accuracy in Nigeria

1.     Inadequate academic training

2.     Use of out dated valuation

3.     Laziness on the part of the valuer

4.     Influence of unscrupulous clients

5.     Death of market evidence

6.     Inexperience in valuation practice

1.     Inadequate academic training: One of the major factors affecting valuation accuracy in Nigeria is that some of the estate surveyors do not receive the required training which will enable them to perform their duty in carrying out valuation exercise because they don’t know when and where to apply particular method of valuation, therefore this affect the accuracy of valuation figure.

2.     Use of outdated valuation method: another reason for inaccuracy in valuation in Nigeria is that most of their valuation method used are not relevant and also outdated. These are usually responsible for the inaccuracy of valuation figure in Nigeria.

3.     Laziness in the part of the valuers: Negligence in the part of some valuers which result to omission, errors and misinterpretation of figures in the valuation exercise being carried out by the valuer. This is one of the major factors that is responsible for valuation inaccuracy.

4.     Influence of unscrupulous: Another factor that is responsible for the inaccuracy in valuation figure is due to the influence of some unscrupulous client who usually influences the valuer to over value or undervalue the property to favour them. This attribute of unscrupulous client affect the accuracy of valuation in Nigeria.

 5. What are the similarities between estate surveyors and quantity surveyors:  The similarities between quantity surveyors and estate surveyors are as follows:

1.     Both estate surveyors and quantity surveyors are management professional in field of environment studies.

2.     Estate surveyors and other form of surveying and building related advices their client.

3.     Both quantity survey and estate surveyors serves as project appraisal as the forecasting the future of proposed project.

4.     Both estate surveyors and quantity surveyors look for their client or contractors working man office or on site, they are involve in project from the start, preparing estimates and cost of the project.

5.     Estate surveyors and quantity surveyors are also referred to as construction cost consultant or commercial managers.

6. What are the differences between quantity surveyors and estate surveyors?

1.     Quantity surveyors seeks to manage and minimize the cost of project and enhance value for money to achieve the required standards and quality while estate surveyor tend to manage and value the interest of the project with a particular interest of the returned in the monetary value of the project.

2.     The primary objectives of an estate surveyor is to carryout valuation of interest in landed properties for a particular purpose while that of the quantity surveyors cost management and provision of bill of quantity in the construction of a project.

3.     Quantity surveyors manages all cost relating to buildings and civil engineering project from the initial calculation to the final figure. While the estate surveyor seek to value the period which it will take the project to receiving its initial capital investment in construction.

REFERENCES

Kuye G.O (2000) Property Valuation principles and Practice in Nigeria”. Nigeria National Library Cataloguing in Publication data.

Darlow C. (1983) Valuation and Investment Appraisal. Estate Gazette.

Chik E.U (2006) Introduction to Estate Management. Treem Nigeria Limited.

Ahmed A.A. Dogora M.V and Akeh G.I. (2012) Introduction to Property Valuation Principles and Practice. Tossy Print, Nigeria.

Ola A. (ed) (2001): Introduction course in Environmental Sciences. Ibadan Odun Print and Packs, Nigeria.