Are you an investor or a home owner? Have you ever find yourself in an embarrassing situation where a potential buyer or occupier bought a house from you or pays a year rent for one of your vacant apartment and few weeks after shows up with some reasons or a flimsy or genuine excuse to renege the lease or sale contract agreement you both had together?
Conversely, perhaps you a buyer of a home or an occupier whom after making payment for your new home purchase or for an apartment lease was faced with circumstances that are beyond your control such as a transfer from your work place to another state or discovering some problems that were not noticed prior to signing the contract and you feel like backing out of the contract.
Many buyers or occupiers encountered and uncovered so many unimaginable problems and issues with their purchase or lease apartment just immediately after moving in or soon after moving that were either considered minor and were overlooked or oversighted due to poor due diligence on the property.
As a result they experience new developments that make them think they have frittered away their hard earn money or the property and the neighbourhood do not in anyway give them the supposed or purported comforts they anticipated as claimed by the broker.
It might also not be socially acceptable or measure up to their standards and their definition of an ideal neighbourhood suitable for them and their family.
Moreover it could probably be that the occupier has seen a larger apartment elsewhere that is better and meets all the criteria they want in an apartment which they love and think would be best for them compared to what they paid for.
For these reasons they may decide to rescind the contract agreement they had with their home owners but most often this sometimes seem impossible for occupiers as if there is no way out of it because most home owners disagree and many could not afford to refund any money to the occupiers.
This brings us to the nub of this topical issue, which is the need to know the exact point in the sale or lease transaction process does payment made for lease or sale of property becomes that of the home owners to allow them dip hands into it and also should home owners entertain refund of unused rent of the total annual rent amount paid by occupiers if the need arises?
I think it is very important and necessary to enlighten ourselves on how we can deal with any unexpected and embarrassing situations like this should in case we find ourselves in one.
We all understand that the greatest desire of every buyer or occupier is to get great value for their money and of course feel very relaxed and comfortable in their newly purchased home or rented apartment but what happens if there is a mismatch in their expectations and what they are actually getting out of the property.
The question is, how should problems, concerns and issues that stem from these unexpected circumstances buyers and occupiers may find themselves in that may necessitate or make them want to terminate or rescind their contract with the seller or home owner be resolved or handled?
I have gone through the state tenancy law many times and I did not come across a section that decisively dealt with this issue or takes care of issues of refund of unused rent periods but I can confidently say or only imagine how home owners and occupiers have managed to resolve conflicts or disputes on refund of any payments made be it unused rent or security deposit.
I know what would be on the minds of many now, who are currently going through this shameful and awkward situation right now or faced with this problem either as a home owner or an occupier.
Most of us have this erroneous belief that once payment is made, lease or sale contract agreement is signed and initialed by the occupier, keys to the apartment or home relinquished to the buyer or occupier then the home owner instinctively owns the money paid and therefore can lay claims to it or use the paid amount for the sale or lease of such property and completely ignores the fact that there could be an attempt by the buyer or the occupier to call off the contract sometimes or anytime in the future.
Many home owners see, term or consider this call off of lease or sale contract as a breach of contract but am sorry to disappoint you and also glad to let you know that this is not in all cases because verifiable and lawful excuses or reasons will always prevail over whatever denial defense a home owner may presents in the court of law particularly in cases of refund of unused rent.
Surprisingly, the rate and the frequency of the reports and complaints I receive from home owners who could not entertain the issue of refund of lease payment brought up by their occupiers who came up with different excuses to enable them move out of their rented apartment as well as get a refund of their money for the remaining part of lease contract agreement they intend not to use.
Considering the problems faced by home owners and occupiers on the issues of refund, I find it difficult to disregard this small but mighty problem in the eyes of those who are presently are at loggerheads over aborting of lease and refund.
And to help throw more light on this topic, I decided to write about the subject and to be honest with you, I consistently receive a barrage of complaints from occupiers also, those who are disturbed and frustrated about their inability to get a refund of unused period of rent paid for which they deserve to get from the home owners, who either told them he had no money and could not make any refund or who told them to exercise more patience till another occupier take up the apartment before any refund can be made.
It might interest you to know that this problem can easily be linked to the poor economic situation of the country and flaws or lack of provision in tenancy laws also contribute to the terrible situations home owners and investors find themselves in today.
The high rate of poverty in the country and the hardship people go through on a daily basis have made them to lose their sense of judgment of what is right or wrong and most people now can only see through their mouth which explains why many home owners live from hand to mouth.
Today hardly can you find home owners who can survive a sudden and unexpected back out from a sale or lease contract agreement. How many home owners can or would be happy to make a lawful refund of unused rent without creating or starting a convoluted argument on what is considered acceptable or how best the situation could have been handled to avoid a case of refund of unused rent which in many cases are out of the equation for most home owners and they never plan for it or expect it.
In many developed nations of the world, the process and procedure involved in getting into a lease or sale contract agreement with a home owner or seller is so flexible in that there is an ample time for potential buyer or occupier to perform their due diligence on the property prior to signing a contract and there are also rooms for anyone to rejig their initial commitment or position on a deal.
If they encounter an unexpected problems or new developments as mentioned earlier which were not discovered when inspecting the property and later feel uncomfortable or found out that what they bought or lease is a sleazy place or neighbourhood not conducive for them and their family then they can ask to back out.
This could be due to unexpected environmental issues, flood, or work transfer as explained previously which are somewhat difficult to determine because some may be seasonal events like what we have in some part of Lekki today.
Lekki being a great location and neighbourhood to have a home today, new Lekki home owners or buyers may not have experienced the flood there before and possibly the flood may not even be considered as a threat or included in the factors used in making their investment or lease decisions.
Be that as it may, I find it very difficult to conflate the process and basic internationally acceptable practices involved in lease of apartment and sale of property particularly on contract agreement issues, for this reason I would love to walk you through both processes one after they other for a better understanding of the concepts.
In an organized set up, there is a clear distinction between investment property and personal or principal property and all are treated differently in the face of the law. Investors and home owners enjoy lots of advantage, protection, tax benefits, deductions and savings on property asset declared as an investment property.
There are strict laws regulating how investment property is expected to be run because investment property is supposed to be treated as an investment property and this explains why most investment properties are managed by real estate professionals or management company in civilized countries.
As a result it turns out that it is extremely difficult or near impossible for home owners to mismanage income generated from a property asset declared to the government as an investment property.
Also it is also rare for occupiers to lodge denial of refund complaints of unused rent and security deposit by home owners to the housing administration because the penalties for these offences are severe and expectedly no one would want to go against the law most especially because of the huge and numerous benefits attached to running or using your property asset as an investment property asset.
In contrast to what we have Nigeria, where most home owners steal and eat up their investment on a daily basis instead of ensuring a disparity or a clear distinction between their personal life and their investment in order to be assured or guaranteed of a successful investment and to also make sure that both are not mingled together.
This account for the reasons why many home owners find it difficult to refund occupiers in this part of the world in the event of relocating to another place due to circumstances beyond their control coupled with the general belief that once a contract is signed by a buyer or an occupier then any case of refund is not acceptable and tenable.
I would love to correct this erroneous belief, what is obtainable in the developed nations around the world is that, rental properties otherwise known as investment properties give occupiers the right to back out from any lease contract agreement at any time, especially if it is as a result of reasonable and verifiable excuses or based on tenable and lawful reasons.
If the excuses and reasons are considered genuine and lawful occupiers deserve and must be refunded with the unused months rent amount including their security deposit provided that there is no major damage to the apartment.
However in reality, many people do not know or understand that investment property assets or rental properties are meant or designed to help investors and home owners grow or build wealth and financial stability over time.
Investment property enjoys so many benefits from government in developed nations because it is seen as another opportunity or way to help the masses grow wealth and build financial stability as mentioned earlier.
Many laws with so many unique benefits to all classes of the citizens and constraint to regulate and control the activities of home owners and occupiers are promulgated not only to protect the interest of all parties involved but also to support virtually everyone who want to invest in real estate.
High productivity and excellent result are most times achieved through effective and efficient management by engaging the services of a management company to manage the investment property although with the support and active participation of the home owners in decision making on issues that involve high risk or huge expenditures.
Anything or everything that has to do with mortgage repayment, utilities, debt, maintenance, administration and productive and effective management of the property is carried out by the management company and the home owners are only allowed a certain percentage of the income from the property asset and most time are expected to reinvest the entire profit produced by the investment property to still retains and maintains its status as an investment property in order to continue to enjoy the tax benefits, deductions, savings and other advantages.
Basically, everyone understand that lease contract commences on the date both parties, the home owner and occupier agreed upon on the lease contract. if the occupier refuses to show up or did not move into the apartment on the agreed date then it is at his or her own peril.
But if the occupier shows up later with good reasons why he would not be able to stick to his own part of the lease agreement and ask for a refund of his rent.
I anticipate that most home owners frown at this type of development because they never envisage a problem or issue of refund from the occupier and may have used the money or reinvest it into another property investment.
To this end, over the years it has always been an arduous task for occupiers to have their ways or get good outcome when pursueing issue that has to do with the refund of the unused rent amount and security deposit.
I want to reiterate that in practice, particularly with investment property any party involved has the right show up with excuses to demand for a refund provided the reasons given to support his claims are verifiable, reasonable, lawful and are tenable in the court of law as mentioned previously.
The home owners have a responsibility and are obligated to refund their occupiers with the unused rent and of course with the security deposit provided there is no severe damage to the property or apartment.
I quite understand that many investors or home owners may not be happy or satisfied with my submissions here but the truth must be told and we must endeavor to move out of this our mediocrity and our abysmal ways of doing things and start acting and behaving like civilized people.
I must also emphasize the need for mutual understanding between home owners and occupiers for a smooth and peaceful co-existence between them to help facilitate the process of refund. It all boils down to mutual respect for parties concerned, understanding and knowing your limits, rights, responsibilities and obligations as occupiers or home owners.
The occupier has the duty of giving a written notice of not later than 30 days to the home owner informing the home owner of his or her intention to terminate or rescind the lease contract agreement.
Similarly, home owners must also understand that rent payment on investment property are not to be mismanaged or used to meet personal needs outside what their investment property can handle.
Home owners can only lay claim to money up to the amount of used rent by the occupier from the total rent amount paid and are not in the position to deny any request for refund by occupiers but to work out a possible way out of the messy situation.
I plead with investors and home owners to inculcate and promote this investment property management initiative and they must have at the back of their minds if they don’t already have it that anything could unexpectedly spring up or crop up at any time or any point in a lease contract tenure that could make an occupier demand for a refund of unused rent amount.
I am of the opinion that government must suss the importance and how critical it is to enact laws to guide and regulate these processes to help restrict and constraint the excesses of both home owners and occupiers particularly in order to guide against home owners arrogating the power or right to determine how refund of unused rent of a rental property should be or must be when going into a lease contract agreement.
Hopefully in the next post we shall examine when payment for sale of a property becomes that of the seller or home owner and we shall also find out if it is possible for the buyer to renege the contract and ask for a refund.
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