BY LAWS OF REAL ESTATE IN PAKISTAN

BY LAWS OF REAL ESTATE IN PAKISTAN

INTRODUCTION

Like any other country, Legal system and laws govern the buying and selling of real estate in Pakistan. Therefore, you need to abide by them, when making real estate transactions in Pakistan.

All of these Pakistan real estate laws have a major impact on the buying and selling of property in Pakistan. Therefore real estate agents, buyers, and sellers of Pakistan real estate need to have a basic know how of these laws to avoid mix-ups in buying and selling 

Property is a thing which is peculiar or proper to any person; that belongs exclusively to one. In the strict legal sense, a sum of rights which the Government guarantees and protects. The term refers to every species of movable right and interest. 

LEGAL DEFINITION OF OWNERSHIP

More specifically, ownership refers to the unrestricted and exclusive right to a thing. Similarly, the right to dispose of a thing in every legal way, to own it, to use it, and to exclude every one else from interfering with it.

 That dominion or indefinite right of use or disposition which one may lawfully exercise over particular things or subjects. The exclusive right of possessing, enjoying and disposing of a thing.

 The highest right a man can have to anything; being used to refer to that right which one has to lands or tenements, goods or chattels, which no way depends on another man’s courtesy. According to Transfer of Property Act 1882 “Property means (i) the thing itself, or (II) some or all the rights in a thing. 

This article explains by laws of real estate, procedure for sale/purchase of real estate in Pakistan, Gift of real estate in Pakistan, lease of real estate in Pakistan, mortgage of real estate in Pakistan. These brief notes are for general guidance only. In addition, people should not take them as a substitute for thorough and professional legal advice.

REAL ESTATE RELATED LAWS IN PAKISTAN

• Registration act 1908
• Stamp act 1899
• Land revenue act 1967
• Transfer of property act 1882

REGISTRATION ACT 1908

This is a law which was originally made to check the registration of the real estate. Registration Act 1908 has all the necessary instructions for registration of properties and it has in total fifteen sections.  

This act has details about the establishment of registration, and describes where people can register the properties. This law discussed the time of presentation of the documents. In addition, the place of presenting the documents is also mentioned in the Registration Act 1908.

In short, Registration Act 1908 is a comprehensive law that guides you on all matters of real estate registration in Pakistan, while leaving no ambiguity.

STAMP ACT 1899

The Stamp Act 1899 directly affects the revenue of the Government. As it mentions in detail about the different stamps used in buying and selling of Pakistan real estate. 

Stamp Act 1899’s directs the buyers and sellers to pay a certain amount to government in lieu of the stamp papers used to make the legal agreements of buying and selling of real estate in Pakistan. The stamp rates might change due to the impact of inflation and governmental policies. However, the overall Stamp Act 1899 instructs buyers and sellers of Pakistan real estate to legally confirm their buying and selling of properties through the use of Stamp.

LAND REVENUE ACT 1967

Land Revenue Act 1967 lays out the complete structure and hierarchy of the land and revenue department in Pakistan. It discusses the different powers allotted to the different land and revenue department offices and their due jurisdictions

. Land Revenue Act also instructs on the collection of land revenue. Some of the more critical issues like conducting of surveys, marking of boundaries, partitions, and arbitrations are also instructed in this law. 

TRANSFER OF PROPERTY ACT 1882

This act discusses in detail about how the transfer of Pakistan real estate should take place. Transfer of Property Act 1882 has a direct impact on the buying and selling of property. There are times when people tend to transfer a property to another person even when they are not legally entitled to do that. Therefore,it can cause a major problem for the buyer who has paid his hard-earned money to buy the property. Transfer of Property Act 1882 discusses in detail about the persons entitled to transfer the property, operation of transfer, oral transfer, and what types of properties can be transferred.

All of these Pakistan real estate laws have a major impact on the buying and selling of property in Pakistan. Therefore,  real estate agents, buyers, and sellers of Pakistan real estate must have a basic know how of these laws. Hence, to avoid mix-ups in buying and selling properties in Pakistan.

TYPES OF REAL ESTATE

We have discussed the types of real estate in detail in our blog : TYPES OF REAL ESTATE.

SALES OF REAL ESTATE IN PAKISTAN

Sale of real estate in Pakistan normally takes place through a title document known as a Sale Deed. However in certain cases e.g. purchase of real estate in (DHA) or in a housing society where sale deed is not required for transfer of title in real estate. And an allotment letter/transfer letter from the authority or the society, is considered the title document.

Some people, before execution of the sale deed, may opt to execute an agreement to sell. However, such agreement to sell does not transfer title to a property in favor of the Vendee. It, nevertheless, does create a right in favor of the Vendee.  In case the vendor refuses to honor the terms and conditions of the agreement, to seek specific enforcement of the agreement to sell. A sale deed must be affixed with requisite stamp duty. It is required to be registered with the relevant sub-registrar. After registration of the Sale Deed with the sub-registrar, they must ensure that Patwari enters a mutation of such sale in the register of mutations.

PURCHASE OF REAL ESTATE IN PAKISTAN

Before purchasing real estate in Pakistan, the person who is buying must carry out a complete and thorough search in respect of title of the seller to the real estate. A general practice is to investigate title of the current vendor and any previous owner(s) for the last 20 years. Buyer must obtain the original title document in favor of the vendor along with other relevant documents. For instance, mutation in favor of the vendor, a fresh copy of fard, aks shajra and NOC/NEC.

If the vendor is selling the property in the capacity of an attorney of the owner then the seller must sure that the power of attorney has proper stamp duty. Moreover,  it has been duly registered with the relevant sub-registrar. If possible, contact should be made with the owner(s) of the property and authenticity of the power of attorney must be confirmed. A holder of a forged and fabricated power of attorney may not be able to transfer a valid title in an immovable property to a third-party.

Non-resident Pakistanis, overseas Pakistanis and foreigners may also buy immovable property in Pakistan. Their presence in Pakistan at the time of execution of the title document is not necessary.

LEASE/ RENTING OF REAL ESTATE

Landlord’s Point of View

Landlord must ensure that they are executing the lease of an immovable property in writing. Lease of immovable property for less than a year does not need compulsory registration. However, landlord must register the lease of immovable property for more than a year.

If the tenant refuses to pay rent, or for any other reason as stated in the lease agreement and allowed under the law, the landlord may end the lease. If the tenant refuses to vacate the premises the landlord may file an ejectment petition before the relevant rent controller.

Tenant’s Point of View

Tenant must ensure that he makes payment of the rent either through a crossed cheque. However, if they have made the payment through some other mode, then tenant must obtain a receipt from the landlord. In case the landlord unlawfully or unjustifiably attempts to evict the tenant, the tenant may file a petition before rent controller in addition to availing other legal remedies

 GIFT OF REAL ESTATE

Gift of real estate in Pakistan must be made in writing. There is, however, a qualification to this general rule in case of a Muhammaden. A Muhammaden may make an oral gift of an immovable property. Although allowed under law, it is not recommended to make oral gifts of immovable property because it may become difficult to prove an oral gift. Where a gift deed is executed, it must be affixed with appropriate stamp duty and it must be registered.

An oral gift, in case of a Muhammaden, takes effect if all three of these under mentioned conditions are satisfied:

• Declaration of gift

• Acceptance of the gift by the donnee during the lifetime of the donor

• Transfer of possession of the subject matter of the gift by the donor to the donnee

Once, the parties satisfy the above mentioned conditions, then the fact of a gift is established.

MORTGAGE OF REAL ESTATE

Legal Mortgage

A legal mortgage in respect of an immobile property is created after execution of a mortgage deed. A mortgage deed requires appropriate stamp duty. Furthermore, it must be registered with the relevant sub-registrar.

Equitable Mortgage

We can create an equitable mortgage in respect of an immovable property simply by depositing original title documents e.g. sale deed, allotment letter, etc., with the mortgagor. It does not have to be registered. However, a general practice is to get a lien marked in respect of such mortgage.

CONCLUSION

When it comes to being a real estate owner, there can seem like there’s no end to what you have to deal with. Unfortunately, this can sometimes include the law. Laws come into play when it comes to real estate all the time. Occasionally you may be able to navigate a problem on your own. However, sometimes seeking legal advice is the best thing you can do. With so much invested already as a potential or established owner, don’t leave things up to gray area– seek advice from established attorneys today.

This article might help the readers if they are undergoing any such issues.

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