A Comprehensive Guide to Selling and Transferring Property in Pakistan
Land ownership is common in Pakistan, with nearly 70% of the population owning some property. Property transfers occur daily and are classified into three major scenarios under the Transfer of Property Act: Buying or Selling, Inheritance, and Gift. Each scenario has its procedure. In this guide, we will walk you through the essential aspects of transferring property ownership in Pakistan.
What Does the Transfer of Property Mean?
Legally, the transfer of property in Pakistan involves passing the title of a landholding from one person to another. This transfer can occur through various means, not limited to sales but also mortgages, gift deeds, leases, and exchanges. Properties in question are primarily immovable, such as plots, houses, apartments, shops, and other permanent structures.
Who Can Transfer Property in Pakistan?
To legally transfer property ownership in Pakistan, an individual must be at least 18 years old, mentally sound, and not legally barred from signing a contract. These requirements are based on the Contract Act of 1872, which defines a contract as a binding agreement between two parties. Minors (those under 18), individuals unable to understand the consequences of their actions due to mental disabilities, and those legally prohibited from signing contracts cannot be parties to such agreements.
The Property Transfer and Sale Procedure in Pakistan
Following are the few steps explaining the procedure for transferringand selling property in Pakistan:
Token and Bayana
The first step in the property transfer process is usually the payment of a “token” amount by the potential buyer to the seller. This token indicates the buyer’s intention to purchase the property and temporarily prevents the seller from negotiating with other potential buyers. If the sale falls through, the token is typically returned with appropriate deductions. A “bayana” may follow the token, providing a more formal agreement with written terms.
The property sale agreement form in Pakistan typically includes the following:
- Complete property details.
- Terms of the property sale.
- The total amount of money for the transaction.
- The date by which the buyer must pay the remaining sum, following the bayana and token.
Required Documents for Transferring or Selling Property
To transfer or sell property in Pakistan, you must gather essential documents, which may vary depending on the property’s location. These documents include:
- Recent photos of both the buyer and seller.
- Copies of their National Identity Cards (NIC).
- The original title deed of the seller proves ownership.
- The “Sale deed” is a crucial contract between the buyer and seller.
- Additional documents may be required, depending on the property’s location:
- Fard-e-Malkiat (Record of Rights), or “fard,” confirms the property’s ownership.
- A Non-demand Certificate (NDC) to show there are no outstanding dues on the property.
- If the property is within a private housing society, a letter from the society can be needed instead of a fard document.
Purchase of Stamp Paper and Payment of Taxes
When drafting the sales deed, you’ll require a stamp paper whose value depends on the property’s worth. As a buyer, you must also pay property-related taxes, including:
- 3% Stamp Duty.
- 2% Capital Value Tax.
- 1% District Council Fee.
- Fixed registration fee, typically around PKR 500.
Writing the Sale Deed
It is advisable to hire a lawyer or deed writer to draft the sale deed, as they are experienced in including all necessary clauses to avoid future complications. However, it is not mandatory; you can create the sale agreement yourself. Property sale agreement formats are available online, typically on the Punjab Land Record Authority’s Registration of Deeds portal.
Execution of Sale Deed
Once the sale deed is prepared, along with the required documents and stamp paper, it should be taken to the sub-registrar’s office. A magistrate or sub-registrar will oversee the transaction, listening to both parties. Upon satisfaction with the proceedings, the official approves the transaction and registers the deed, making the recipient the legal owner of the property.
The Procedure for Transferring Property in Pakistan as Inheritance
When a property owner in Pakistan passes away, their property is automatically distributed among their legal heirs. Pakistan’s inheritance laws are influenced by Islamic Law and the Transfer of Property Act, making the concept of a ‘will’ uncommon. Consequently, all property shares automatically become the right of the owner’s legal heirs, preventing others from making claims.
An inheritance certificate, also known as a ‘wirasatnama,’ is issued by the civil court in Pakistan. This registered document is required to transfer property ownership from the deceased owner to their legal heirs. It is also necessary for builders and housing societies to verify property ownership before entering into legal contracts.
How to Acquire an Inheritance Certificate?
Acquiring the certificate is straightforward, but professional legal assistance is recommended. The lawyer must submit a written objection to the civil court detailing the heirs and the property left behind. Four court hearings are typically required for the certificate’s issuance. The following documents need to be submitted to the civil court for the legal proceedings:
- The late owner’s death certificate
- CNIC copies of the late owner and his legal heirs
- Mutation certificate for the property
- Statement of the legal heirs
- Statement of an independent witness
Transfer Property Ownership as a Gift in Pakistan
In the real estate context, a ‘gift‘ refers to transferring property ownership from one person to another without a monetary transaction. Property can be gifted during a person’s lifetime, but any gift made under coercion, deceit, or fraud is considered invalid.
For those interested in sharing property ownership without monetary exchange, a gift deed is the ideal option. It is a legally binding document that records the transfer of ownership from the giver to the receiver, signifying consensual transfer. A gift deed can also cover tangible property, including jewelry, vehicles, and money.
How Can I Receive a Gift Deed to Transfer Ownership?
To register a gift deed, the transaction details must be documented on stamp paper, along with several necessary documents. For approval, the application needs to be submitted to a sub-registrar. The following documents are required for the transaction:
- CNIC copies of both parties
- Property tax clearance certificate
- Allotment letter
- No-objection certificate
- Statement record
- Official seal of the deputy director
Pakistan’s real estate laws have clearly defined rules and regulations for transferring property ownership, closely monitored to prevent malpractices in the market. For those wondering how to check property ownership in Pakistan online, this guide provides valuable information for a smooth property transfer process.
In Pakistan, property ownership transfers are subject to a 3% stamp duty. In Pakistan, the CVT (Capital Value Tax) on property ownership transfers is 2%. Property ownership transfers in Pakistan are charged 1% of the District Council Fee, according to real estate regulations.
The Transfer of Property Act 1882 is the fundamental law governing property transfer in Pakistan. Along with the Land Revenue Act of 1967 and the Registration Act of 1908, this law governs the transfer of immovable property (land) in Pakistan.
In short, gifting a property to a family member or anyone else is perfectly legal.
In Islamic law, a son has no right to his father's property while the father is still alive. Assume the father is in good health. During his lifetime, the father has the right to distribute his wealth among his heirs.
In legal terms, a gift deed is a document that must be attested by two witnesses. Perhaps the declaration of Oral Gift isn't. However, the plaintiff called both attesting witnesses as witnesses.
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