Fine Print Of the LAW

Essen­tial con­sumer doc­u­ment check­list for buy­ing prop­erty in Pak­istan

By Huma Shah

Despite a reces­sion in the coun­try the real estate busi­ness in Pak­istan is still going steady. More and more peo­ple are buy­ing prop­erty not only as an invest­ment, but also for their per­sonal use. There are many devel­op­ment projects and hous­ing schemes which have been devel­oped in the last ten years. Unfor­tu­nately, along with the gen­uine schemes, a lot of land frauds have been per­pe­trated, caus­ing loss of people’s entire life-savings and the dream of buy­ing or build­ing their own homes.

At such a time it is impor­tant for the new buyer to ensure that he is able to invest his money in real estate which is gen­uine and to keep in mind the fol­low­ing steps in order to elim­i­nate any con­tin­gen­cies regard­ing the clear title of the land, the pos­ses­sion of the land, whether it is encum­bered by any mortgage/ charge and whether the land is free­hold or lease­hold. Own­er­ship to the buyer is trans­ferred through a doc­u­ment of title and it is essen­tial that the buyer estab­lish in what man­ner the own­er­ship of the prop­erty has passed to the present owner/the seller with respect to the prop­erty being sold. These include (i) a Sale Deed; or (ii) the Allot­ment let­ter, in case the prop­erty forms part of a Hous­ing Society/Authority; or (iii) Exemp­tion Letter/Adjustment Let­ter, in case the prop­erty is con­trolled by a devel­op­ment author­ity, e.g. LDA; or (iv) a Gift deed (Hiba nama) in case the prop­erty has passed down to the seller by way of gift; or (v) a PTD or extract of RL-II, in case the prop­erty is an evac­uee prop­erty.

Fine Print Of the LAWIn the case of document(s) of title con­cern­ing Agri­cul­tural land, then the fol­low­ing, amongst other, lat­est doc­u­ments are required to be reviewed by the buyer: (i) the Sale deed or the Gift deed; (ii) the Muta­tion (Intiqal) which may be based on a Sale deed, Exchange or Inher­i­tance (Intiqal virasat) and/or Gift deed of the prop­erty; (iii) the lat­est Jama bandi (Extract from the Record-of– Rights); (iv) the lat­est Khasra Gir­dawari; (iii) the lat­est Fard-Malqiyat (iv) the Non-Encumbrance Cer­tifi­cate and (v) the Aks Sha­jrah.

Doc­u­ments to be obtained in respect of Urban Prop­erty include (i) Sale Deed or Trans­fer Let­ter (includ­ing any reg­is­tered deed as referred to para­graph 3 here­in­above in which inter­est in the prop­erty has been trans­ferred); (ii) an approved/certified Site Plan of the prop­erty; (iii) the receipts of pay­ment for the last 3 years of Prop­erty Tax on the prop­erty; and a No-objection Certificate/Non-Encumbrance Cer­tifi­cate from the rel­e­vant author­ity where the record of the prop­erty is being main­tained.

Orig­i­nal title doc­u­ments issued in favor of the seller, includ­ing those of any pre­vi­ous sales (known as the chain of title doc­u­ments) must be obtained from the seller (as well as any power of attor­ney). Prior to pur­chas­ing property/land, a thor­ough inves­ti­ga­tion into the title of the seller in the prop­erty should be car­ried out by an inspec­tion of the property’s files being main­tained with the rel­e­vant author­i­ties in order to con­firm that the seller is the actual owner of the prop­erty being pur­chased. Such search is car­ried out from the author­ity which main­tains the land record of the area where the prop­erty is sit­u­ated. It is usu­ally rec­om­mended that the title of the land be inspected at least as far back as 25 years and/or a min­i­mum of 3 trans­ac­tions prior to that of the present owner/seller. In case the prop­erty is under joint own­er­ship it should be con­firmed that all share­hold­ers com­ply with the sale.

The buyer must also make sure that all prop­erty taxes, pay­ments of util­i­ties have been paid by the seller; there is no encumbrance/charge on the prop­erty by any banking/financial insti­tu­tion. It is usual to exe­cute an agree­ment to sell prior to exe­cu­tion of the final sale deed/agreement. An agree­ment to sell usu­ally includes the details of the prop­erty being sold, the amount of ‘token’/earnest money (the ‘biyana’) token money being given by the buyer to the seller, and the remain­ing amount of money to be paid and the date by which such money is to be paid to the seller. Although the agree­ment to sell does not trans­fer title of the prop­erty from the seller to the buyer, it does, how­ever, cre­ate a right in favor of the buyer to seek the spe­cific per­for­mance of the agree­ment from court in case the seller refuses to honor the terms and con­di­tions of the agree­ment. Con­versely, it also pro­vides the seller with the right to retain the token money and refuse to exe­cute the final sale deed/agreement in case the buyer does not com­ply with the stip­u­la­tions set out in the agree­ment to sell. In the event the prop­erty is being sold /transferred to the buyer by a power of attor­ney holder of the owner/seller of the prop­erty then it is impor­tant that it is ensured that the power of attor­ney is affixed with appro­pri­ate stamp duty, has been duly reg­is­tered with the rel­e­vant sub-registrar. In the event it deals specif­i­cally with the Prop­erty being sold then the orig­i­nal deed of the said power of attor­ney should also be pro­vided to the buyer. The holder of a forged power of attor­ney does not have the author­ity to trans­fer the legal title of a prop­erty. Full and final title in the prop­erty is only deemed to have been trans­ferred once the sale deed/title doc­u­ment has been duly exe­cuted. A sale deed must be affixed with req­ui­site stamp duty and com­pul­so­rily reg­is­tered with the rel­e­vant sub-registrar. Once the sale has been com­pleted the fac­tum of the said sale is required to be entered into the record of the prop­erty being main­tained with the rel­e­vant author­ity.

Huma Shah is a cor­po­rate lawyer, part­ner and con­sul­tant for the law firm Sheikh, Shah, Rana and Ijaz. She can be reached at ssri.law@gmail.com

This arti­cle was orig­i­nally pub­lished in the print edi­tion of Val­uemag, issue 2, June 2008.




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